All right, thanks so much for joining us with a special edition of Bloomberg Daybreak, the US stock market close for the good Friday holiday. I'm John Tucker, and coming up this hour a look at where the anti trust investigations against big tech stand under the Trump administration. We're going to speak with Jenniferree, senior litigation analysts with Bloomberg Intelligence. Plus we have seen our share of market volatility so
far this year. We'll go inside the markets with Eric Balchunis, the senior ETF strategist at Bloomberg Intelligence, and Jess Metton of the Bloomberg Stocks team. But first we're going to focus on the future of FED, Shair J. Powell and what's in store for the economy amid the trade wars. We're pleased to welcome Bloomberg International Economics and Policy course. But Michael McKee and Stuart Paul us economists with Bloomberg Economics. So the posting from President Trump said it all. Trump
says Powell's termination can't happen fast enough. Well, it's so much for FED independence, is it really? If he's threatening it sounds like a thread against Powell. Is he threatening Powell or threatening FED independence? Or both.
Nice, Fed, you got there too bad if something happened to it. Right, in theory, he's threatening Powell, but does he really mean termination in the sense of I'm going
to fire him. That's an open question because there are court cases right now about what power the president has to fire the heads of independent agencies, And while they don't exactly correlate to the FED, there is a feeling that if the Supreme Court were to rule that the president has unfettered power to fire the heads of agencies,
that he could try to fire Powell. It all may be moot because Powell's term as chair is up in May of next year, so Trump could be just talking about him leaving as the FED chairman.
And it's still so the independence of the FED. We can go back to the Knicks administration when the President had one of his economic people become the Federal Reserve chair. That was Arthur Burns. We know what happened there.
That's right. So there's no such thing famously as a free lunch in economics, But if there is one thing that comes close, it's central bank independence. Countries that have independent central banks have lower, more stable inflation. Countries that are more heavily influenced by the political process their central banks, when they're determined by by political actors, when there are political appointees, when they have less independence, you tend to
get higher, less stable inflation. I think that Mike is right. This might end up just being a moot point, and folks in the administration could encourage Trump to just wait out Powell's term. And the real question is, then, who would we end up seeing filling the.
FED chair role.
Would it be someone like Trump had rolled out as potential appoint point ease in his first term, people like Judy Shelton, who would be a bit more hawkish, or would it be somebody a bit more dubbish than so much of his proposed policies would require someone quite a bit more dubbish.
If you'd like a great conspiracy theory though John that way, Oh sure, that would really fascinate the markets. Suppose that Donald Trump does try to fire Powell, and to a certain extent is successful. Obviously, the FED would fight that there is no opening on the FED to fill a governor's job. Powell would still be a governor of the Federal Reserve and until January. In January, there's an opening, so he could appoint somebody who's the FED chair and waiting.
It is also possible that if Powell were gone, he could as chairman, he could appoint that person. But the Open Market Committee that makes interest rate decisions is a separate body from the FED itself, So the Open Market com could just rename Powell as chair, and you could have a chair designate for the Fed who is not the chair making decisions on interest rate policy.
That's a really important and interesting point. We've had a little bit of an experience, a little bit of an experiment with Michael Barr, the former Vice Chair for Supervision. Of course, the administration as it was coming into office was eyeing who could take the Vice Chair for Supervision role, someone perhaps a little bit more lenient on banks than Barr was. Barr preempted that by resigning his role as Vice Chair for Supervision but retain the title of governor.
To your point, and what that sort of did was that it created an opening for the Trump administration to offer somebody up who's already a governor in this case Mickey Bowman, and in theory, the Trump administration if Powell were to take that route, lose his chairman's role, but stay on as a governor, totally departing from convention.
But if that were to be.
The case, it would be somebody like Chris Waller, currently a governor, who could step in and fill that share role.
Well. On Wednesday, speaking in Chicago was the FED Shair Jerome Powell, and here's part of what he had to say.
The level of tariff increases announced so far is significantly larger than anticipated, and the same is likely to be true of the economic effects, which will include higher inflation and slower growth.
So it doesn't sound like there's going to be a FED put.
No, And he addressed that specifically. He was asked would you step in? And he said no, because.
I should explain to everybody listening what a FED put is. Basically, you get to backstop the market if things really could start to go haywire.
The FED, and this has long been in their position that the FED doesn't interfere when there is money being lost in the markets because the markets are going down, that's not their job. But if trading is interrupted, if there is a systemic problem, if there are all sellers and no buyers as we saw.
If there's problem with the plumbing right, he's going to whether FED would do something to open open the pipes, But no, they're not going to rescue the markets.
And his suggestion that inflation is going to be worse because the tariffs are worse just tells the markets that the Fed's going to be very slow to think about cutting rates in the future, which is why we saw an additional reaction after the markets were already down on Wednesday.
So still you want to weigh in on that, pal says, you know, maybe inflation, maybe employment, they're going to be impacted by the tariffs, And I got to wonder also if that's kind of what set President Trump off.
It's it's interesting to see the market in the context of the FED put right now, markets are pricing at about ninety bases points of cuts this year. We think that's so that's so off from reality. As you heard, it's sounding which direction, that's way too many cuts that are pre thin in our view. It's as we heard from Chairman Pally, Yes, we're likely to see slower growth, We're likely to see some inflation pressures.
The question would be which does the FED.
Care more about. In the same breath, we're also hearing from the chairman that we're very close to the full employment that the FED is a maximum employment that the FED is charged with trying to achieve as part of its dual mandate. And if you have upward inflation pressures, then it's likely to be the case that the Fed's going to maintain it's higher for a longer position. So
we don't see a FED pull looming. We see ninety basis points of rate cut price, then it looks a little bit crazy to buy eye.
What's the data been telling us, the hard data and even the soft data which measures I guess sentiment.
It's really hard for the FED right now because the soft data is awful and the hard data is so far so good. Pyle said Wednesday, labor market's in good shape. Thursday, we got a decline in initial jobless claims that sort of suggests that that is the case. But we also saw the Philadelphia FED report a collapse in business confidence in their district during the month of April that portends
bad things for the economy. But also they reported that inflation expectations went up among manufacturers in the Philadelphia region, So they're kind of caught in between. The question is does all this negative sentiment actually change business and consumer decisions, and that'll take us a couple of months to see.
So we've fed. Even if they were going to have to move one way or another, they're not going to have evidence until we get to maybe July that would tell them one way or another what's going on?
Just tangentially, since you mentioned the Philly FED, who's Anna Paulson.
Anna Paulson is the new incoming president of the Philadelphia FED.
She's currently and this is somebody who's not picked by the president.
Of the board of directors of each bank picked there on. The FED Board of Governors has veto power, but they can't other than that influence it. She's the research director at the Chicago Fed. Patrick Harker. The current president has to retire under FED rules in at the end of June, so she'll take over July first.
All right, Stull, I'm going to ask you to sort of school us on tariffs. The President has said so far it's brought in billions the tariffs bill. Who pays tariffs? I mean, remind everybody when the stuff comes in from I don't know wherever China comes into Port Nork, Elizabeth not far from here. The guy who picks it up is the guy who pays the tariffs.
Essentially, essentially yes, when the real question is.
The tariffs aren't charged in China as they leave the port by some you know, anonymous US official. It's you pay it here.
Sure, But just like all taxes, the real question is who bears the incidents of the tax or who bears the burden of the tax. Does the imposition of attacks take more out of margins or can companies then pass along higher prices to consumers. Separate from who has the legal obligation to cut the check for the tariff, what really matters is the incidence of the tariff and how much firms can pass along higher input costs to consumers. We see from surveys like the pmis that firms are
facing higher input costs. They report that they are trying to pass along higher prices. We see that in the regional FED indices like we saw from Philly earlier last week. But the main question is just how demand destructive are tariffs? How demand destructive is uncertainty and how much can tariffs get passed through to consumers. Basic FED models would suggest that the level of the average effect of tariff rate
would create an additional two percentage points of corelation. Personally, I think that that's probably a little bit high, because I do think that the degree of demand destruction that comes from effect that from the average effect of ta RAID being above twenty percent is going to limit the extent to how much firms can pass along those higher input costs.
And Mike, one of the stated purposes is to re sure bring employment back to the US to make all this stuff that's being made over It seems to forget the idea that it's basically labor arbitrage. Why stuff moved overseas to be produced in the first place, because it's cheaper to do so overseas, not to mention the fact that with productivity gains, it takes fewer people here in the country to make the stuff that we used to make.
Yeah, and there's also the cost of shipping you have to put into this as well. The cost advantage in terms of labor is starting to fade as other countries raise their living standards, but it's still an important input. But the problem that you have here is that nobody knows what Donald Trump is actually doing. We don't know what tariffs are going to be put on, and we don't know how long they'll last, and we don't know
how he'll change his mind. So if you're a company planning a major expansion and investment in some sort of factory, you don't know whether it's going to be worthwhile or not. So it's going to really be hard to justify moving in and that is going to hold the president back. Now he's talking about making deals with trade deals with countries. That's not going to bring any factories back.
All right.
Thanks to Bloomberg International Economics and Policy correspondent Michael McKee and Stuart paul Us economists with Bloomberg Economics and just a hand to look at how the market politicity is impacting the retail investor in the world of exchange traded funds. It is twenty minutes past the hour is Bloomberg. Welcome back to the special edition of Bloomberg Day Greek. I'm John Tucker. The US stock market closed for the Good
Friday holiday. The ongoing tariff saga has made for historic moves in the stock market, and for a look at how it's impacting the retail market the exchange traded fund industry, let's bring in Eric bellcunis, the senior ETF Strategies at Bloomberg Intelligence, and just met in Deputy team leader of Equities at Bloomberg News. Hi, guys, thanks for being here. Hey, where is money flowing these days?
Believe it or not, it's in the US. A lot of investors who are using ets putting that money into US stocks, so risk assets.
I would have guessed just the opposite. Everybody's hiding under a rock.
Well cash like ets and gold have done better than normal, but they haven't interrupted to sort of flow us on as we call it, into US stock ets. So if you were to look at the stocks on I don't know, any period this year, you're going to see stock of ETFs like VU, which is the Vanguard, SMP five hundred, IVV which is the black Rock SMP five hundred, the QUES are in the top ten. It got some little bit of value and growth in there.
Ces for everybody because you have to explain it to made.
So yeah, So SMP five hundred is like the five hundred biggest stocks. The QUES is the NASTAC one hundred. The stocks that list on NAZAC and they tend to be like more tech and innovative, so it's a little more high volatile, and the Nastak one hundred over time has done way better than the SMP, but it can go down further in his selloff, and it has it's draught out and has been rougher than the SMP, but
people still buying it. We got about ten billion into both the QUES ETF So I think what's going on is this, over the last fifteen years, the trail crowd has been rewarded for buying the dip, and so they are buying the dip still. And there's been a couple of days in this tariff tantrum where the dip has worked. You know, there's like a huge run up, and so those you know, quick boosts up inter of these down weeks or days are going to keep them coming back.
And then the retail crowd, the sort of buying holders, I think a lot of them over the years have just thrown up their hands in terms of market timing. I think they're just like, I can't time this stuff. I mean, after COVID, like who could have timed the FED buying ets and the market rallied and had a good year. So I think a lot of them are like, I'm not even I'm tuning out. I got a good cheap ets. I'm just got a dollar cost average until the sun goes down and I retire, and that's that.
And so we call that the vanguard put in that in a market that's going down, there's the FED put that they might step in. Now there's the Trump put that he might reverse, but we also the vanguard put. There's a just a bunch of retail investors who are just gonna buy them matter what, and it does help buffer these downturns a little bit.
Jess. So you've seeing kind of the same thing. What's your perspective sitting at the equities desk?
That's right. We like to look at the individual stocks as well. That I'm sure Eric looks at two and Emma Woo over at GP Morgan, she heads up their derivative strategy and she always collects a lot of great data for individuals shares, especially when it comes to retail specifically and what they're buying. And we've begun to see more of a divergence here in two particular popular names
that we constantly talk about. So if you look at the inflows recently into Tesla, those are still going into records, whereas the outflows from Nvidia those are breaching record levels too,
so you're seeing those going in opposite direction. What's the reason it's important is because typically when I'm talking to fund managers, they're keeping a close eye on their clients and what, especially on the retail side, what they're willing to let go of and what they're not willing to let go of, because you can use that as contrarian indicators.
Because for a while, especially the last two years of the AI boom, of course, people were going to continue to pile into shares like in Vidia, and it's still, of course well off of its record reach just earlier this year, because it's been on up and up the last few years. But now you're starting to see that shift a bit with retail versus Tesla, though people are still piling in despite that stock being well off of its all time high back in December, So that's what
you're seeing a divergence there. So it's going to be interesting to see how that impacts its stock price because typically people's and air can talk more about this. People like to talk about when retail sort of throws in the towel if that can be contraired, and that's kind
of the bottom overall of the market. But of course I'm sure he remembers like in the depths of COVID in twenty twenty, everything happened so fast where retail investors didn't have time to make a lot of changes and then they ended up not necessarily throwing in the talent getting that call right.
You also look at who's investing in their own company, corporate to inside, yes, what are they doing in these troubled times?
And the reason we look at corporate insiders because there's a variety of reasons that they could still buy. But if you have a situation like this, especially with the broader market in a correction and even the NAZAC one hundred obviously in a bear market, you want to see
what are corporate insiders doing. Are they still continuing to buy more of their stock, because that can give you confidence of what they see for their businesses as well as the economy, And you're actually seeing that happen right now.
So corporate insiders still scooping up shares of their own companies at the fastest pace in about sixteen months, So that would have been when the S and P was last in a correction in the fall of twenty twenty three, so that is something in the nearer term that's giving investors and portfolio managers more confidence that corporate insiders are doing that.
Hey, guys, active versus passive investment management, that's been a debate going back and forth for years and years In times like this, Eric, let me start with you, do the active managers perform better than you know if I stuck my money into it just an index fund.
Yeah, So what's interesting is it depends on what fast the class you're talking about. David Cohen, who covers active and mutual funds for US, did a study. He just looked at the crazy week, you know, the week where everything just was wild and the market was down a lot, and he just wondered how actas did And what we found was interesting. On the stock side, that beat rates,
the outperformance of the index rates doubled the average. So stock pickers over the last couple of years they've not been able to sort of buy the MAG seven at the same rate as the benchmarks, so they've been lagging because the MAG seven has done so well. But that actually pays off in the selloff when the MAG seven
goes down worst to the benchmark. And I think it's because stock pickers tend to be looking at fundamentals and some of the evaluations of the MAG seven were getting high and they were like, I need to buy more value, and that allowed them to outperform during this rough patch.
On the flip side, the bond investors, who normally outperform, they actually got their beat rates cut in half because bond investors they actually benchmarked against the indexes that are weighted by debt, you know, whereas the SMP is an index weighted by market caps, so it has momentum in it, but benchmarks are not that good. They're waited by debt equate it to playing the Washington Generals, which is the scene the Globe Shutters play. It's just a poor, easy
to beat up team. All you do is aut a little high yield or international and you're good. And so what happens though, in a crazy sell off where you have treasuries doing good, the ag actually or their benchmark beats them, so they actually have more risk typically, and then you hit a sell off, they underperform more. So it is really an interesting dichotomy between the two, but for both of them. The problem without performing in a
rough market is people don't care as much. We've found that if you beat the market like the markets in the market's down twenty percent and you're down fifteen, it doesn't do a lot like it's unfortunate, like you should get rewarded for that. That said, if you can go down fifteen when the market's down twenty, that could help you when the market goes back up over a year or two. Now you've got some credits from beating it
when it was down, and maybe you outperform. You're up ten the market's up eight, that's when it can pay off. But right now all the active stuff bonds and stocks on the mutual financyeing outflows. So this outperformance doesn't matter in the short term. It could matter long term. But it's interesting the way it's different depending on which as class you look at.
You're listening to Bloomberg Daybreak. I'm John Tucker, and we're talking with Eric Valchunis, Senior ETF Strategies as Bloomberg Intelligence, and Jess Meant and Deputy team leader of Equities at Bloomberg News. Jess, you've been writing about the death cross. That's ominous. What is that?
Okay, I know it sounds ominous, but I'll break down why it not necessarily always is and typically what you would happen in this and you can use this for indexes as well as individual stocks, so this particular exactly, so this is what happens when the S and P five hundreds fifty day moving average, so it's shorter term moving average, crosses below it's longer term two hundred day moving average. So when stocks are in an up trend, typically you wouldn't see that happen like the last two
years of the AI run. But when you begin to see a correction like this happening, that's when you see the shorter term moving averages move below it's longer term moving averages. So typically people want to point that out because it sounds like doom and gloom, because that happens, say during the dot com era in nineteen ninety nine, also in October two thousand, right after the stock bubble
burst earlier that year that march. You also saw it happen in December two thousand and seven, right ahead of the global financial crisis, and of course it happened in March of twenty twenty. But again I want to point out that that's.
I mean, we're we're not calling it a good indicator. We're not well.
It depends on how severe an economic downturn is, because if you go back since the fifties, this has happened over forty times, So people want to point to kind of the handful of times that it has happened. But even in COVID when it happened in March of that year, it happened on March thirtieth, whereas the stock market bottomed
on March twenty third. So it doesn't always work. I mean, since nineteen fifty, the S and P five hundred had posted a meetiing loss about seven tents of a percent a month later, but if you look three months out, it was about a two sent game for an index in a year later ten percent on average. So really what hinges it on is is there a more severe economic downturn or not. We don't necessarily know that yet, but that's why people watch it, because it depends on
how much further pain could be happening. So sometimes it's worked, other times it hasn't.
All right, so if you want to preserve your money. Eric, it sounds like the death crosses here. Where in the ETF world do you put money to preserve your cash?
Yeah, some of the names for the technicals are pretty clever. The golden cross, I think is what you want to see. I think that happens. Hopefully down the road we'll get a golden cross. But yeah, So what we found is even though there's a lot of buying of US docks like normal, what you do find is the cash like ets.
So Eskov and Bill these are the second and third best selling ets this year after vu Escov and Bill did the same thing, which is they're probably the two most boring ets one to three or one to three month treasuries. So it's literally like a money market fund. So a lot of people are hiding out. That's probably the safest, most organic way to sort of hide out when things are rough. In my opinion, there's no catch there.
There's some other things people do to kind of hedge, you know, one thing they do they might use a one time inverse ETF like SAH that we have seen people do. But there's a little bit of volatility drag that can corrode your investment long term so you kind of have to, like, you know, watch that thing. You know, it's not totally natural. Some other people are looking at treasuries long long data treasuries, but they kind of had a couple bays and periods there where they went down
with stops. And this is something that's an interesting point is that bonds, you know, especially as you go along the curve to the mid and the long long data section. You know, people buy those thinking that's the forty to hedge their sixty, but it's become less reliable. Seen twenty twenty two, bombs were down thirteen percent, stops are down
eighteen percent. And so what we found is a lot of people use buffer ets now, which are ets and like structure products, they use options basically to target an outcome. So you buy one of these and it will tell you you're only going to get a five percent no more, or you take the first ten percent, or you know, we'll cover the first ten percent. Anything beyond that is on you or hey, no downside hedge, and every one of the sort of situations you have to give up
some upside. So it's basically an option strategy package into an ETF. But people like these because unlike bonds which can be shaky, or these other hedging instruments for to have like technical things that corrode your money.
Eric, thanks very much, appreciate it. Eric Balcunas, the senior ETF Strategies at Bloomberg Intelligence, and Jess Manton stopping by the studio today at Bloomberg News. Up next, the latest and the government's effort to break up Facebook owner meta platforms. Thirty eight minutes past the hour. This is Bloomberg and thanks for joining us for this special edition of Bloomberg Daybreak. The stock market closed for good Friday holiday. Hi there,
I'm John Tucker. Well, big tech has been in the crosshairs of US anti trust agencies and so far it's continuing under the Trump administration. Let's get the update on where all these cases stand, and we bring in Jennifer Ree, senior litigation analyst with Bloomberg Intelligence, to go over it with us. Well, let's start with the courtroom drama. It's got it all. A billionaire witness on the stand, smoking gun emails, paranoia and even cutthroat competition. We're talking Mark
Zuckerberg's Meta on trial. It's the Federal Trade Commission. Jen trying to break up Meta and force it to sell Instagram and WhatsApp. Why is the government going after Meta? I mean I thought they were kind of hands off in the Trump administration.
Well, I think that's what people expected to happen, but we're not really seeing very much evidence of hands off approach when it comes to big tech yet. You know, Meta was first sued during the first Trump administration. And what the FTC is saying is that these acquisitions that men have made now back in twenty twelve, in twenty fourteen,
have you of Instagram and WhatsApp, we're anti competitive. That the only purpose for buying the companies by Meta at that time, Facebook was to just take out a potential competitor that they were very concerned about both of these apps, that they would eventually grow to become something more like Facebook and then prop you know, possibly supplant them in the market, and that they had a strategy to either bury a competitor or buy a competitor in order to
eliminate that rival. And that's what they did here.
Well, I mean, there's no denying they bought up successful rifles. Sounds to me on the surface case closed.
Well, the interesting thing is That's what makes this case so difficult because based on the documents you mentioned, these hot documents, we've been hearing about Zuckerberg's emails.
Yeah, quote unquote smoking good, right, he was what are he's saying those?
You know, he said it's better to buy than compete. I mean, you don't really get more straightforward than that in terms of supporting the FTC's case. But here's the thing. Even if the intent was bad back then you have to prove more elements than that to win a monopolization case. It's more than just that intent. You have to properly define the sphere of competition. You have to prove the company as a monopoly, and you have to show how consumers were harmed, and you have to show that that
harm was not outweighed by the pro competitive benefits. And look at what Meta did after it acquired Instagram and WhatsApp. It put in a lot of resources to what we're really fledgling companies at the time that they were acquired. And they have a good argument here that it was pro competitive. We may have bought them, but we didn't bury them. We grew them.
And the judge in this case has to consider also something called network effects. Basically, if you're on this platform they did all this, it's really hard to go anywhere else. I mean, what are you going to go to a smaller platform that doesn't have as.
Many users you need the users you need to be on it. If you have a lot of your friends are on it, there is a network effect. But the judge, you know, some of the evidence that's come out is that things have changed over time with TikTok and with x and with YouTube, and that we're moving a little bit away from that network effect need because people are multi homing and moving around and sharing data and videos
and information in a different way. And the judge even questioned whether network effects are as important today as they were ten years ago.
So but wait a second here, I just remember the government approved these acquisitions in the first place.
Very good point they did. So this would send a difficult signal to businesses. Now, legally, they have the right that the laws say, the Federal Trade Commission or Department of Justice can go after any deal any time. They can change their mind, and they've said, look, times have changed. The industry was different back then when we first looked at these deals, and they did it was about a six month investigation I think into the Instagram deal before they allowed it to close.
There's no jury here, I mean, how does this work?
Just a judge. It's called a bench trial. It is Judge Boseberg who's.
This judge doesn't have enough honest plate.
He doesn't catch a break. So it'll be his decision, and he'll first make a decision about liability, whether they're actually guilty, whether the FTC proved its case. If that's the case, he will move on to remedy and decide what is the right remedy.
And jen we also have two lawsuits against Google parent Alphabet. On Monday, we're going to get a remedy on Search because there's there's been a ruling that were found guilty, so they're going to remedy that. Coming up Thursday, we actually got a decision on a liability. This comes in respect to the lawsuit that's focused on digital advertising at Google. Tell us about that.
What happened right, Well, you know that one was unexpected. This decision on liability was expected to few months ago, and when it didn't come out, everyone was wondering, well, when will it came out? On Thursday? And it was a partial victory for the Department of Justice. These products that the Department of Justice head challenged are very complicated, right.
There are a series of products that Google has that connect digital publishers and advertisers together, and so they're all software essentially, and a couple of them are on the publisher end and a couple of them are on the
advertiser end. And what Google was basically alleged to have done is sort of manipulate the whole process because fees are taken out for each of these products that are used, so that it keeps publishers and advertisers within their whole supply chain right to place an ad on a website.
So what this.
Judge decided was that Google was found liable for monopolization of what's called the Publisher ad Server, So it's one of the products on the publisher side. Google actually bought this product. It was originally called double Click and Google. When Google bought double Click, it obtained this product also monopolization of the ad exchange market. That's one of the advertiser sides. It's in exchange where they can actually come together to buy and sell ads and for tying the
two of them together. What that means in antitrust is conditioning access to one to conditioning the access of one to get the other, and that is illegal under the anti trust laws. So that came out on Thursday, and what the judges said is, Okay, here's my decision. The next step is to have a hearing to decide what the proper reality is going to do.
What are we going to do? What do you suppose the proper remedy remedy with this?
And of the lawsuit, well, you know, like several of the government lawsuits against the big tech companies, they will seek divestiture, forced asset sale, as they're doing FTC's doing with Meta, as the Department of Justice is doing with Google on the search case that you mentioned. They will seek that. I don't think that they'll get that here. And the reason I don't think so is because I believe judges are really looking for the most straightforward and
kind of non intrusive way of remedying a problem. And so if the problem is this unlawful hying, let's say they're told you have to stop this, you have to make access unconditional. You can't say you must use one in order to get the other and again the decision only recently came out, so I haven't had a chance to digest it yet looking at hundreds of pages. But whatever it is, the judge found that Google is doing that monopolizes the publisher ad server. It's really she'll really
just say you have to stop doing that. That's more likely than a divest chat.
Okay, let's move to the other case in which they were found guilty with respect to the search engine. Right, are they going to have to get rid of search Google Search?
I don't think so. So what's starting on April twenty first is a hearing also on what the proper remedy should be since a liability decision was made, and this was about Google paying other companies, say yeah, Chrome right.
Just Google Search man.
Google was paying other companies to install Google Search as the default behind other search engines at other Internet app access points in various devices, and basically it locked up all the distribution points for the use of a search and so rival search engines couldn't get in there. And
the judge that these default agreements are illegal. So, as I said, if you're looking at judges that are going to do the most straightforward thing In my view, what the judge will say is you cannot force this exclusivity anymore on all these third parties, on Apple, Samsung making Android devices, and instead you have to you know, you can't pay them anymore to put your search engine exclusively in those positions.
There are other cases too of what it's Apple, Apple, Amazon.
Live Nation, Yes, and Visa.
What are the O Visa? Okay?
Yeah, Visa. You know, it's the most active that the government's been in thirty years in terms of going after big companies for monopolistic conducts. So it's really pretty remarkable. You know. The last one was to make Microsoft back in the late nineteen nineties, right, Yeah, and sort of a smaller case against qualcomby the FTC in around twenty seventeen.
Right Apple, Now, I get, I mean, I get with the Trumpet administration, uh and social media, they say it's bias against the conservative conservatives. I kind of get that. I don't understand the whole climate though, why it hasn't changed under what we thought was going to be more of a laissez fair administration when it came to cases like this.
Well, I think that there's always been this anti big tech sentiment amongst mostly the populist part of the Republican Party. You know, you have jd Vance who has who praised Biden's anti trust authorities saying he thought what they were, that they were doing a good job. And it's for a couple different reasons. I mean that the alleged censorship
of conservative content is one of them. But I think in some respects Big Tech is also kind of considered leftist organization that push liberal ideas that this administration doesn't really agree with, and I think the intent is to continue to be aggressive.
Are these other cases strong in your view?
No, I actually don't think the case against Apple or Amazon that you mentioned, both very slow moving, are particularly strong cases. And for those reasons, as those litigations develop and move closer to trial, I do think there might be some possibility of settlements there.
Explain everybody. This give us a sort of a primer when we're talking about anti trust cases anti monopolization cases. It is both the Federal Trade Commission and the Justice Departments that are in on this right. They bring separate cases, they work together. How does that work?
They do? They both have authority to enforce the anti trust laws, and what happened we understand in this case is that several years ago, I think this was during Trump one point zero, the agencies did get together and they kind of divided up the big tech companies and FTC took Amazon and took Meta, and the Department of Justice took Google and took Apple. They started investigations of the companies which then culminated in these litigations. But that is how they work. They tend to talk to each
other say who will take on responsibility. They do the same in the merger space.
And who are the personalities at the FTC and well beyond the Justice Department, beyond Pambondi.
Well, we have an interesting situation at the Federal Trade Commission now because it is technically supposed to have five commissioners, only three of which can be from one party. So normally, with the Republican president, you'd have three Republicans and two Democrats. But President Trump just fired the two Democrats. So at this point we have only three Republicans that are running the Commission, and it looks like it's going to be
that way for some time. The two Democrats have filed a lawsuit saying that this firing was illegal but obviously those things take time to work their way through court.
We know about all these cases that you just went over. What's next, Well, I think.
At least in terms of new monopolization cases, I'm not so sure anything's going to come along quickly, because, first of all, you know, Trump's enforcers took over the FTC and DOJ with a lot of workload. They inherited a lot of cases. They are resources constrained. They've been resource constrained for many years. Actually, they can only bring so
many cases. And if more mergers begin to be notified and filed, they're also going to have those that they're going to have to review, possibly negotiate settlements, possibly even challenge deals they find to be anti competitive. So I think, at least with respect to the monopolization space, these are all going to play out. I don't think we're going to see very many new cases, all right.
Thanks to Jenniferree, senior Litigation analyst of Anti Trust with Bloomberg Intelligence. We would also like to thank Eric Baltoon Is, Senior ETF strategist at Bloomberg Intelligence and Just Meant and Deputy Team Leader Equities at Bloomberg News as well as Bloomberg International Economics and Policy Course meen with Michael McKee and Stuart Paul Us economists with Bloomberg Economics would also
like to thank you for listening. I'm John Tucker. Stayed with US top stories, global business headlines coming up right now