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Welcome to the Bloomberg Law Show. I'm June Grosso. Ahead in this hour a landmark anti trust case against Google, the controversial decision limiting the administration's communications with social media companies. Justice Alito rejects calls for his recusal in a major tax case, and Tesla's ban on US union shirts goes all the way to a federal appellate court. The United States versus Google, the first trial pitting the federal government against a US technology company in more than two decades,
began in a DC federal court on Tuesday. The Justice Department and state attorneys general alleged that Google illegally monopolized the online search market by paying billions of dollars to tech rival smartphone makers and wireless providers in exchange for being the default search engine on browsers and mobile devices. But Google's top lawyer, Can't Walker, told CBS News that consumers use the search engine because it's helpful and it's easy to switch to another search engine.
It really couldn't be easier.
You can sit at home on your couch and change what search engine you're using.
It's as easy as changing your shoes.
My guest is antitrust expert Harry First, a professor at NYU Law School. Harry, just how important is this case?
This is an important case, at least symbolically and maybe practically. So symbolically it's important. It is the first case in more than two decades to challenge a durable, high tech monopoly.
So the last case was brought in May of nineteen ninety eight, so that's a quarter of a century since the last one, and that was against Microsoft, and since that time nothing, So it is symbolically important because it shows the federal government and the state any trust enforces turning their attention to big power in our economy.
The government says that Google paid more than ten billion dollars a year for exclusive agreements to make Google the default search engine on mobile phones and browsers. Is there anything wrong with that with the company saying I'll pay you if you do this and we both benefit.
Well, the definition of an agreement is we both benefit. So the question is whether these agreements helped to maintain Google's monopoly position. So firms entered into lots of agreements across the economy, of course, and most of them are lawful. But when it comes to monopoly firms, firms that have a monopoly position, they can't use agreements to unreasonably exclude competitors.
And that's what the government plaintiffs are arguing that these agreements unreasonably excluded good competitors who were foreclosed from, you know, getting their search engines in front of consumers so they could use them, and so that they could get more and more searches done on them and continuously do what Google had been able to do. And they were monopolists. More and more data, more and more data, and so
get better results, have a better search engine. So the argument is that they excluded competitors through these agreements.
In the opening statements, Google's lawyer argued that consumers don't use Google because they have to. They use it because they want to, and if they want to switch, it's easy enough, right.
So that is a factual argument in essence, but it's also an appeal to framing the case in a way favorable to Google and in a way that they hope will appeal to the judge. So Google's basic argument is, are you kidding me? This is the greatest product ever? Why do people use it? You know, nobody's holding a gun to their head. They use it because it's darn good. And you know, nothing is stopping consumers from changing those
the falls. They could do it. You know it's easy enough to do, So tell me why they don't do it. I'll tell you why they don't do it. They don't do it because they get a great product and they're happy with it. And in the end, Google says, and this is true, the purpose of the any trust laws is to serve consumers. That's what markets are for, and consumers are being very well served. So why are you bringing.
This case government?
Is that the only argument you think they're going to make.
Well, there are lots of legal arguments along the way. They may argue that search actually isn't a product because it's on price free. You know, you can't raise its price. You can't lower its price the product if there's a product involved as advertising, you know, and then what's the advertising market? They'll argue that, okay, if search is a product, you know, there are lots of ways to search for information. Even on the Internet. There are lots of ways to
search for information. So for example, you know, people search for information on TikTok. Maybe not you or me, but younger people do. People search for information on Amazon, you know, if they are looking for a product, lots of people just go right to Amazon and look for it. They don't look for it on Google. So there are lots of different ways to search for things, and Google is if search is a product, Google doesn't control it. Consumers control it. They those keyboards and make their choices.
The judge asked Google's lawyer to respond to the Justice Department's allegation that quote, what you say, our competition for defaults are not really competition at all that. Really, only Google can be selected for the default. Explain why that's important.
So Google was selected for the default because they paid for it in one way or another, either through the revenue share or for saying, you know, if you want all these apps, you've got to make it a default, or they paid Apple large sums of money. The question is more, what does a default mean? Default is an exclusivity. It's just the start, It's where things start. It's default. So you know, Google wants to say, there's still plenty
of consumer choice. So Google isn't controlling it. Consumers are controlling it. I think the judge has already shown a little skepticism about an argument that the faults don't matter, which is I think what Google wants to say, You know, they don't matter because they're changeable. And I think, you know, the judge is my recollection was pressing Google's council already for saying, well, give me some examples to consumers changing.
Harry as a lawyer, which side would you rather be on, the governments or Googles?
I think the government's case is strong. Actually now, I say that in part because there's been a test run. In a way the European Commission already found a lot of this stuff to be in European competitional abusive dominance, the agreements relating to mobile distribution, not the browser part. And you know, one good reasoning that doesn't compel the same results in the United States, but it's pretty similar.
It's similar to arguments that were made in the Microsoft case about contracts that were exclusive and effectively excluded Netscape the browser, even though you know you could still get a browser in different ways. Now you may remember, I remember, you know, it used to be well, if you couldn't get the browser pre installed on a Dell PC, they came in the mail. Hey, there's plenty of distribution in
the court that there. You know, it doesn't have to completely foreclose you, but it just shuts off basically the most efficient way of distribution. And in that old day, the OEMs, the Dells of the world compact didn't want to put a second browser on because of cost. And here they get that same default, even though they technically don't call it exclusive. It's the same sort of thing. So I think the government has a strong case. Obviously, it's not a lay down case. I haven't heard any
talk of settlement. So Google presumably feels that it might be able to win a trial, and there's a long time between here and there, As they say, before there's some resolution of this case, because this is really we're just at the beginning of it.
In its lawsuit against Google, the Justice Department pointed to that Microsoft case and said that Google deploys the same playbook as Microsoft did. How much does this case borrow from the Microsoft case or echo the Microsoft case.
I think there are a lot of similarities. You know, Microsoft, a lot of the exclusionary work was done by exclusive contracts that they had with service providers, with cool so forth. They paid the money, So there are a lot of factual similarities. I don't think there's the same sort of technicological effort of tying Google Search to something, which is what Microsoft did with the Internet Explorer browser. But it's quite similar. And the District Court has already followed the
legal playbook as well. I mean, the government, i think, has tried to say, hey, this is Microsoft, and you know how that came out, and legally, the district court judges already followed the way the Court of Appeals set out the structure for analyzing the problem. The district Court has already chosen that in the earlier decision that made the case. So Microsoft is going to be very important in this case. But you know, in the end, facts
are very important. So we'll see yet how the judge feels about the arguments on default and how much of the market was really foreclosed by this or you know, how you figure that out. So that's yet to be seen.
Yes, a lot more to come. This is just the first stage of the trial and the judge isn't expected to make a decision until next year. If he finds that Google broke the law, then a second phase will determine remedies. So will surely be talking to you again, Harry, Thanks so much. That's Professor Harry First of NYU Law School. Coming up next a decision limiting administration officials communications with social media companies. I'm June Grosse. When you're listening to Bloomberg, this.
Is Bloomberg Law with June Grosso from Bloomberg Radio.
The Supreme Court has paused a ruling that restricts the Biden administration's contacts with social media companies. The administrative stay granted by Justice Samuel Leto is a stopgap measure while the justices consider how to handle the First Amendment clash ruled on by the Fifth Circuit Court of Appeals last Friday.
That Circuit court concluded that the Biden White House, the Surgeon General, the CDC, and the FBI likely violated free speech rights by coercing social media platforms to take down posts on their sites at times with intimidating messages and threats of adverse consequences. White House Press Secretary Karine Jean Pierre has said that communications by Biden officials with the social media companies was not coercive.
We have promoted responsible actions to protect public health, safety, and security when confronted by challenges like a deadly pandemic and foreign attacks on our elections, and we have consistently made clear that we believe social media companies have a critical responsibility to take account of the effects of their platforms that they have on the American people while making independent decisions about the content of their platforms.
Joining me is Professor Eric Goleman of the Santa Clara University School of Law. He's also a co director of the High Tech Law Institute. Eric what was the main issue in the Fifth Circuit case.
The basic question is when were conversations that were taking place between the government and social media services becoming so coersive or so directed that the social media services were doing the government's bidding and removing content at their direction.
Did the Fifth Circuit find that there were actual threats made to social media companies?
It did, But the threats are always a little bit vague. It's not always as easy as you must do X or we will throw you in jail. The threats are often more indirect, and that's one of the many challenges from this opinion. It wasn't entirely clear to me exactly which threats mattered, were when they even became threats, and.
What did the injunction specifically prohibit Biden administration officials from doing.
The actual implementation of the injunction is no more clear than before the opinion. What the court said is that certain branch of the government, specifically they called out the White House and the FBI must comply with the rules articulated in the court. But the Court didn't provide concrete boundaries around those rules, simply said you must comply with
the Constitution. So, in a sense, I don't know how the executive branches are going to implement what the court's ordering them to do because it's saying comply with the Constitution. But obviously, the people who made the decision in the first place weren't clear what was constitutional what wasn't, and I don't know they're ingclearer now.
It also says they can't significantly encourage platforms to remove lawful content. So what does significantly encourage mean exactly?
That's the point. The significant encouragement is the boundary around the constitutional protections. In other words, if they're significantly encouraging the removal of constitutional content that's not constitutional, that's a violation of the First Amendment. However, what constitutes this significant encouragement is not made clear by the opinion. They do point to a few examples, but I don't think I
would know how to actually interpret that language. And so what's likely to happen is that if this opinion stands, the regulated entities are going to become far less conversational with the social media services. They're not going to take a chance about violating the rule. So the court standard actually clears out a lot of permitted behavior today. Because the boundary is so unclear, people are going to err on the side of being cautious.
Well, that's what the Republicans who brought this case want, isn't it. The Missouri ag Andrew Bailey, said that the ruling was another brick in the wall of separation between tech and state.
No doubt many people wish that the government would not be in conversations with social media services, and yet the court's opinion really cuts the shut over dialogues that take place every day, all the time throughout our entire country between governments and private entities, not just social media services. This concern about significant encouragement or coercion and comes up across the board in lots of spaces, and the quest standard puts potentially many or all of those in play.
Opens up the door for lots of people to challenge government conversations that are just in the public health and safety interest. Gom's just trying to do its job to protected citizens, and now this court casts a doubt on the legitimacy of those efforts.
The Biden administration had said that it was pushing social media companies to just adhere to their own rules about content. Did you see a First Amendment violation here?
There's no doubt that some individual employees of the government pushed the frontiers, perhaps to or over the limit. That's just the nature of individual government employees so zealously trying to do their job, they might get a little bit excited. Having said that, I think that overall a number of the social media services appreciate the feedback from the government.
They want to hear from the government because the government sees things that they don't or is a good neutral source of assessing risks in the community that need to be addressed, and so it's helpful for the social media services to hear from the government. The risk that the government is assessing what might be done to address those risks. That's actually helpful and that informs the social media service's
own independent turtle discretion. So the line between that kind of activity and the overzealous pushing by some government employees is really thin. And we want fewer of the overzeala's stuff, but we definitely want the other stuff to continue. And that's the part that I don't think the government employees are going to know where they are on that spectrum.
I thought it was interesting that doctor Anthony Fauci, who came under such criticism from conservatives during COVID, you know, the Fifth Circuit said, no, he did, Okay, he was fine.
Yeah. I think the Fifth Circuit was trying not to engage in partisan politics. Fauci was the targeted conservative iyre, and so they weren't pandering to that ire. And yet the entire structure of the opinion really does validate a lot of the conservative objectives in a way that I think fundamentally on their minds. Part of the health and safety.
So it's kind of like, what do we really want from the government, And I don't know that I share the Fifth Circus vision of what it wants from the government.
I always point out that the Fifth Circuit is considered the most conservative appellate court in the country, and we've seen these judges make rulings that were outliers before, and it's getting reversed by the Supreme Court more than it used to.
Well, the good news is that this particular opinion fixed an even worse District Court opinion that was a true outlier, and even that opinion was too much for the Fifth Circuit. They could not stand behind this opinion that had just gone rogue on the rule of law. So In that sense, the Fifth circu opinion is definitely better than the District Court opinion that preceded it. And yet I don't know what would happen if the Fifth Circuit opinion is appealed to the Supreme Court.
The Biden administration told the Supreme Court it's going to ask the court to take the case on appeal, and in the meantime, Justice Samuel Alito granted the government's request for a temporary stay. Does the Justice Department have a good argument for the court to take this case.
The opinion, Although it narrowed the injunction quite a bit, it still leaves a core injunction against key executive branch agencies, restricting their ability to do their job and leaving such ambiguity about how they can do their job that it seems like they need the Supreme Court to give the
government more guidance. It wouldn't surprise me if the states that are the plaintiffs in this case also appeal the ruling because they want to pick up the stuff they had gotten in the District Court that the Fifth Circuit took away. So it's entirely possible both sides will be encouraged in the Supreme Court to take this case.
And we'll know more by next Friday when Alito's stay ends. Thanks Eric, that's Professor Eric Goleman of the Santa Clara University School of Law. Coming up next, Justice Alito refuses to recuse. I'm June Grosso and you're listening to Bloomberg.
This is Bloomberg Law with June Grosso from Bloomberg Radio.
At a judicial conference in August, Justice Elena Kagan was asked about Congress's power to check the Supreme Court.
It just can't be that the Court is the only institution that somehow is not subject to any checks and balances from anybody else. I mean, we're not imperial, and we too are a part of a checking and balancing system in various ways. So can Congress do various things to regulate the Supreme Court? I think the answer is yes.
Justice Kagan's answer may have been yes, but Justice Samuel Alito's answer was no. In a July interview for The Wall Street Journal, Alito said Congress did not have the power to impose an ethics code on the Supreme Court. That interview has now led to calls for Alito to recuse himself. Not because of the content of the piece, but because one of the writers is an attorney involved in a major tax case coming before the court this term.
Alito has refused to recuse himself, explaining why in an unusual statement released by the Court last Friday, joining me is constitutional law scholar David Souper, a professor at Georgetown Law School, tell us a little more about the background of this recusal dispute.
Certainly, Justice Alito perceived correctly that he was under considerable criticism in the media and responded in a number of ways, partly by writing an op ed defending himself and partly by giving two interviews to a lawyer who was interviewing him for the Wall Street Journal. That lawyer is now one of the lawyers behind an effort to have large chunks of our tex system declared unconstitutional, that is in
front of the court. Several people, including a number of Senators, have suggested that Justice Alto should refuse himself because of the ties to the lawyer who twice interviewed him, and Justice Alito has said he will do no such things.
A group of Democrats, led by Senatjudiciary chaired Dick Durbin, call for his recusal in a letter to the Chief Justice, and Alito attached his statement in response to a Supreme Court orders list, And if you look at it quickly, it looks like a decision of the court, complete with footnotes. How unusual is it on a scale of.
One to ten, pretty close to a ten. I think you can get to a ten if you come by in the very unusual form, and that the content is also extremely strange.
He said that there was nothing out of the ordinary about the interviews in question, and then he refers to in footnotes interviews that various justices have done with members of the media and says, well, they didn't recuse themselves when cases involving those media entities came before the court. But I don't know of any case where the journalists then came before the court.
I don't either. It's also pretty unusual because Justice Alito himself described this PR campaign as his self defense. Judges talked to journalists to educate the public about the law all the time, that's all fine, but he said that no one was defending him, so he would have to defend himself and launched this PR campaign. The lawyer in
this case helped to him with his pr campaign. Something that people in this town pay tens and hundreds of thousands of dollars for was given to him free, and then this lawyer who did this enormous favor to him is arguing a case in front of the court that's unprecedented to my knowledge.
There's also the fact that when the first article was published in April, the justices hadn't yet agreed to hear the case. They agreed in June, and then the second article was published in July. So the timing alone gives the appearance of impropriety.
Well, any participation, whether it's in considering whether to take the case or in deciding it, is improper if you have a conflict of interest, and when someone has just provided you services which, by your own admission, you felt you badly needed, and those services have enormous value. That's precisely why we have conflict of interest law. There's nothing wrong with his getting these services. He just shouldn't participate in a case that being litigated by the person who provided them.
Something he said is something that I think Justice Thomas has said too, which to me, this is the point about ethics. He said they didn't discuss the tax case, either directly or indirectly. Well, I mean, that's not the point, is it, whether they discuss the case.
Well, that's certainly not the point. I mean, if a lawyer in the case had given a car or a house to a Supreme Court justice while not discussing the case they were litigating, that justice should still refuse themselves from the case that that lawyer was arguing, because they obviously owe the lawyer or something and will have a temptation to repay it.
Judiciary Chairman Dick Durbin's response was quote Justice Alito, of the originalist school of thinking that empty seats on an airplane don't count as gifts, surprises no one by sitting on a case involving a lawyer who honored him with a puff piece in the World Street Journal that referred to Alito accepting a trip to a luxury fishing lodge in Alaska from wealthy Republican donors. But there have been a string of ethical lapses by some of the justices, especially Clarence Thomas.
Yes, this one, though, is really more striking because Justice Alito is saying that he should be able to rise above his debt that he owes this lawyer and decide the case fairly, which shows a fundamental misunderstanding of conflicts of interest law. The whole point of conflicts of interest law is that we don't want to ask people to rise above their conflicts, and we don't want to ask
the public to trust that that has happened. Instead, we eliminate the conflicts by having people who are conflicted not involved in cases and with judges, the goal is to avoid the appearance of impropriety.
The Judiciary Chair wrote to Chief Justice Roberts, Can Roberts do anything when Alito says, nope, I'm not going to recuse myself.
Yeah.
The Chief Justice, combined with the other justice can do quite a great deal. Towards the end of Justice Douglas's service on the Court, the other justice concluded that he didn't have enough mental acuity to make responsible decisions, so they informally agreed that they would not decide any case
in which his was the fifth vote. The other justices can similarly decide that they will not decide any case in which Justice Alito's is the fifth vote, or they could simply vote to reject this case because they can't hear it in impartial circumstances. It's called dismissed as improvidently granted or dig. They can dig the case to prevent Justice Alito from participating in it. But this goes way beyond Justice Alito or Justice Thomas, other justices, and it
only takes five of them to make an order. They can adopt an ethics code, they can adopt rules for accusal, and it does not have to be unanimous. Many orders of the Court, of course, are not unanimous, so the others haven't need to step up. If they want the public to respect the Court and if they want the Court to do its business in a way that's worthy of the public's competence.
It seems like a three prong problem. You have the court's ethics controversies, you have the limited transparency at the court, and then you have also these far reaching rulings that bring the public's attention to the Court and its power.
Yeah, and that's the combination. Now, there's a majority of the Court that is very conservative, and even on a case that neither Justice Thomas nor Justice Leader were participating in, there would still be a conservative majority on the Court. The question is, why do they insist on proceeding in a way that is, at once they're in bold and at the same time raises serious ethical questions, and that's
very hard to understand. And then why the other justices don't seem to see this is the problem worth addressing is also hard to understand.
You talked about the various things that could be done by the Supreme Court justices, But do you think that anything will really be done in the end about either just As Alito or just As Thomas by the Court itself.
I don't think they'll take action directly against them. That's not how I close system like the Supreme Court typically works. But I think they might very well establish a code
of ethics going forward. It won't deal with all the problems we've had, it won't deal with how much, particularly these two justices have committed themselves to a narrow set of right wing billionaires, but it can limit what happens going forward and hopefully keep this sort of thing from snowballing as it obviously has with these two justices.
Well, we'll see if this is the last word on Justice Alito's recusal or not. Thanks so much, David. That's Professor David super of Georgetown Law School coming up. Next on the Bloomberg Law Show, a controversial appellate court ruling that the Biden administration coerced social media platforms to take down posts on their sites. I'm Junengrosso and you're listening to Bloomberg.
This is Bloomberg Law with June Brusso from Bloomberg Radio.
The money is there, the cause is righteous, the world is watching, and the UAW is ready to stand up.
This is our defining moment.
It certainly was an unprecedented moment, as the United Auto Workers went on strike Friday against all three Detroit automakers, a strategy announced by its president Sean Fain. Of course, Tesla doesn't have to worry about strikes. It's the the only major US auto manufacturer not represented by a union. The electric car makers legal disputes over union organizing are no secret, and the legal fight over Tesla's ban on workers wearing union shirts on its electric car production line
has reached the Fifth Circuit Court of Appeals. Joining me is labor law expert Kate Andreas, a professor at Columbia Law School. Kate is a ban on union shirts unusual. I mean a lot of places even require uniforms.
Since the nineteen forties. The NLRB has held, with Supreme Court approval that workers are allowed to wear union insignia, including union T shirts, unless there's a special business reason for an employer to prohibit it. So it is the case that a lot of employers have uniform requirements, but they have to permit workers to wear union buttons, union stickers, union shirts unless there's some business reason why doing so
is trumental to the business. The board has recognized that showing your support for the union is an important part of how workers organized unions, and it's an important part of workers right to expression at work right. It's their right to communicate their support for the union, and that is protected by the NRA.
Did a factor in it all that Tesla adopted this policy in twenty seventeen during a campaign by the UAW to organize production workers.
The Tesla's position was that ad adopted the ban because there were problems with production, that Tesla vehicles were getting harmed in some way in production, so it tightened up this uniform rules. But what the board said was, well, if you had, for example, made a progression on wearing sharp implements, that would be understandable, right because you might rip a our speed if you're wearing a sharp implement.
But what you can't do is adopt a rule that there's no special business reason for it, And you certainly can't do it if there's the possibility that you're doing it in order to coerce workers and exercise of their union organizing rights, that you're trying to discriminate against union activity. But even if it's adopted for other reasons, it's not permissible unless the employer can show that there's a need for it.
But it seemed like the Fifth Circuit judges were concentrating on the difference between dress codes that don't allow any expression of union support and those like Tesla's that permit workers to wear union stickers and the like. One of the judges said, a sticker says go union, union is good or whatever. In what way is that an insufficient means of communication? So were these judges ignoring that precedent you just told us about.
Right, So one of the judges seem to be saying, if the employer gives workers some way to communicate their support, that's enough that the employer gets to decide how workers can communicate their support for the union. That is not what the precedent has held since nineteen forty five. Other
than that brief period during the Trump administration. Since nineteen forty five, the Board has said the employer doesn't get to decide that it doesn't like union shirts or it doesn't like union buttons unless there's a business reason for that. So if the Fifth Circuit ends up adopting the reasoning that was suggested in oral arguments, that would be a real retrenchment of where workers' rights have been for a long time.
I find it surprising that Tesla would bother to go through these appeals and everything over this issue when I'm missing something.
I think there are two things going on. One is that employers like Tesla do everything they can to try to stop workers from organizing unions. And so in every case, if they're able to exert more authority over the workplace and narrow the ability of workers to engage in organizing activity that is very important to them that precedent for user cases, it sends a message to workers, even if it doesn't set precedent, that it's going to be very
different to win a union. And so I think that explains why Tesla's pursuing what seems like a relatively minor issue.
Thanks Kate. That's Professor Kate Andreas of Columbia Law School. This is Bloomberg Law on Bloomberg Radio. I'm June Grosso. Stay with us. Today's top stories and global business headlines are coming up right now