This is Bloomberg Law with June Brusso from Bloomberg Radio. It was the biggest antitrust showdown between the federal government and a US tech giant in a quarter century, and a stunning defeat for Google when a federal judge ruled last week that it's a monopolist and that the search giant broke the law by exploiting its dominance to squash competition and stifle innovation. The finding that Google illegally monopolized the market for general search services and search text advertising
is just the first part. Next comes a trial to determine what the consequences will be for Google, and that could be anything from a breakup to unwinding its exclusive deals. Of course, Google says it will appeal the decision. Joining me now to discuss the case is Jonathan Canter, Assistant Attorney General for the Department of Justice Anti Trust Division. What does the Google decision signify for the Justice Department? Is it a game changer or something less?
The Google decision usb Google signifies that the anti trust laws apply to the Internet. This is the biggest case about the Internet since the Internet, and so to the extent there are any questions about whether in a world where certain parts of a product offered for free or monetized with advertising, or a world where internet technology companies operate, whether the anti trust laws still apply just as they did against Microsoft AT and Standard Oil. I think we have an answer to that question.
What kind of changes do you envision this decision will bring about eventually?
Well, I think that remains to be determined. The way the process here works is that we first had a trial to address liability to determine specifically whether Google violated the anti trust laws. Once it's determined that Google did violate the ani trust laws, and the court opted to bifurcate the proceedings, which means now there's a second proceeding that will address the appropriate remedies in light of the liability finding.
And so there'll be a hearing on the remedies, which could include the breakup of Google to something much more minor what kind of remedies will the Justice Department be asking for.
So the process is ongoing. The court has ordered a hearing in early September, and we're going to respect that process. And so I can't speak specifically about the remedies that we will seek or that the court will likely order
in this particular case. But what I can say is that generally we take remedies very seriously and in all of our cases, we want to make sure that any remedy, whether it's in a monopolization case or other cases, meet the market where it is today and have an impact in light of the conduct, both in terms of how the market functions today but also how it's likely to function in the immediate future.
Can you tell us what kind of remedies are available so the.
Courts have a wide range of discretion in terms of ordering remedies. I think there's a long line of cases going back many many years that may out the different range of remedies. And in an anti trust case, you can have remedies as broad and it's severe as a breakup of a company, or you can have remedies that prohibit a company from engaging in certain kinds of practices and everything in between.
One thing that came up at trial was that Window users, when they were defaulted to Microsoft's Edge browser and bing Search, eighty percent of them chose to switch to Google Search anyway. So how much of an impact on consumers do you think this decision could have? If it's upheld.
Well, I think in any decision, whether it's in this case or any other, has to consider both the evidence that was put forward a trial, but also the market realities. And so one of the things that we discussed in a pretty innovative way in the trial is we put on the stand a behavioral expert, someone who can explain the power of defaults and help particulate how consumers behave in light of certain things that they might see on a screen.
And so all of those.
Kinds of questions are likely to be relevant in this or any other case.
Do you think the decision is appeal proof?
That's not a decision for us to make. We feel very confident in the outcome, and the decision is very thoughtful and deliberate. And you know, if there's something that we need to address as part of an appeal by Google, then we'll do tone writing.
So the federal government has launched a series of cases against Google, Meta, Amazon, and Apple. You're going to trial against Google, I believe a second time next month in a related case, and your anti trust lawsuit against Apple bears some similarities to the Google search case. Does the Google case give you a blueprint in any respect for how to handle these other cases.
Yeah, I think it's important to take a step back, and I trust monopolization cases brought by the Department of Justice against companies is not something that happens every day. The last case before USB Google was USB Microsoft, which
was filed in nineteen ninety eight. Both were victorious, and both were significant, not just because they involved massive companies that have a major impact on society, but because they represent an opportunity for courts and companies to understand how antitrust law is applied in these markets, these technology markets, and how they are applied against the backdrop of a
modern economy. So absolutely, given the significance of the case in terms of size and scope and the rarity of a case like this being decided by a court, it's going to, i think hopefully, be an important statement on the state of the antitrust laws today and its applicability to companies in today's markets.
Do you think the Justice Department has sort of a momentum here with the willingness of JUDGMENTA to crack down on a tech giant. So do you feel a sort of momentum going your way?
Well, we feel the momentum is that we have the facts in the law on our side. We brought a case that we believe was the right case to bring, and we made sure to prove that to a court, and we did that. We did that successfully. But we've had a number of successes, and so if you look at the back of our basebook card, you'll see a lot of wins of late, including in merger cases, including
on summary judgment motions, including on motions to dismiss. We've had a very significant run of success and I think that's because we're picking our cases carefully and we were litigating them skillfully.
So then do you think that the antitrust laws are flexible enough to address the tech giants that you have the.
Tools you need, the anti trust laws are flexible enough to address any company in today's modern markets. The anti trust laws have been able to stand the test of time because they address a principle that remains core to our free market system, which is that competition drives companies
do better. Competition drives prices down, competition drives wages up, competition drives companies to innovate, and so anti trust protects competition the competitive process, and that's something that continues to apply, and it continues to be central to one of the things that makes our economy so great and so powerful and so significant, not just in this country but world over. And so I do yes, I believe that's the case. Now. At the same time, there are always opportunities to clarify
the ani trust laws. The anti trust laws are written by Congress. We enforce them, we don't write them. And it's always the progative Congress to write new laws and to update laws. And we've weighed in, for example, in love of Congress on some updates relating to technology and competition and anti trust. But in the interim, at least until we see anything additional from Congress. Our job is to enforced law faithfully and when we believe it's meritorious.
Was there one moment at trial or one piece of evidence that you considered the most important?
So listen, these cases are not built on any one witness or any one document, right, good anti trust cases are built on a body of evidence and a wide
range of facts. But one of the things that I will point out that I think is significant and innovative is on the first day of trial, we put on the stand a behavioral scientist, and to my knowledge, this is the first time in the US government and an anti trust case has put on the standard behavioral scientists, somebody who is not talking necessarily about dollars and cents, but talking about how people in the real world react to real information, how people behave when they see something
on a screen. This is a new important area of science. It's a rigorous area of study that focuses on the realities of how users function in a world where we have screens, and we have prompts, and we have stimuli that may or may not cause us to behave certain ways. And I think, you know, consumers behave often in idiosyncratic ways that might not necessarily be rational according to a standard economic model, but nonetheless it happens because people are
again idiosyncratic, they're human. And I think that it was an important aspect of our case in USB Google, but it's an important aspect of our program going forward, which is to say that if we want to be relevant in a modern economy, we have to make sure that we are putting the expertise that we can bring to bear to understand not just how humans behave in theory, but how they.
Behave in practice.
So does that mean you'll be introducing that kind of evidence at other anti trust trials if.
It's relevant, if it helps us in a court understand how markets function and how consumers actually behave in the wild.
And absolutely well, thanks so much for joining me on the show. That's Jonathan Canter, Assistant Attorney General for the Department of Justice Antitrust Division, coming up next on the Bloomberg Law Show. The Eighth Circuit has blocked the Save program, a student loan repayment program that ties how much someone pays each month to their income, leaving eight million borrowers with more questions than answers. This is Bloomberg.
Starting a day.
We're canceling student debts for borrowers who are enrolled in the Save plan and have been paying student loans for as little as ten years. Back in February, President Joe Biden unveiled the Save program, a student loan repayment program that ties how much someone pays each month to their income. But the eight million borrowers currently enrolled in Save have endured up and down legal decisions on the program since June.
That's because two lawsuits filed by Republican states, one in Kansas and the other in Missouri, claimed that the Biden administration didn't have authority from Congress to enact the save plan, and on Friday, a panel of Republican judges on the Eighth Circuit blocked the plan. The borrowers already enrolled in the plan don't have to worry at this point because the Education Department is placing all the borrowers in an interest free forbearance while the Biden administration continues to defend
the plan in court. Joining me is constitutional law? Professor Harold Krant of the Chicago Kent College of Law. Why this continuing litigation over every Biden administration attempt to reduce student loan debt.
I think the courts are the opinion that the Biden administration is trying to circumvent the Supreme Court's decision limiting the range of options that the administration has to either forgive debts or to in essence, to practically limit the amount of payment that needs to be made on student loans.
And in the current case, which is technical but based upon this income contingent payment plan, the Biden administration altered threshold which payments can be lessened and they lessen the number of years which individuals would have to pay before the loans could be forgiven, and in essence, the amount that could be forgiven was very equivalent to the same amount that the Supreme Court struck down in the student loans case of last year. And so the courts there
was a split right now in the circuits. But some of the courts are saying, wait, the Supreme Court told you can't do that, and you basically tried to do it in another way, But the tools you use aren't going to clearly allow you, the administration to accomplish that goal. It seems to me, and indeed clearly from reading at least the most recently circuit decision, that the courts want to limit the flexibility of the administration has in order to limit student loan debt.
Just review for a moment for us the Supreme Court decision the parameters of it.
So the Supreme Court rule that a statutory directive to the Education Secretary basically to postpone or to minimize debt was not equivalent to cancelation, and so the cancelation that the administration tried to do did not fall within the terms of the statute. The statute wasn't clear enough, and the Court then use the kind of so called major questions presumption to say that if we aren't clear that Congress intended that an agency to make such a dramatic change,
we will read the statute narrowly. And so the Court said, no power to or give loans in that particular satutory scheme, which is slightly different than the one the administration tried to accomplish. Here, there wasn't income based repayment, but it was a contingent repayment system eliminitating the amounts that individuals would have to pay depending upon how much money they earned in the year, and their loans would be forgiven
after a period of time. So the question that the Court had to and the Supreme Court likely to rule on this is whether this is really similar to the first case, even though there's slightly different types of plans that basically no administration has ever used this plan to
such an extent. It has to an effect to forgive something like four hundred and fifty billion dollars, and that's not what Congress had mine by saying that the Secretary could decide the length of time and the terms upon which the contingent payments should be made to the administration.
And yes, there was an open ended delegation. But the question is whether the Supreme Court, if it decides the case, will say that the open ended delegation has to be read in context and meaning like twenty to fifteen years or two hundred and twenty five percent of above the poverty line versus two hundred and fifty percent above the
poverty line, and not make such a dramatic change. And what I think that this case reveals is a great administrative conundrum in that Congress often is flexibility to agencies because Congress doesn't know the details itself, and Congress doesn't know what kind of situation the agency will find itself in. And what's the court going to do then, with all of these open ended delegations, Well, piecemeal decide that agencies can't regulate under these open ended delegations when Congress itself
hasn't been more clear. And that's the issue that's going to I think, cut across court term after court term, because we simply are in a situation we don't know when Congress is allowed to get away with that kind of open ended delegation. And when it can't.
Just going back to the Supreme Court decision for a minute before we move forward, do you think that that was a decision where they knew what they wanted to accomplish and they just worked their way backwards to accomplish that, or do you think that was a fair reading of the statute because I believe that was a six to three decision right with the conservatives and the majority and the liberals and the minority.
Yeah, it was. And I think that the Supreme Court read into this idea of deference to agencies a limitation called a major questions limitation, and that is suggesting that if the agency does something unexpected or it seems to exercise more power than was intended, that's a reason to read the delegation narrowly. It's a way, according to the Court, to preserve majoritarian rule and limit the power of administrative agencies.
But fast forward, after the student loans decision, the Supreme Court held that this kind of Chevron difference or difference to agency's interpretation of statutes no longer exists as a
special function. So the question that is raised by the current Eighth Circuit decision is should this so called major questions limitation Should that be applied to a statute even when there is no question about deference to the agency's interpretation, because now it's the court responsibility to interpret the statute.
And so if the statute is open ended, shouldn't the Court read it in a fair way and make a determination that Congress intended a statue to be open ended and flexible, which would mean that they intended to give the agency the flexibility to do what the agency thinks
it needs to do. So one of the open ended questions left over the Supreme Court's term this year is whether this so called major questions limitations on delegated authority, should that still be a operative principle given that Chubron deference has been jettisoned. And I think this case illustrates it well because technically you may have a similar type of interpretive canon to use understanding what Congress means want
to give such broad delegations to the agencies. But it's not the major Questions doctor anymore, because that should have been thrown to the dustbin of history when the Court got rid of shock.
This is extremely conservative court, a panel of three Republican appointed judges, not a surprise since the Circuit only has one Democratic appointee. Explain their reasoning here.
Well, the first question was was there standing to challenge this new interpretation by the administration. I think the court correctly held that there was because the same kind of loan handler that had standing in the earlier Supreme Court case for Missouri was a plaintiff in this case as well. The theory is that if there's fewer loans to process, they will lose money. Not the best standing case, but the Supreme Court earlier said it meets the Article three threshold.
And then the question is what about this is an injunction case, so what's the likelihood of success? And they're the court, because of the statutory interpretation issue that we raised, held that they didn't believe Congress intended in this Contingent Repayment Plan delegation to the Secretary of Education, that Congress didn't intend for the Secretary to adjust the program so dramatically as to result in four hundred and fifty billion
dollars of forgiven loans. And so they said that it's at least a fair not for sure, but least that fair reading would be that Congress did not intend to delegate that much authoritiy agency. And then the third part of the decision is, well, what about the balance of hardships? And the court is mysterious as to the balance of hardships. It seems to say that there's no real hardship to the plaintiff from waiting till the Supreme Court takes the case.
The only harm that I think really discern from reading the decision is to the Eighth Circuit itself. The Court said that because the administration is doing a run around its earlier opinion, that itself constituted a harm. That's not a harm to the plaintiff, that's a harm to the self respect of the court. And so that to me was a real head scratcher. At the end of the opinion.
What kind of loan forgiveness plans are allowed under the Supreme Court decision? What kind are absolutely allowed?
Any So, yeah, sure, the administration is continuing to apply both in this case, the income contingent re payment plan is continuing to apply in the prior case, the income based repayment plan. There was slightly slightly different plans and
there's no problem with that. The question is how dramatically they can change the terms under which those student loan programs are administered so as to minimize the amount of and obviously the administration by tinkering with a number of years that someone has to pay on a contingent based program, or by changing at what level of income you want qualifies for these plans, it can make a huge impact upon how much repayment will be made across the board.
And so the issue isn't whether the administration can implement the programs. The issues whether the administration can make such changes to the programs as will dramatically change the amount of student debt that needs.
To be repaid. Coming up next on the Bloomberg Alaun Show, I'll continue this conversation with Professor Harold Krant to the Chicago Kent College of Law. There's a split in the circuits. Will the Supreme Court take this case? Student loan borrowers could get dizzy from all the sea sawing decisions by the courts. Just last Friday, a Biden administration debt relief plan that could cancel billions in student loans was halted
by a federal appeals court in Missouri. The Eighth Circuit granted a Republican led state coalition's request for the court to temporarily block the program while the US Education Department appeals al lower court ruling against the plan. I've been talking to constitutional law professor Harold Krant of the Chicago Kent College of Law. Is this a conservative liberal issue or is this a question of Republican judges not wanting Biden's forgiveness plan to go through.
I think the loan forgiveness programs really sort of reveals the sort of sea change we're having now about not trusting administrative agencies, because in these cases, the judges can see the impact of the Ministry of agency's actions so clearly. In the first case, the Supreme Court case, there was something like four hundred and fifty billion dollar estimate of the impact on the economy, and in this case, according to one estimate, the estimate was a four hundred and
seventy five billion impact on the economy. And the sea change then, is that the judge are saying, why should agencies be making decisions with such an impact on the economy.
Isn't that what Congress is for? And so they're finding ways to limit agency action when there's such a huge impact upon the economy and that stems from distrust of administrative agencies and theoretically from a greater insistence that Congresses do more than posture and actually make hard decisions and give clearer guidance to agencies.
So two different sets of Republican states brought lawsuits against the safe Plan arguing that the Biden administration didn't have authority from Congress to enact it, one filed in Kansas and one filed in Missouri. The Eighth Circuit, which handles Missouri, put the injunction in place, but the tenth Circuit, which handles Kansas, did not put an injunction in place, so
split in the circuits. Why bring these lawsuits in two different jurisdictions knowing that it could lead to conflicting decisions.
No, I think that the states often tried to file broad based actions against the administration in different jurisdictions in the hope that they will get at least one jurisdiction go their way, knowing that if they have one, then there's likely to be at least they split in the circuits, which would then elevate the case to the Supreme Court. And they of course have good reason to believe that if the case goes to the Supreme Court, the Supreme Court will be friendly to their side of the case.
So as a strategic matter, it makes a great deal of sense to me, and I would advise the Republican Attorney's General to do the same thing. Is not to bet on just one jurisdiction unless you're in the Eastern District of Texas the Western District detection storry, but instead to fly.
The District of Texas it goes to the Fifth Circuit, right.
Right, That's true to file in a variety of districts. I mean in this case they were somewhat limited, of course, because they had to find at least one plaintiff with conventional Article three standing. And that's why the mos every planeff was so critical in this particular case, but in other related cases. Again, as a strategy, it makes sense to a file and hope for the best, because if you get explored the circuits, then you have a much better chance of getting Supreme Court review.
Do you have one circuit, the eighth Circuit, putting the plan on hold, then you have the tenth Circuit saying it could go forward. I mean, the federal government is just going to follow what the Eighth Circuit said, or why couldn't the federal government just say, well, the Tenth Circuit said, it's okay.
If there are those issues. It has to do with the scope of the injunction that is placed. And in a circuit's context, the court issued a injunction that was quite broad, and so that really overlapped with the decision of the Tenth Circuit. So theoretically the Eighth Circuit can't, of course rebut what the Tenth Circuit has said, so that the administration could in fact apply different rules in different circuits. It doesn't like doing that because of the
ideal of uniformity. Theoretically, it's possible in those kinds of situations. That's happened many times in the past that different regulatory programs are ministered differently in different circuits. In this case, however, the Education Secretary said that they'll put everything on hold pending for the review. So I think that's probably a rational response and that the administration will join in asking for my guests is joined in asking for a plennary review by the Supreme Court.
Yeah, because student borrowers are just confused about all these different court decisions and there are all kinds of different loan forgiveness plans out there, and I'm sure it's mind boggling to try to figure out what's going on.
Yeah, there are a guide to the perplexed, and there are certain kinds of sites which try to give help to people. But even to understand the difference between the back forgiveness program as opposed to a contingent income program as in this case, it can be somewhat daunting for
the average student loan person to follow in there. So there are hotlines that have sprung up to give advice to students so they know which way to apply in order to either extend the amount of time they have to pay back or limit the amount of money that
has to be paid back each term. I'm sure there's some people that get tripped up, but I think the administration and some public interstcruture are doing a great job and trying to help students understand their rights, particularly in light of these conflicting of polic court decisions.
I know that it's daunting because I went on some of those websites today to try to see what was going on, and it's very confusing. I mean, it starts out with the safe program is on hold, but then talking about what you can do, so I feel sorry for anyone who's trying to find alternatives. So do you think that the Supreme Court would this split in the circuits, is going to almost have to take the case.
Yeah, I think it extremely alctly that the Supreme Court will take up the circuit. There's a lot of money at to take. There's confusion, as you mentioned, and obviously there's a split in the circuits, and that's a great recipe for a CIRT grant.
The Education Department is moving forward with a broader student loan forgiveness plan. It's going to send out emails about it. I mean, do you think it's time that they took a breath instead of going forward with these plans that seem to get stuck in the courts.
I mean, obviously the Education departments dot asked for my advice, but I think a pause is probably in order to allow the court to give parameters and just give some guidance in the next decision. But on the other hand, the Congress has given the Education Department of a wide variety of tools in terms of what kind of programs exist and what kind of turns to impose on these different student loan programs, and with how choices then students should make in order to limit the amount that they
have to pay back. And so the administration is trying to be aggressive in trying to help lift the burden of student debts upon so many people in our country. They're being aggressive. I mean, it's interesting how unaggressive they were at the beginning, right, and now they guess they've seen that they may only have six months left, they're being incredibly aggressive. Yeah, and what tends again, maybe I've missed something, But where is the irreparable harm here? The
court doesn't even really talk about it. It's so weird, right, That's one of the standard things in any kind of injunction situation is irreparable harm, and they're just really, isn't any because you know, before a final judgment can come up, there'll be a delay, sure, but that delay isn't going to cause the student loan processor or not going to even cause the taxpayer any kind of a reparable harm.
So it's a very I think politically motivated assessment of the standards of women in junction issue.
Well, I don't even know. I don't even think the standing is solid.
Well already held it.
I know they did, but I mean they were reaching. So they won't have as many loans to process.
Yeah, so, and they get paid for each loan that they process. That was the first decision.
Well, we'll see what happens next. Hel Thanks so much. That's Professor Harold Krent of the Chicago Kent College of Law. And that's it for this edition of the Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast, Slash Law, and remember to tune into The Bloomberg Law Show every
week night at ten pm Wall Street Time. I'm June Grosso, and you're listening to Bloomberg