This is Bloomberg Law. Some complicated international law issues here. What kind of docket is Chief Justice Roberts facing interviews with prominent attorneys and Bloomberg legal experts. Joining me is Bloomberg New Supreme Court reporter Greg Store, Neil Devon's a professor at William and Mary Law School, and analysis of important legal issues cases and headlock. Is this essentially the fifth circuit haunting he has presided over a so called
hot bench at the Supreme Court. Bloomberg Law with June Grosso from Bloomberg Radio. Welcome to Bloomberg Law on Bloomberg Radio. I'm Joe Shorts, lived in for June Brosso. We begin with privacy and Google. What exactly is Google tracking? And when a lawsuit filed in claims incognito mode on the popular Google Chrome browser potentially is misleading users. The company says privacy disclosures make clear that private browsing mode doesn't
make activities invisible online. Now Alphabet Ceodchai will have to face hours of questioning in a California court. Joining us now is Bloomberg Industry Group reporter Andrea Vittorio. Her story in the terminal headline. Google's Sundarachai ordered to answer questions
about incognito mode. This is a California federal court correct tell us what's going on here, Andrew yes, m consumers have to Google over incognito mode, which is m a setting on their web browser Chrome where um people can turn it on to try and make their activity private. The lawsuit claims that it's not as private as people think it is. Google describes it as you know, when
you're incognito, you're not quite invisible online. But the idea is that other people who use your who share your device, wouldn't see your activity, but your activity online could still be visible to the websites that you visit. So there has been some consumer confusion about what this kind of private browsing actually means. When I'm on this particular well bred web browsing mode, I can just select this. And you're saying that the assumption is that most consumers as well.
Incognito means well, nobody knows I'm there, right yeah, that I can search whatever I want and it will be tracking me. But there is a sort of a splash stream that comes up when you turn on incovenati mode. And Google says that's where they just close to users that, um, this is what it actually means, and so they shouldn't be surprised that it's not quite as private as they think it is. But what the lawsuit is debating correct, Okay, so what's the problem here? Now? This lawsuit was filed
in June of what are they arguing? Basically that Google is breaking its privacy promises to consumers by tracking them more than they think they were. So there's some claims brought if they under like California law and like contract law. Um, just sort of challenging this practice. Talking with ANDREWA. Vittorio, reporter with the Bloomberg Industry Group, her story on the terminal Google's of Touch, I ordered to answer questions about
incognito mode. What type of information, uh, you know, is Google retaining here when folks are using this this Chrome browser. It seems like it would be anything that you type into your browser, basically like what you're searching, what websites are visiting. I think websites that are that have Google Analytics uh imbedded into them could also be collecting information um about like your shopping habits or whatever it is you're doing online. Google obviously didn't want to put up
their CEO. However, this federal court obviously disagreed UH speak to us about that controversy. There has been some back and force lately over the evidence gathering stage of this lawsuit. There's been a lot of internal Google documents that were shared with the lawyers for the Consumers, and they've been UM wanting to ask questions of some of the people
who UM are mentioned in the documents. And I think they've talked to some UH lower level Google employees already, but now they've started asking to move up the perfect hierarchy. And recently the Consumers lawyers got permission to question Google's chief marketing officer about Incongnito's branding and now UM just this week they got permission from the court to question
the CEO. M So, tell me what does that mean, what happens next, and how significant a legal victory is this Next the Consumers lawyers will get to sit down with the UM executives that they want to question and just have UM an opportunity to go beyond what they've learned from the documents so far, and this will create a written testimony that could then become part of the lawsuits. Mhm uh and basically, where do you see this going?
I mean, this is it feels like we've been debating this topic about you know, um privacy with with the you know these companies for a while. Now, UM, what is this latest turn tell us about what's going on here? I think it's another example of consumers who are having a hard time understanding privacy disclosures UM and trying to figure out what it means them practically. So there have
been a lot of lawsuits in this vein lately. They seem to end up in settlements if they may get past the early efforts by the company's to get rid of the lawsuits. So it seems like maybe we would be headed in that direction here. Yeah, okay, So do we know when the CEO will be subject to this questioning? And I guess in the same the same idea here,
um legally, what happens next? I'm not sure if there's a schedule for the questioning of the CEO, but they're still sort of in that phase of getting more information um for the lawsuit, and then I guess that will see into the judges next decision on where this case goes. Andrea Vittorio. She's a reporter with the Bloomberg Industry Group. We appreciate you taking time to join us today on the Bloomberg law Thank you for having me a headline
on the Bloomberg terminal. Activist Starboard discloses Go Daddy steak push us for changes. Story written by Bloomberg reporter Scott de Vot. Activists vestor Starboard Value disclosed a stake in a website services company, Go Daddy, Inc. And said it may push for changes to improve the stocks performance. The New York based hedge Funds had a regulatory filing that had held a six point five percent stake in the
technology company, which it believes is undervalued. Now. Starboard uh said in the filing that it may meet with management and the board is part of the investment to discuss ways to improve shareholder value, including potential board and operational changes, as well as business combinations. Representative for Go Daddy didn't
immediately respond to a quest for comment. Now shares and Go Daddy had fallen eight point two percent a year to date, giving the company's market valuation of roughly twelve point seven billion. It shares rows seven percent to eighty one dollars a share on Monday. Starboard has a history of pushing for changes at companies in the technology sector. To explore this a little bit further, we want to bring in an expert in the field. UH. This is
Kai leaka Fette. He is a partner in the law firm Siddeley Austin UH and he co chairs Sidley's shareholder activism practice. Thank you Kai for joining us. Uh. Let's start a little bit with what happened. Starboards a thirteen D filing, which means they're basically buying more than five percent of the equity here is noteworthy because the activist eight hundred million dollars is one of the largest stakes
that's ever taken. Are there any regulatory hurdles for an activist to clear when they take such a large position. That's a great question, and thanks for having me on your program, Joe. Yes, there are a number of regulatory hurdles for one activist to address when they take such a big stake. UH. The one one fighting regime is with the SEC and they're already cleared it by fighting a so called ski or thirt D. But you're required to file when you have a five percent or larger
stay in the public company. But they are also anti trust considerations. When an activist acquired a stake that is worth more than ninety two million dollars in the public company, they also need to make a filing. This um, this the FTC and the d o J commentator trust perspective to get cleared. M HM talking with kai Lecafette. He is a partner with Sidley Austin law firm in New York,
fifth largest in the country. All right, um, Now, one of the interesting things is that Starboard apparently gave the scoop to the media before filing U that d form. Are there any legal issues with that maneuver? It is.
It is a little bit of a gray area of the law, but that is something that activists do frequently, that they give a scoop to one media outlet, very often actually your very own Scott Devote from bloom Book, and only afterwards an hour later, thirty minutes later, or sometimes even five minutes later, they issued their press release
or makes the as you see filing. The SEC has not taken any any action against this kind of maneuver in the past, and I doubt that the SEC is focused on this, but it is interesting that activists like to do that. M Now, the stock traded up significantly
following the news. What is the significance of this stock price increase legally or otherwise, Well, it shows me that the activists probably did not give a hatch up to other arts and hatch funds investors, because if you have such a large right in the stock price following following the news, it means that no one else or few outside the activists knew beforehand that this would would would what happened. So from a legal perspective, it probably clears
the activists from any wrongdoing. Um. It is also interesting though that a lot of a lot of outside advisors wead more into the stock price increase when when an activists go public, a lot of a lot of outside observers fear that it's a stock price increases significantly that this is a core di validation of the activist thesis.
Un a little bit skeptical of that argument. For me, it just means that there are a lot of ups and hetch funds preing into the stock and they oftentimes just follow the name without any any larger investigation as to whether or not the activist thesis, which is not even publicly disclosed in our case, has any validity or not? And what are the typical next legal steps for were
the activists after filing this schedule d well. Typically activists start engaging with the public with the company privately, not in public, after they file a schedule thirt in d But at some point or another they have to make a decision whether they put up or shot up. That is um meaning whether or not they run a proxy contest to replace all or a portion of the board of the target company. And at most companies, there are certain deadlines to observe when making a step of running
a proxy contest. It's called the nomination deadline. The nomination deadline at most companies is somewhere between February and March, So that would be the next legal step in this kind of situation for an activist. H Ki Leakafet is our guest. He's a partner at Siddeley Austin in New York.
He also court or Siddley's Shareholder Activism a practice. Are there any illegal defenses a company can use against an activist after the filing of a schedule thirteen day that's a question I always get from clients, and many of my clients would like to take the activists to court, send them to jail, get them, beat them up. But the unfortunate trous is that they are a few legal
defenses that have an immediate effect against an activist. One of the defenses that a lot of companies explore is whether or not to adopt a so called poison pill. A poison pill, it's a legal instrument that allows a company to limit the maximum amount of shares any investor can buy. Typically that it's a ten or fifteen percent threshold of the outstanding shares. So that's something a company
can do. However, the poison piler, just as many other pills, has certain side effects, and the side effect of a poison pail as while the board can do that without share old or approval, a lot of shareholders view poison pods relatively negatively and tend to vote against the incumbent board unless the board can demonstrate a very good justification for the adoption of the poison fill. So it is
a legal maneuver that is sometimes used. Sometimes it makes sense to use it, but in a lot of cases, the the the disadvantages at weigh outweigh the advantages of the mm hmmm. A final question for me, so, how do you size up this activist investor, Starboard value and the actions they took as it relates to Go Daddy. Well, I cannot speak to Go Daddy, but generally speaking, uh, Starboard is one of the most well known activist investors, either the number one of the number two activist investors
in the world. They have a lot of credibility in the market. They a a lot of capital at the disposal. They have very sophisticated advisers, so when they decide to go public against the company, it's typically it's typically a sign of confidence on their end that they got it right. K Kaylee Kaffett, he is a partner, said Lee Austin there in New York City. Appreciate you taking time and joining us on Bloomberg Law. Thank you for having me. 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 Podcast, Spotify, and on www dot Bloomberg dot com, slash podcast Slash Law, and remember to tune into The Bloomberg Law Show every night at ten pm Wall Street Time. The show is produced by Eric Mallow for Bloomberg Radio. I'm Joe Shortsley. Thank you for listening and remember the tune into the next edition of Bloomberg Law right here on Bloomberg Radio b