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Welcome to Bloomberg Law on Bloomberg Radio. I'm Madison Mills in for June Grasso. Today we're talking about how a conservative supermajority is affecting the Supreme Court and reshaping the US as a result. Plus later in the show, three men convicted of acting as Chinese agents in New York City. We're going to talk about that and the latest congressional bill, target AI aims to work towards regulation, but is it
gonna work. We're gonna discuss all of that and more on the program, But first let's start with the highest court in the land, because the Supreme Court has had a strain of decisions that have tested the core principles of American democracy, leaving American citizens skeptical about the Court as a result. Here to discuss is Bloomberg New Supreme Court reporter, Greg's store. Greg, thanks so much for being with us as always, you've covered the Supreme Court for
a while. Talk to me about what you would say is the single biggest differentiating factor of this court versus the other Supreme courts.
That you've covered, well, Madison, it starts with that six 's three conservative majority that you mentioned, because that's what lets them do all the other things. And what we've seen as a court that has been pretty aggressive in asserting its own powers, sometimes taking them away from other branches, and really reshaping American law without seemingly worrying too much about what the public reacts.
Is And talk to me about that public reaction. How big of a shift would you say you've seen in terms of the public perception of the Supreme Court.
Yeah, the Court's public standing is at or near record lows, and that is driven primarily by really low approval ratings among Democrats and liberals, you know, it's what's causing that. You know, the polls don't necessarily show that, but certainly all these big divisive decisions, the abortion decision being the biggest one last year, but also all these ethics controversies
that we've had floating around. We've seen the Court's approval numbers dip since the revelations about Clarence Thomas a few months ago, and now, of course we're seeing some new ones involving Justice sam Alito.
Do we know which of those two is having more of an impact in terms of public perception. Is it the sentiment surrounding the decisions of the court or the personal ethics violations and allegations about those violations of individuals on the court that's driving public perception.
It's really hard to say, you know, if I'm guessing, and I'll just say this is a guest, just kind of based on looking at the numbers and when they shift, it's roughly equal parts both. Certainly, there are people who are already predisposed to be skeptical of the Court and what it's doing. And so maybe when somebody who doesn't like the Court's abortion decision then reads about luxury vacations
taken by Clarence Thomas. That's all the more reason for them to say, I don't approve of what the Court is doing. So in some ways the two issues sort of, you know, overlap with one with one another and kind of build on one another.
Well, also, we talked earlier, and as you said, it's this six ' three division of a conservative majority in the Court, but you know it's not technically supposed to be a political body, as you know very well, are we seeing that politicization of the Supreme Court getting more and more intense as the years go.
On, Yeah, very much so. And depending on which side you talked to, will start at a different point in describing how we got here, but certainly where we ended up is the six most conservative justices on the Court are all Republican appointees. The three most liberal are all Democratic appointees. If there's another vacancy that comes up, nobody will expect Joe Biden to nominate somebody who's anything other
than a liberal justice. And that's a dynamic we didn't used to have Back twenty years ago, there were Republican appointed justices whom we would describe as liberals because they turn out not to be exactly what the Republican Party was expecting when they were nominated, and going a little farther back, you could find Democratic appointed justices who were conservative on at least some issues, and that phenomenon just doesn't exist anymore.
So, given that, are we expecting or do you anticipate sort of changes to come in terms of how the makeup of the court is decided and just kind of the you know, tradition of the court in general. Do you see any changes to that happening.
It's really hard to see how we as a society get out of this particular box we're in. You know, we've you know, essentially now in a world where you know, Republicans are saying, for example, if if there's another vacancy when Joe Biden is president, if they are able to block confirmation in the in the Senate, they will do that. You know, Democrats of course have talked about adding seats to the court, but no indication there is the kind of political will you would need to make that happen.
And some of these justices, you know, of course, they have life tenures. So you know, the justices appointed by Donald Trump are all you know well south of sixty and conserve for several more decades.
Well, Greg, one thing that you also talk about in your story, which folks can find on Bloomberg dot com and on the terminal of course, about the aggressive Supreme Court reshaping the US is just the kind of growth of the power of the Supreme Court. Are there any decisions that the Court has made that you can talk to us about that have extended and expanded that power.
Yeah. The easiest place to think about this with with regard to is that phenomenon is regarding the EPA. So a series of decisions we have seen. The Court last year restricted the EPA's authority over climate change in terms of regulating emissions coming out of power plants. This term, the Court sharply curtailed the EPA's authority over to protect wetlands and took potentially tens of millions of wetlands out of out of the scope of the Clean Water Act.
And then next term the Court has a case that's a little more kind in the legal weeds, but is really important that they're considering overturning a precedent that has given agencies a certain amount of leeway when they interpret statutes and you know all told what that means is the agencies are able to do less than they were able to, and the Supreme Court now is more the final arbiter of what the agencies can and cannot do well.
And speaking of that power as well, it just feels like there's we're kind of in a different era and you talk about this in the story than we were when the Supreme Court was originated. You know, I think about the use of quill pens in the courtroom, for example, do you see any of those sort of I don't want to say smaller, but those little traditions changing over time to kind of at least indicate to the public that there is some evolution happening with the Supreme Court.
Well, this is a court that is very resistant to changing its long standing practices. Now one thing that has changed is, you know, arguments, which used to be it used to be the only people who could hear the arguments were the few hundred people who could pack into the courtroom. Now they live stream the arguments and that has you know, provided a certain amount of transparency now that they were sort of forced into that because of the realities of the pandemic when they were holding arguments
by phone. But they're still resisting other things that could make the court more transparent, for example, cameras in the courtroom. No indication that they're anywhere close to allowing that.
So what are the big questions that the Court is going to be answering this cycle that you can let us in on.
Yes, there are. There are several very big cases the Court's going to be deciding in the next week and a half or so. Perhaps the biggest one is one that could abolish the use of race in college admissions. The Court's being asked to overturn a couple precedents that that say universities can do that for the sake of
achieving campus to diversity. The Court is also considering striking down President Biden's student loan release policy, which would forgive at least in part, loans held by some forty million people. There's a big case involving the intersection of free speech rights and LGBTQ rights. There's a very big case involving
who gets to set the rules for federal elections. So it's going to be a very busy next week and a half and it will tell us a lot more about whether the Court wants to continue being as aggressive in the use of its powers as it has been in the past.
And really quickly here, Greg, what's next when it comes to the ethics questions of some of the Supreme Court justices.
Well, we had this new story from Republica about Justice Alito, and there's going to be a lot of fallout from that. They the report is that he took a fishing vacation with somebody who eventually had business before the Court. Didn't disclose that. There's give me a lot more talk about trying to impose a code of conduct on the Supreme Court.
All right, Greg, Well, thank you so much as always for joining us to break down all things the Supreme Court in the United States. That was Greg's store Bloomberg News reporter joining us from Washington as always to talk about the Supreme Court. Really important coverage from him and the rest of our DC team about the decisions to
come from the Supreme Court. As he was mentioning there, we've got student loans on the docket, affirmative actions, so a lot of really big questions that are going to be shaping the future of democracy in the US, and a lot of other factors there so really important to watch. Coming up, we're going to talk about the future of AI regulation in DC.
That's next.
I'm Madison Mills in for June Grasso on Bloomberg Law this week, and this is Bloomberg.
This is Bloomberg Law with June Grosso from Bloomberg Radio.
We're going to move from Washington up here to New York City because a retired NYPD sergeant and two others were convicted as agents of China. Those three men were also pressuring dissidents to return to China from the US as well. So here to discuss all of the details of this is Bloomberg News reporter Patricia Hurtado joining us by phone. Patricia, thank you so much for coming on the show. Just give me the lowdown here for those who haven't been familiar with this story.
What do we need to know?
Well, at Brooklyn federal jury heard a three week trial and deliberated for two days in a case that accused a retired NYPD police sergeant and two other men with acting as a legal agents of the Chinese government to pressure dissidents to return to China.
And what does this mean for those three men in terms of what's next for them? What happens?
Well, they all three faced substantial prison time. One of them, the former cop, faces at least twenty years and possible the twenty year prison term substantial time for anybody. And this was the first case to go to trial brought by the US government making these allegations, which are pretty
serious if you think about it. It's that the Chinese government sent operatives or had operatives acting on their behalf to pressure and induce former Chinese nationals who moved to the US and show up on their doorsteps and spy on them.
That's yeah, that's really interesting. Do we know any of the details of what that operation sort of looked like and anything else you can tell us about what would go on with that.
Well, the government has brought several cases and the Eastern District of New York, which includes neighborhoods include you know, Chinatowns in both Brooklyn Sunset Park as well as in Fleshing Queens. They have brought other cases involving activity they allege has been you know, people acting on behalf of the Chinese government, including enslaving people to build and do work on a house that was owned by an estate that was owned by the Chinese government. But this case
basically alleges that they people were being monitored. This former police sergeant was accused and the jury found that he access law enforcement databases to find out information about where these people lived and would show up and track their cars. And these people were getting messages and letters in their mail basically threatening them. So you know, the idea that there's this big brother is watching all the way from China is quite shocking to some some people, of course.
Yeah.
And this was called Operation fox Hunt by the Chinese government, is that correct?
Yes, yes, And it was basically the US government alleges that this with this initiative you know, hatched by the Chinese Ministry of Public Security, so they were basically they're also accused of even establishing a police and the legal police station in New York to basically, uh, you know, monitor people and and spy on them. And that was
according to direct case that was just filed in April. So, I mean, the allegations that these people were even hired a former cop who's not Asian to use his access to law enforcement databases, it's shocking, you know that.
Right, And that's former cop that's Michael McMahon.
Correct, that's correct, that's correct.
So to what extent is this news that we're talking about, Michael McMahon and the two other men convicted as agents of China? How connected, if at all, is that to the secret police station in New York City that others were arrested Regarding.
Well, that case, it's an out growth. It's also brought by several prosecutors in Brooklyn, and that case is basically an iteration of the similar activity. If you want to think about it, it's more possibly egregious activity, right, I don't know which ones do you think is worse? Having a private secret police station in Chinatown in Lower Manhattan or having people travel around and show up on doorsteps.
The testimony in this case, this most recent case that just got made, was they were showing up at the doorstep of this man, his wife and his daughter in New Jersey and showing up in the doorstep, and she was getting their family was getting mail, and at one point, one of the victims testify they got a letter that was basically suggesting that they would be better off committing suicide than staying in the US.
Oh my gosh, yeah, and talk to me about the victims, then did they go to the police and did they feel comfortable doing that? How did how did they kind of come forward?
The evidence did so that even China caused an inner Pole read notice to be filed with the International Police Group that said complained about on behalf of China that
these three people were wanted by China. So if you can imagine that your inner pol is looking for you, but it's all cooked up, that's wild, you know, to think eventually these the victims were reached, reached the law enforcement, the allegations reached law enforcement, and there's been a couple of cases you know, that have been brought by the US government under the Trump started under the Trump ad administration called the China Initiative, which is basically also brought
cases including alleging that the Chinese telecommunications giant called Huawei Technologies was also spying, but that was corporate espionage basically. So you know, it seems like all kinds of initiative. Let's not just go after the Chinese people. We believe our dissidents in the US running from controversy or is trying to escape controversy or oppression in China, but also let's operate in the US and spy on American technology.
So there's two cases that were brought, one of them in Seattle and one of them in Federal court in Brooklyn that's also pending as part of this China initiative. So you know, it's some of the cases have been very have been unsuccessful, and the US has had to
drop them. But you know, there's just seems like with the current situation of the status of the US China relations, which are chili you know, it has been frosty in the past, and certainly the China Initiative was an outgrowth of the Trump administrations that China was not to be trusted, right.
Well, you mentioned kind of the context here, and it's so important to note this is coming after you know, Blincoln has just been in Beijing and had a surprise meeting with Chinese President Shiji Pain thirty five minute meeting towards the end of his two day visit there, and Chinese officials sort of blasting the US after that meeting, kind of talking about the US tampering with its political promises on Taiwan again after that meeting, So that context is important.
And then of course from the Bloomberg side of things.
What we cover is the importance of the business impact when it comes to things like semiconductors and the chips race and the Chips war. Really, so that context is just uh making these making these interactions between the US and China even even more Chile as you mentioned, Patricia.
And you know, the one thing you can say is that while this initiative was underway, there were a lot of cases brought. And I think many of our readers would remember that Menglan Huts she was the CFO of Huawei. She's arrested at the request of the US on charges in Vancouver, Canada, and she fought the case vehemently from from the and was a Brooklyn federal case. So while the case against the company still pending, she was allowed
to go home after in a plea deal. But in meanwhile the China Initiative brought, and I should say the China Initiative which was pretty you know, uh hard iron fisted by the Trump administration. The DOJ now has scrapped the China Initiative. Under the Biden administration, many people felt that it was a little too hard, hard nosed on it.
So, yeah, lots to cover there. Patricia, thank you so much for joining us and talking.
It all through. We really appreciate it.
That was Patricia Hurtado, our Bloomberg News reporter on this story. Next up, we're talking AI regulations. To stick around. I'm Madison Mills and this is Bloomberg.
You're listening to Bloomberg Law with June Grasso from Bloomberg Radio.
It wouldn't be a Bloomberg show without us talking about artificial intelligence, and of course, with all the power of AI, you could say that comes with great responsibility. That's one reason we're hearing and seeing a lot of regulation questions popping up in Congress to try and hedge against any issues to come with AI. So here to discuss this with us is Bloomberg Intelligence analyst Matthew Schuttenhelm. Thank you so much for being with us. Matt really appreciate it.
I'm going to take a page out of Jay Powell's book from his comments in Congress today. He talked about how if you drive car, if you're driving somewhere, you might start off really fast and slow down a little bit once you're getting closer to your destination.
So not a big speeder.
J Powell when it comes to AI regulation, Are we just leaving the house for the road trip or are we Are we getting close to the destination?
Yeah?
I think we are. We're not even out of the house yet. Yeah, yeah, we're starting to get ready. And and you know, it's this is such a tough thing for Congress to take on because it's it's so new, and it's so technical, and and then it then once you know, down the road, it starts to become more political.
So Congress has struggled so much to regulate big tech, and now it has this whole new concept of this whole new big thing that it wants to go after, but it has very little concept right now of one the technology and to the problems that might come up. So so fashioning a regulatory regime to address that is is just a daunting problem for for Congress.
And you mentioned big tech.
How unique is it that AI executives and officials, the big movers in AI are kind of on board to work with Congress as compared with the big tech thing.
That we saw.
Yeah, I mean, they've definitely been a lot of resistance from big tech in terms of you know, resisting data privacy regulation. But you've also seen like companies like like Meta Facebook being you know, supportive of at least publicly, and so that that we've often seen that distinction said okay, regulate us, give us something, and even Congress couldn't, couldn't
do that. You're seeing that here as well, where where the companies are are are coming in and saying, look, we want to support, you know, a reasonable approach to using this technology. You as lawmakers should impose something reasonable. But then I think in behind the scenes, it's it's often a different story when when when regulators are starting to put together sort of aggressive regulation. I think you see a different tone from the companies as that plays out.
So talk to me about what some of the proposed legislation right now is looking like.
Yeah, so it's very early days right now, So I think so far we've seen I think two bipartisan bills introduced since the first hearing in the Senate last month, and one of those has to deal with Section two thirty, the liability shield that has been a big deal in big tech in terms of shielding companies from lawsuits, and lawmakers want to get out in front of that with AI and say, look, we don't want this liability shield to apply to AI. If people are harmed because of AI,
people should be able to sue over that. So that's the first bill that's sort of out of the gate. I don't know that that's a huge deal. I don't know that the courts are you going to be jumping into AI litigation really really fast, And even if they did, I'm not sure Section two thirty would would be much of a shield. I think there's a strong argument that Section two thirty shouldn't apply to AI, even without Congress
saying that in new legislation. And then the second bill that we're seeing right now is sort of I think something that might catch on, and it's the idea of proposing a commission of about twenty people from the industry, from privacy groups and things like that to slow down and take a look at this in a comprehensive manner and issue a couple reports over the next two years to say, Okay, what is it that AI can do, what should we be concerned about, and how should we
think about regulating it? And as you think through the difficulty of the problem, as we started talking about earlier, that might be Congress's best chance is sort of let's slow down, let's have some experts, you know, look at this, and after that commission does its work over a year or two, maybe Congress then is in a better position to adopt real regulations of things that matter.
Talk to me about Section two thirty again. You mentioned that AI maybe should not be.
Part of that. Why is that?
Yeah, so I think I think there's a pretty strong argument that Section two thirty shouldn't apply to AI. Section two thirty has played its most important role in saying that when when a user posts something on social media, the user is responsible for that post. You can't sue Meta or Google because they hosted the content that I posted. You know that was harmful, you can sue me. You
can't sue Meta or Google for that. And I think in the AI context it's not as clear that that would happen as often it's it's it's probably the case where the AI is putting is the speaker more than a third party. And so, especially with courts sort of reluctant to expand Section two thirty, they's sort of a
trend against that. I tend to think that if these cases start getting into the courts, the courts are going to be skeptical about extending the liability shield to AI anyway, and I think they're mostly going to hold the AI companies responsible. That doesn't mean the AA companies would lose those lawsuits. It just means they wouldn't have this extra shield on top to throw out the lawsuits right out of the gate.
Yeah, okay, that makes a lot of sense.
And then going over to like you mentioned the idea of the National AI Commission Act and Congress kind of bringing in twenty members to look at AI's risks. Just a curveball question that occurred to me here is you know, Congress got a lot of flak from inviting Sam Bankman freed to DC to advise them on what cryptoregulation could look like. Is there any potential threat of that or would this be a little bit different?
Yeah, so I think, you know, it's it's a tough one because I think the more that that Congress invites industry in to be a part of this conversation about regulation should look like, the more likely it's going to result in regulation that isn't all that disruptive to the industry, and so that and so it's it's this constant balance that that Congress has to do because if it if it ignores industry and says, well we got this, well we'll go do the regulation ourselves. They don't know how to.
They don't they don't really understand the technology enough to do it. So in my view, you know, you would open yourself up to more criticism as if you do this, But I think it might be the only way for Congress to get itself up to speed on this technology. Is is is at least in the preliminary stages, partnering with industry to some extent and trying to understand both you know, what what the good that can come of this, but also what are the risks that they should be
thinking about. I think Congress really needs to slow down and invite industry in to be a part of that conversation.
Yeah, it's such a good point because we've seen historically that it can be difficult for Congress to get a handle on some.
Of these absolutely these big tech shifts.
Yeah, I want to talk to you too about any headwinds this could cause for AI growth because you do sit on our Bloomberg Intelligence team as a litigation analyst. Should investors be worried about DC moves.
You know, I really wouldn't be overly concerned. I think this is going to be a hot topic for years to come, I think, And so you're going to what you're going to see is the constant barrage of headlines about, you know, what does this technology do and what should we be doing about it? And so we are literally one hearing in on Capitol Hill on this, you know, and there's going to be I think multiple This is going to be a regular part of the conversation and
that's not going to go away anytime soon. But what we've seen from the big tech effort, you know, the effort to impose data privacy legislation, and how that's just failed. And it's just very hard for Congress right now to reach consensus on this stuff. And Europe's moving ahead, and I think, you know, I think Europe's likely to move first on some of this stuff and and and the US, just like on on on GDPR and and and data privacy.
I think the US is probably going to be playing catch up a little bit there as Europe moves ahead. But in my view, just the difficulty of getting your head around this technology and the problems and then the politics overlaid on top of that. It's difficult to see Congress doing anything that would be really materially disruptive, and in part because they don't want to thwart this technology, you know, and drive it elsewhere.
Right right, It's a really good point.
Matt Shuttenhelm, Bloomberg Intelligence litigation analyst, thank you so much for joining us. Really important points there on the challenges and opportunities perhaps that come with regulating AI. But makes a lot of sense that Congress would not want to move too quickly.
There.
I'm Madison Mills, and this is Bloomberg.
You're listening to Bloomberg Law with June Grasso from Bloomberg Radio.
All right, we got to move over to Seattle now to talk about Amazon, because the FTC suing Amazon for making it difficult to cancel those Amazon Prime accounts. If you're like me, you got that account when you were in college and have had it ever since. So here to discuss the situation with US is Spencer Sober. He is, of course, our Amazon eBay expert based in Seattle for US. Spencer, thanks for hopping on the call. Talk me through this latest news from the FTC.
The FTC more broadly, is just trying to crack down in general on any of these kind of online subscriptions. You know, there's people get them for meals, for a variety of things, for movie tickets, and of course Amazon Prime, which people pay you know, one hundred and thirty nine dollars a year poor or fifteen dollars a month for and so what basically the gist of it is it should be as easy to cancel one of these things as it is to sign up, and there's often a
pretty significant difference. You know, Amazon makes it very simple to sign up for Prime. If you're not a Prime member and you're shopping on the site, they've bombarred you with suggestions would you like to join Prime and get free shipping and this and that and highlight all of
the benefits. But then if you decide you no longer want it, they send you into what's internally called like this iliad loop, you know, which refers to this Greek poem of the you know, the saga along the Trojan War, you know, and you have to go through screen after screen after screen trying to trying to cancel your membership. And so you know, this is part of a broader cre down around those practices, both a very high profile company.
Yeah, you never want your Amazon shopping experience to be remniscent of the Trojan war. I doubt that that's in the best interest of Amazon.
Here, talk me through.
This isn't the only FTC suit against Amazon, right now, talk me through some of the others.
Well, the FTC has been looking very broadly, cast a really wide net around all of the big tech companies, you know, Amazon, Google, Apple, Facebook in Amazon in particular. Things that they've been looking at is, you know, are they a monopoly you know, if you just you know, are they causing consumer harm by having too much control over online shopping in the in the US? And then other things like is Amazon Web Services monopoly? You know,
their cloud computing division. Do they squeeze their merchants? There's about two million merchants that sell things on Amazon. Are they squeezing them on fairly or using coercive tactics? So they're really looking at Amazon in a variety of ways.
Yeah, So where does this leave Amazon in terms of what they need to do next?
Here?
Because Amazon already changed its process for canceling prime subscriptions, right, So do. They just need to keep making changes to try and sort of pre adjust before any other issues come up from the FTC. What's their standing right now.
Yeah, they did a few months ago change the site to try to simplify it, and this was while the FTC investigation was going on. They were also they also faced action in the European Union for similar issue. So the European Union is generally a little bit ahead of the US in terms of cracking down on this kind of stuff. So yeah, they're going to try to tweak it. I mentioned with Amazon, they generally want to do just enough and not anymore to keep the regulators at day.
You know, we could see some kind of fine or settlement with the FTC where they make a payment, and it could even involve some sort of marginal rebate to consumers. You know. I mean it's like two thirds of US households belong to Amazon Prime, so they even if they did have some you know, staggering figure as a settlement, you know, every US consumer is going to maybe get a book or two.
Yeah, final thirty seconds here, Spencer. We've been talking a lot about subscriptions and the impact that they have on the stock price of these companies, particularly Netflix, coming to mind. Any chance of news like this impacting Amazon's share price or not so much.
It doesn't seem to have affected it. I mean, the bottom line is that it's very popular. And I've been covering Amazon a long time and I've rarely heard this complaint from consumers. They have a very high customer retention rate. A few people, I think, try to cancel because they're satisfied with the membership. It's something like more than ninety percent of all customers who try a free trial membership stay with it. There you go.
All right, Spencer, thank you so much for joining us and coming on to talk about the FTC lawsuit against Amazon.
We really appreciate. Again.
Really interesting to note because I mean, like Spencer was saying, I've never tried to cancel my Amazon membership, but some people do. All right, this is Bloomberg Law.
I'm Madison Mills, and this is Bloomberg