Speaker 1: You're listenings KFI AM six forty the Bill Handles show
Speaker 1: on demand on the iHeartRadio f KFI AM six Forday
Speaker 1: on a Tuesday morning, April fifteenth. And one of the
Speaker 1: big stories that we're going to be looking at and
Speaker 1: certainly over the next few days is this lawsuit the
Speaker 1: FTC has filed against Meta, and but for the tariff story,
Speaker 1: this thing would have exploded literally across the world. This
Speaker 1: is so important. Mike Dubuski, who is ABC News Technology reporter,
Speaker 1: is with us. Mike, first of all, thank you for
Speaker 1: being with us as you do occasionally. Hey, let's get
Speaker 1: into this thing and talk about why, what and what
Speaker 1: the outcomes may be.
Speaker 2: Yeah, so let's start with the what. This is a
Speaker 2: case that sees its origin all the way back in
Speaker 2: twenty twenty. We've been talking about this question of whether
Speaker 2: Facebook now Meta is a monopoly in the world of
Speaker 2: social media for about five years now. This started under
Speaker 2: the first Trump administration. The case was transferred over to
Speaker 2: the FTC under the Biden administration, and now it is
Speaker 2: finally going to trial after some filings and some refilings,
Speaker 2: and it has been a long process, but now we
Speaker 2: are finally seeing representatives from Meta. Mark Zuckerberg is testifying today.
Speaker 2: He also testified yesterday and from the FTC from the
Speaker 2: federal government appearing in court arguing over some key questions.
Speaker 2: Mainly this goes back to the acquisition of Instagram in
Speaker 2: twenty twelve and the acquisition of WhatsApp in twenty fourteen.
Speaker 2: This was before the company was called Meta, it was
Speaker 2: called Facebook back then. It the government is alleging here
Speaker 2: that those acquisitions were made not because Facebook was trying
Speaker 2: to innovate technologically. They weren't trying to become more competitive. Rather,
Speaker 2: they were trying to squash out the competition, and this,
Speaker 2: the FTC says is a violation of the eighteen ninety
Speaker 2: Sherman Anti tich Trust Act. Now, Bill, I know that
Speaker 2: you're very familiar with the eighteen ninety Sherman Anti Trust Act,
Speaker 2: but for just listeners who are not, it states that
Speaker 2: it is illegal to maintain a monopoly by using anti
Speaker 2: competitive practices, and those practices in this case amount to
Speaker 2: buying up worthy competitors in the marketplace basically just to
Speaker 2: take them off the playing field.
Speaker 1: Okay, so one quick question. The argument's going to be,
Speaker 1: they did it to create a monopoly the defense. If
Speaker 1: I'm a defense attorney representing Meta, I'm going to say, hey,
Speaker 1: I bought this or we bought this just as a
Speaker 1: business investment because we figured this was going to make
Speaker 1: buckets of money, which, of course it turned out. I mean,
Speaker 1: when you look at the price that was paid, which
Speaker 1: was astronomical, both of these purchases were the bargain of
Speaker 1: the year for Meta, and so to show that this
Speaker 1: was the intent that they were going to monopolize, I
Speaker 1: don't know how easy that it's going to be, but
Speaker 1: the facto, if it turned out it does monopolize, does
Speaker 1: the government have a much stronger case. Yeah.
Speaker 2: So you've outlined Meta's defense here pretty much to a tee,
Speaker 2: and you're absolutely right to identify that these were major
Speaker 2: deals at the time that have only proven to be
Speaker 2: even more lucrative for Meta. Now in twenty twenty five
Speaker 2: and twenty twelve, when Meta acquired Instagram, they did it
Speaker 2: for about a billion dollars or about fifty employees at
Speaker 2: that company. Now Instagram rakes in multiples of that every
Speaker 2: year for the company WhatsApp they acquired in twenty fourteen
Speaker 2: for nineteen billion dollars. That has also taken out over,
Speaker 2: specifically in foreign markets where it's used as sort of
Speaker 2: like the de facto default messaging tool for many people.
Speaker 2: Meta basically says that the government is punishing them for
Speaker 2: being successful right. They made these acquisitions not because they
Speaker 2: were trying to stamp out competition, but rather because they
Speaker 2: thought it would make them more competitive in an increasingly
Speaker 2: competitive and crowded social media space. They say that these
Speaker 2: were shrewd business to decisions. At the end of the day,
Speaker 2: and for what it's worth, Meta says they face a
Speaker 2: lot of competition. In a statement before this trial all
Speaker 2: kicked off, the company says that they will present evidence
Speaker 2: that will show what every seventeen year old in the
Speaker 2: world knows that Instagram, Facebook, and WhatsApp compete with the
Speaker 2: likes of TikTok, YouTube, x imassage, and many others. They
Speaker 2: also brought up companies that you might not think of
Speaker 2: as social media companies, but they say definitely are competitors here.
Speaker 2: Things like Reddit, things like LinkedIn, things like Pinterest. Meta
Speaker 2: basically wants the market definition to be very broad, because
Speaker 2: the more companies there are, the less likely they are
Speaker 2: to be saddled with the moniker of monopolist. The government,
Speaker 2: on the other hand, wants the market definition to be
Speaker 2: very narrow. They say that there are only three companies
Speaker 2: in this particular space that they're talking about within the
Speaker 2: remit of this case. There's Meta, which they say controls
Speaker 2: eighty percent of the usership that is available to them.
Speaker 2: They say Snapchat is a competitor, and they say, excuse
Speaker 2: me that my Wii, which is a or excuse me
Speaker 2: me Wi which is a self described privacy first social
Speaker 2: media network that on its website claims to have over
Speaker 2: twenty million users worldwide. Right, it makes sense that the
Speaker 2: government would want this to be a small market, and
Speaker 2: that makes it easier for them to claim that that
Speaker 2: Meta is dominant in that market. But clearly Meta has
Speaker 2: a different definition.
Speaker 1: So I have a question regarding market share. Google has
Speaker 1: what eighty percent, seventy eighty percent of the browser world
Speaker 1: market if I'm not mistaken, certainly in this country, and
Speaker 1: tell me if I'm wrong on this one, and if
Speaker 1: it does have an overwhelming presence, why isn't it being attacked?
Speaker 1: Maybe it is, I'm not aware of it. And then
Speaker 1: of course the argument is do you break it up?
Speaker 1: How do you break up a single company. The Meta
Speaker 1: is easy. WhatsApp, Instagram, you sell off. But the Google issue,
Speaker 1: if you can go to that, and then I'm going
Speaker 1: to come back after the break and talk about how
Speaker 1: big a deal this actually is. Did he answer the
Speaker 1: Google question. Yes.
Speaker 2: It's interesting that you bring up Google because last year
Speaker 2: they faced a major anti trust challenge from the Department
Speaker 2: of Justice and a judge ruled that they, yes, were
Speaker 2: operating an illegal monopoly in the world of online search.
Speaker 2: That they basically did the same thing that the FTC
Speaker 2: is accusing Meta of doing, using their billions, using their
Speaker 2: market power not to make a better product for consumers,
Speaker 2: but rather to muscle out competition, and as a result,
Speaker 2: their product has calcified on the vine. It has become
Speaker 2: worse for consumers, and that's not what our antitrust law
Speaker 2: is set up to do. The prosecutors here in the
Speaker 2: Meta case want to basically make that same argument that
Speaker 2: Meta is getting rid of competitors. They're using their market
Speaker 2: power to muscle out these smaller companies, and as a result,
Speaker 2: their products have gotten worse, and that's worse for the
Speaker 2: American consumer at the end of it.
Speaker 1: Okay, so let's gives and worst case scenarios, Mike, what
Speaker 1: is going to happen or may happen.
Speaker 2: So the worst case scenario is what the FTC is
Speaker 2: advocating for, which is a breakup of Meta. They want
Speaker 2: the company to spin off Instagram and WhatsApp into their
Speaker 2: own discrete apps, sell them to somebody else. They say
Speaker 2: that's the only remedy to this monopoly that exists in
Speaker 2: the social media space. If that happens, Bill that would
Speaker 2: radically reshape Meta, no doubt.
Speaker 1: Right.
Speaker 2: This company obviously got it start with Facebook, but with
Speaker 2: the acquisition of both Instagram and WhatsApp, we've seen those
Speaker 2: two apps sort of supersed Facebook in terms of cultural
Speaker 2: influence and growth. Right. They rake in billions of dollars
Speaker 2: from those apps every single year. It would also flip
Speaker 2: the conventional playbook in Silicon Valley on its head. And
Speaker 2: I think this is pretty interesting, right If I am
Speaker 2: the owner of a startup in Silicon Valley, generally speaking,
Speaker 2: it's not my goal to make a company that competes
Speaker 2: with Google or Meta or Apple or Tesla. That would
Speaker 2: be great, but that's really hard, and those companies have
Speaker 2: billions of dollars to throw around and teams of lawyers
Speaker 2: that are trying to make sure that that doesn't happen. Rather,
Speaker 2: I want to build a small startup that gets acquired
Speaker 2: by those companies to the tune of many billions of dollars.
Speaker 2: But if the government starts breaking up these tech companies
Speaker 2: as they have been advocating to do, not just in
Speaker 2: this case, but in the Google case that we talked
Speaker 2: about a few minutes ago. Also, the FTC has a
Speaker 2: complaint filed against Amazon over similar concerns. Well, that Calculus
Speaker 2: could really change in Silicon Valley, and that means that
Speaker 2: everyday users experience is going to change. Not just is
Speaker 2: Instagram and WhatsApp going to be under the beck and
Speaker 2: call of a different company, maybe with different ideas about
Speaker 2: what those apps should be. But also we might see
Speaker 2: more variety in our social media space as Meta kind
Speaker 2: of takes a backseat to newer competitors who are emboldened
Speaker 2: and to compete with these companies that are seemingly on
Speaker 2: their back feet. Now, the best case scenario for Meta
Speaker 2: is that this all goes away. Right CEO Mark Zuckerberg
Speaker 2: and President Trump have had a contentious relationship in the
Speaker 2: last few years. In fact, at one point the President
Speaker 2: even threatened to throw Mark Zuckerberg in in jail if
Speaker 2: his platforms contributed to an election loss. That of course
Speaker 2: didn't happen. But more recently, Mark Zuckerberg has been making
Speaker 2: overtures to the Trump administration, donating a million dollars to
Speaker 2: Trump's inauguration fund a few months ago, rolling back policies
Speaker 2: that conservatives have criticized, namely getting rid of fact checkers
Speaker 2: earlier this year. Will that be enough to incentivize the
Speaker 2: Trump administration to maybe get the FTC to lay off
Speaker 2: a little bit or soften their case to a degree,
Speaker 2: maybe even accept a settlement from Meta, which they say
Speaker 2: they are open to making. That is something that you
Speaker 2: can imagine a lot of Silicon Valley is going to
Speaker 2: be paying close attention to over the next six to
Speaker 2: eight weeks or so.
Speaker 1: These companies we're talking about, Amazon, Instagram, Meta are all
Speaker 1: American companies other than TikTok. Are there any foreign based
Speaker 1: companies or anywhere near that level.
Speaker 2: TikTok is the big one, and Meta has highlighted them
Speaker 2: specifically in their defense in this case, saying, hey, if
Speaker 2: you break us up, if you weaken our standing in
Speaker 2: the market, well that opens.
Speaker 1: Up the world here for more.
Speaker 2: Chinese apps like TikTok to spread influence. Right, they kind
Speaker 2: of go back to the concerns that lawmakers have raised
Speaker 2: about TikTok that they could be used to spread pro
Speaker 2: China messaging or to spy on American users and what
Speaker 2: have you. So they kind of need their market power
Speaker 2: in order to fight back against that. That's the argument
Speaker 2: that Meta is making. Whether a judge will go for that,
Speaker 2: I think is an open question. The judge in this
Speaker 2: particular case is James Bosberg, who, if you follow politics,
Speaker 2: should be a film hiliar name of late. But he
Speaker 2: has to ultimate decide whether the government is making a
Speaker 2: good enough case. He has indicated that they have a
Speaker 2: pretty steep hill to climb before this trial got underway.
Speaker 2: Despite the fact that the FTCs has emails that Mark
Speaker 2: Zuckerberg sent in twenty twelve and the lead up to
Speaker 2: the acquisition of Instagram saying that he was trying to
Speaker 2: neutralize a competitor by acquiring that company, it does seem
Speaker 2: like there's some challenges for the government here. For one,
Speaker 2: they have to parse out the intentions of tech executives
Speaker 2: from more than a decade ago. That's really difficult. Also,
Speaker 2: the environment for social media was really different back then,
Speaker 2: and they also have to prove the hypothetical right that
Speaker 2: the world where Facebook didn't acquire these companies would have
Speaker 2: been a better world for the consumer, the average social
Speaker 2: media user. That's just not the world we live in, right,
Speaker 2: We don't live in that timeline, meaning that they have
Speaker 2: to prove that with evidence, despite the fact that it's
Speaker 2: a hypothetical scenario.
Speaker 1: That's going to be a really prove How do you
Speaker 1: prove a negative which becomes almost impossible. Mike, thank you.
Speaker 1: You put a very interesting explanation of all this made
Speaker 1: it much easier for us to understand. We'll talk again.
Speaker 2: Great sounds good.
Speaker 1: To take care, Mike Debusky, ABC News Technology reporter. Guy
Speaker 1: really knows this stuff all right now? Spring break, I
Speaker 1: don't know. I was never a spring break guy, Neil.
Speaker 1: Did you ever take a spring break? Were you one
Speaker 1: of those people like to have, Yeah, like Florida or
Speaker 1: any of that. No, I didn't. I never did it either.
Speaker 1: I never did Amy.
Speaker 2: Did you?
Speaker 1: Oh, yeah, you were a spring breaker? Huh oh oh.
Speaker 3: I didn't go to Florida, but we we definitely did,
Speaker 3: you know, Lake Shasta, Rent and house boats and stuff
Speaker 3: like that.
Speaker 1: Oh wow, yeah, you were in the in crowd. I
Speaker 1: never was, so no surprise there. Here's what's going on,
Speaker 1: and I love this is there's you've heard of helicopter parenting,
Speaker 1: of course, and that is not changing. I'm going to
Speaker 1: tell you about a company which I looked at and
Speaker 1: I thought that was so terrific because it says a
Speaker 1: lot about the world of parent and kids. It's a
Speaker 1: company called grad City. It opened up in two thousand
Speaker 1: and eight. It's been around for a while, and it
Speaker 1: organizes spring break trips for high school seniors. Now I'm
Speaker 1: assuming Amy, you did it all on your own. There
Speaker 1: was no organization, just a bunch of you got together
Speaker 1: and decided to go out and party.
Speaker 3: Yeah, but this was college. I'm trying to think if
Speaker 3: we did anything for spring break. I think we just
Speaker 3: hung out and skated on spring break.
Speaker 1: Yeah. No, this is high school. So yeah, I didn't
Speaker 1: do much well whatever, but students do. And so grad
Speaker 1: City just did a trip twelve hundred guests from fourteen
Speaker 1: Michigan high schools and students sleep forward to a room
Speaker 1: and guess who else comes along? Parents? Parents are joining
Speaker 1: their kids for spring break effectively saying we'll let you
Speaker 1: go for spring bak, but you're not going by yourself. Pass. Yeah, well,
Speaker 1: let me tell you, twelve hundred students went for to room.
Speaker 1: Now the parents stay at the adults only section of
Speaker 1: the resort they rented or hotels near and by schools
Speaker 1: are not involved themselves. This is a spring break. But
Speaker 1: this part of the spring break industry, if you will,
Speaker 1: where parents are getting involved, is happening more and more.
Speaker 1: And what does that tell you about parenting today? One
Speaker 1: that there's more helicopter parenting, parents being much more involved too,
Speaker 1: students clearly doing a lot more drugs, having a lot
Speaker 1: more sex, bringing home incredible amount of venereal disease, coming
Speaker 1: home dripping wet without any water, without any rain. That
Speaker 1: is completely disgusting and it is simply just not the
Speaker 1: same as it used to be. So amy back to you, okay,
Speaker 1: I mean you're not going to let your parents go
Speaker 1: obviously during college or not. But typically what you do
Speaker 1: You run a house boat, you say in a bunch
Speaker 1: of you go swimming, sure and get drunk, and.
Speaker 3: Yeah, yeah, we do that kind of thing, or we'd
Speaker 3: go to the coast or whatever. But we had organized
Speaker 3: spring break things not as big as Florida.
Speaker 1: How that used to be. Oh, yeah, that's great. Well,
Speaker 1: you know they what they've done in Florida. I mean
Speaker 1: they've made basically a fire zone area where they bring
Speaker 1: in not only the cops with the fire departments and
Speaker 1: everybody watching out, and they're just they're shutting it down.
Speaker 1: It's zero tolerance. You show up with drugs, or you
Speaker 1: show up with any kind of bad acting. If you will,
Speaker 1: you're done.
Speaker 4: Can you imagine Amy King drunk? Yeah, and she's sitting
Speaker 4: around with all her friends and yeah, she's like, wait
Speaker 4: a second, yeah I will. Yeah, Mini has a dress
Speaker 4: he has as Donald Pooh tigger naked.
Speaker 3: That's not what we're talking about.
Speaker 1: No, that's not what we're talking about.
Speaker 2: Oh.
Speaker 1: I just wanted to point that out. That was kind
Speaker 1: of neat Grad City. I mean, I just love business,
Speaker 1: but I never thought that they would be in the
Speaker 1: business of catering to not only students but parents.
Speaker 3: Well, and it's different today than it used to be.
Speaker 3: Like I would have never hung out with my parents
Speaker 3: when I was my senior year and stuff, But now,
Speaker 3: like my friends who have kids, that's what they do.
Speaker 3: They love spending time with their kids where and the
Speaker 3: kids want to spend time with them different.
Speaker 1: Than you want to. My kids want to spend time
Speaker 1: with me. They love it, well, actually they love the
Speaker 1: credit card. The second that the credit card is done,
Speaker 1: they're done. And they've made that very very clear.
Speaker 4: I'd rather be with Max and Tracy than do anything else. Huh,
Speaker 4: I'd rather do it. I'd rather do anything else than
Speaker 4: be with my kids. All right, fair enough, we're done
Speaker 4: with that. We're done with that now.
Speaker 1: As you can imagine, the lawp is getting sued big
Speaker 1: time because of the Palisades fire, and the argument is
Speaker 1: is that the utility didn't provide enough water to fight
Speaker 1: the Palisades fire. All right, there was that reservoir that
Speaker 1: was empty for a year, and it was three million
Speaker 1: gallons and it could have done a lot to save
Speaker 1: parts of the Palisades. We don't know, no idea, but
Speaker 1: the lawsuit's going to continue. Now. What are the defenses. Well,
Speaker 1: one of the defenses is the fire was too big.
Speaker 1: Nothing could have saved those houses. You could have had
Speaker 1: a thirty million gallon water reservoir and nothing would have
Speaker 1: saved those houses. Okay, that's one defense. How about this one,
Speaker 1: there's one hundred and fourteen year old court ruling that
Speaker 1: says that a utility cannot be sued if it doesn't
Speaker 1: have a contract in fact to supply the resources. Here's
Speaker 1: what dwpsa LADWPS saying, since the LADWP doesn't have a
Speaker 1: contract to provide water for a fire, therefore it can't
Speaker 1: be sued. Wait a minute, by the way, this is
Speaker 1: a big attorney for Amongertoles and Olson in LA that's
Speaker 1: defending the city and the lawsuits blaming the utility for
Speaker 1: running out of water to fight the blaze. The attorneys
Speaker 1: are arguing there was no contract to provide water for
Speaker 1: the blaze, only to provide water for your normal drinking water,
Speaker 1: your normal use. And that actually that was a case
Speaker 1: that happened one hundred and fourteen years ago. If you
Speaker 1: can imagine, this was a case in which there was
Speaker 1: a man who had was a utility customer. Utility wouldn't
Speaker 1: pay the bill, they cut off the water, and he sued,
Speaker 1: and the at that point, the utility said, we don't
Speaker 1: have a contract anymore, we have no duty to this guy.
Speaker 1: And that's exactly what they're saying here. We don't have
Speaker 1: a duty. We don't have a contract to provide water
Speaker 1: for fire suppression. Of course, as you can imagine, the
Speaker 1: plantiffs are going crazy saying, oh no, no, this is
Speaker 1: all there's We're going to distinguish it away. It makes
Speaker 1: no sense, but it's just kind of fun. Well, it's
Speaker 1: fun when you're talking about multi, multi billions of dollars
Speaker 1: of damages. And if you're an LEDWP customer and the
Speaker 1: losses happened, be prepared for big, big increase in water rates.
Speaker 1: All right, we're done, guys coming up, Gary and Shannon.
Speaker 1: I'm taking phone calls off the air and i'll start
Speaker 1: in just a moment eight seven seven five to two
Speaker 1: zero eleven fifty. Handle on the law, marginal legal advice
Speaker 1: eight seven seven five to two zero eleven fifty. And
Speaker 1: there are no breaks. We don't do news or commercials
Speaker 1: or anything. So I go through them very very quickly
Speaker 1: as you can imagine, and no patience. You know that
Speaker 1: by now, All right, tomorrow morning we start all over again.
Speaker 1: Amy and Will are here for wake up call. Neil
Speaker 1: and I join from six to nine, and you've got
Speaker 1: Kno and n also part of the group. To a
Speaker 1: very minor extent. This is KFI AM six forty you've
Speaker 1: been listening to the Bill Handle Show. Catch my Show
Speaker 1: Monday through Friday, six am to nine am, and anytime
Speaker 1: on demand on the iHeartRadio app