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<v Speaker 1>You're listenings KFI AM six forty the Bill Handles show

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<v Speaker 1>on demand on the iHeartRadio f KFI AM six Forday

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<v Speaker 1>on a Tuesday morning, April fifteenth. And one of the

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<v Speaker 1>big stories that we're going to be looking at and

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<v Speaker 1>certainly over the next few days is this lawsuit the

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<v Speaker 1>FTC has filed against Meta, and but for the tariff story,

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<v Speaker 1>this thing would have exploded literally across the world. This

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<v Speaker 1>is so important. Mike Dubuski, who is ABC News Technology reporter,

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<v Speaker 1>is with us. Mike, first of all, thank you for

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<v Speaker 1>being with us as you do occasionally. Hey, let's get

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<v Speaker 1>into this thing and talk about why, what and what

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<v Speaker 1>the outcomes may be.

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<v Speaker 2>Yeah, so let's start with the what. This is a

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<v Speaker 2>case that sees its origin all the way back in

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<v Speaker 2>twenty twenty. We've been talking about this question of whether

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<v Speaker 2>Facebook now Meta is a monopoly in the world of

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<v Speaker 2>social media for about five years now. This started under

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<v Speaker 2>the first Trump administration. The case was transferred over to

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<v Speaker 2>the FTC under the Biden administration, and now it is

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<v Speaker 2>finally going to trial after some filings and some refilings,

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<v Speaker 2>and it has been a long process, but now we

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<v Speaker 2>are finally seeing representatives from Meta. Mark Zuckerberg is testifying today.

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<v Speaker 2>He also testified yesterday and from the FTC from the

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<v Speaker 2>federal government appearing in court arguing over some key questions.

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<v Speaker 2>Mainly this goes back to the acquisition of Instagram in

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<v Speaker 2>twenty twelve and the acquisition of WhatsApp in twenty fourteen.

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<v Speaker 2>This was before the company was called Meta, it was

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<v Speaker 2>called Facebook back then. It the government is alleging here

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<v Speaker 2>that those acquisitions were made not because Facebook was trying

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<v Speaker 2>to innovate technologically. They weren't trying to become more competitive. Rather,

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<v Speaker 2>they were trying to squash out the competition, and this,

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<v Speaker 2>the FTC says is a violation of the eighteen ninety

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<v Speaker 2>Sherman Anti tich Trust Act. Now, Bill, I know that

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<v Speaker 2>you're very familiar with the eighteen ninety Sherman Anti Trust Act,

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<v Speaker 2>but for just listeners who are not, it states that

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<v Speaker 2>it is illegal to maintain a monopoly by using anti

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<v Speaker 2>competitive practices, and those practices in this case amount to

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<v Speaker 2>buying up worthy competitors in the marketplace basically just to

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<v Speaker 2>take them off the playing field.

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<v Speaker 1>Okay, so one quick question. The argument's going to be,

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<v Speaker 1>they did it to create a monopoly the defense. If

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<v Speaker 1>I'm a defense attorney representing Meta, I'm going to say, hey,

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<v Speaker 1>I bought this or we bought this just as a

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<v Speaker 1>business investment because we figured this was going to make

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<v Speaker 1>buckets of money, which, of course it turned out. I mean,

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<v Speaker 1>when you look at the price that was paid, which

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<v Speaker 1>was astronomical, both of these purchases were the bargain of

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<v Speaker 1>the year for Meta, and so to show that this

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<v Speaker 1>was the intent that they were going to monopolize, I

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<v Speaker 1>don't know how easy that it's going to be, but

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<v Speaker 1>the facto, if it turned out it does monopolize, does

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<v Speaker 1>the government have a much stronger case. Yeah.

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<v Speaker 2>So you've outlined Meta's defense here pretty much to a tee,

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<v Speaker 2>and you're absolutely right to identify that these were major

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<v Speaker 2>deals at the time that have only proven to be

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<v Speaker 2>even more lucrative for Meta. Now in twenty twenty five

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<v Speaker 2>and twenty twelve, when Meta acquired Instagram, they did it

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<v Speaker 2>for about a billion dollars or about fifty employees at

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<v Speaker 2>that company. Now Instagram rakes in multiples of that every

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<v Speaker 2>year for the company WhatsApp they acquired in twenty fourteen

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<v Speaker 2>for nineteen billion dollars. That has also taken out over,

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<v Speaker 2>specifically in foreign markets where it's used as sort of

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<v Speaker 2>like the de facto default messaging tool for many people.

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<v Speaker 2>Meta basically says that the government is punishing them for

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<v Speaker 2>being successful right. They made these acquisitions not because they

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<v Speaker 2>were trying to stamp out competition, but rather because they

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<v Speaker 2>thought it would make them more competitive in an increasingly

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<v Speaker 2>competitive and crowded social media space. They say that these

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<v Speaker 2>were shrewd business to decisions. At the end of the day,

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<v Speaker 2>and for what it's worth, Meta says they face a

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<v Speaker 2>lot of competition. In a statement before this trial all

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<v Speaker 2>kicked off, the company says that they will present evidence

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<v Speaker 2>that will show what every seventeen year old in the

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<v Speaker 2>world knows that Instagram, Facebook, and WhatsApp compete with the

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<v Speaker 2>likes of TikTok, YouTube, x imassage, and many others. They

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<v Speaker 2>also brought up companies that you might not think of

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<v Speaker 2>as social media companies, but they say definitely are competitors here.

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<v Speaker 2>Things like Reddit, things like LinkedIn, things like Pinterest. Meta

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<v Speaker 2>basically wants the market definition to be very broad, because

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<v Speaker 2>the more companies there are, the less likely they are

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<v Speaker 2>to be saddled with the moniker of monopolist. The government,

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<v Speaker 2>on the other hand, wants the market definition to be

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<v Speaker 2>very narrow. They say that there are only three companies

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<v Speaker 2>in this particular space that they're talking about within the

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<v Speaker 2>remit of this case. There's Meta, which they say controls

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<v Speaker 2>eighty percent of the usership that is available to them.

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<v Speaker 2>They say Snapchat is a competitor, and they say, excuse

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<v Speaker 2>me that my Wii, which is a or excuse me

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<v Speaker 2>me Wi which is a self described privacy first social

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<v Speaker 2>media network that on its website claims to have over

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<v Speaker 2>twenty million users worldwide. Right, it makes sense that the

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<v Speaker 2>government would want this to be a small market, and

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<v Speaker 2>that makes it easier for them to claim that that

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<v Speaker 2>Meta is dominant in that market. But clearly Meta has

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<v Speaker 2>a different definition.

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<v Speaker 1>So I have a question regarding market share. Google has

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<v Speaker 1>what eighty percent, seventy eighty percent of the browser world

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<v Speaker 1>market if I'm not mistaken, certainly in this country, and

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<v Speaker 1>tell me if I'm wrong on this one, and if

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<v Speaker 1>it does have an overwhelming presence, why isn't it being attacked?

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<v Speaker 1>Maybe it is, I'm not aware of it. And then

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<v Speaker 1>of course the argument is do you break it up?

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<v Speaker 1>How do you break up a single company. The Meta

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<v Speaker 1>is easy. WhatsApp, Instagram, you sell off. But the Google issue,

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<v Speaker 1>if you can go to that, and then I'm going

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<v Speaker 1>to come back after the break and talk about how

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<v Speaker 1>big a deal this actually is. Did he answer the

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<v Speaker 1>Google question. Yes.

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<v Speaker 2>It's interesting that you bring up Google because last year

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<v Speaker 2>they faced a major anti trust challenge from the Department

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<v Speaker 2>of Justice and a judge ruled that they, yes, were

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<v Speaker 2>operating an illegal monopoly in the world of online search.

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<v Speaker 2>That they basically did the same thing that the FTC

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<v Speaker 2>is accusing Meta of doing, using their billions, using their

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<v Speaker 2>market power not to make a better product for consumers,

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<v Speaker 2>but rather to muscle out competition, and as a result,

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<v Speaker 2>their product has calcified on the vine. It has become

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<v Speaker 2>worse for consumers, and that's not what our antitrust law

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<v Speaker 2>is set up to do. The prosecutors here in the

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<v Speaker 2>Meta case want to basically make that same argument that

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<v Speaker 2>Meta is getting rid of competitors. They're using their market

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<v Speaker 2>power to muscle out these smaller companies, and as a result,

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<v Speaker 2>their products have gotten worse, and that's worse for the

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<v Speaker 2>American consumer at the end of it.

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<v Speaker 1>Okay, so let's gives and worst case scenarios, Mike, what

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<v Speaker 1>is going to happen or may happen.

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<v Speaker 2>So the worst case scenario is what the FTC is

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<v Speaker 2>advocating for, which is a breakup of Meta. They want

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<v Speaker 2>the company to spin off Instagram and WhatsApp into their

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<v Speaker 2>own discrete apps, sell them to somebody else. They say

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<v Speaker 2>that's the only remedy to this monopoly that exists in

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<v Speaker 2>the social media space. If that happens, Bill that would

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<v Speaker 2>radically reshape Meta, no doubt.

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<v Speaker 1>Right.

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<v Speaker 2>This company obviously got it start with Facebook, but with

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<v Speaker 2>the acquisition of both Instagram and WhatsApp, we've seen those

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<v Speaker 2>two apps sort of supersed Facebook in terms of cultural

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<v Speaker 2>influence and growth. Right. They rake in billions of dollars

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<v Speaker 2>from those apps every single year. It would also flip

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<v Speaker 2>the conventional playbook in Silicon Valley on its head. And

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<v Speaker 2>I think this is pretty interesting, right If I am

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<v Speaker 2>the owner of a startup in Silicon Valley, generally speaking,

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<v Speaker 2>it's not my goal to make a company that competes

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<v Speaker 2>with Google or Meta or Apple or Tesla. That would

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<v Speaker 2>be great, but that's really hard, and those companies have

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<v Speaker 2>billions of dollars to throw around and teams of lawyers

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<v Speaker 2>that are trying to make sure that that doesn't happen. Rather,

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<v Speaker 2>I want to build a small startup that gets acquired

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<v Speaker 2>by those companies to the tune of many billions of dollars.

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<v Speaker 2>But if the government starts breaking up these tech companies

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<v Speaker 2>as they have been advocating to do, not just in

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<v Speaker 2>this case, but in the Google case that we talked

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<v Speaker 2>about a few minutes ago. Also, the FTC has a

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<v Speaker 2>complaint filed against Amazon over similar concerns. Well, that Calculus

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<v Speaker 2>could really change in Silicon Valley, and that means that

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<v Speaker 2>everyday users experience is going to change. Not just is

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<v Speaker 2>Instagram and WhatsApp going to be under the beck and

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<v Speaker 2>call of a different company, maybe with different ideas about

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<v Speaker 2>what those apps should be. But also we might see

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<v Speaker 2>more variety in our social media space as Meta kind

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<v Speaker 2>of takes a backseat to newer competitors who are emboldened

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<v Speaker 2>and to compete with these companies that are seemingly on

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<v Speaker 2>their back feet. Now, the best case scenario for Meta

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<v Speaker 2>is that this all goes away. Right CEO Mark Zuckerberg

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<v Speaker 2>and President Trump have had a contentious relationship in the

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<v Speaker 2>last few years. In fact, at one point the President

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<v Speaker 2>even threatened to throw Mark Zuckerberg in in jail if

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<v Speaker 2>his platforms contributed to an election loss. That of course

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<v Speaker 2>didn't happen. But more recently, Mark Zuckerberg has been making

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<v Speaker 2>overtures to the Trump administration, donating a million dollars to

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<v Speaker 2>Trump's inauguration fund a few months ago, rolling back policies

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<v Speaker 2>that conservatives have criticized, namely getting rid of fact checkers

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<v Speaker 2>earlier this year. Will that be enough to incentivize the

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<v Speaker 2>Trump administration to maybe get the FTC to lay off

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<v Speaker 2>a little bit or soften their case to a degree,

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<v Speaker 2>maybe even accept a settlement from Meta, which they say

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<v Speaker 2>they are open to making. That is something that you

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<v Speaker 2>can imagine a lot of Silicon Valley is going to

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<v Speaker 2>be paying close attention to over the next six to

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<v Speaker 2>eight weeks or so.

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<v Speaker 1>These companies we're talking about, Amazon, Instagram, Meta are all

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<v Speaker 1>American companies other than TikTok. Are there any foreign based

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<v Speaker 1>companies or anywhere near that level.

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<v Speaker 2>TikTok is the big one, and Meta has highlighted them

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<v Speaker 2>specifically in their defense in this case, saying, hey, if

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<v Speaker 2>you break us up, if you weaken our standing in

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<v Speaker 2>the market, well that opens.

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<v Speaker 1>Up the world here for more.

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<v Speaker 2>Chinese apps like TikTok to spread influence. Right, they kind

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<v Speaker 2>of go back to the concerns that lawmakers have raised

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<v Speaker 2>about TikTok that they could be used to spread pro

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<v Speaker 2>China messaging or to spy on American users and what

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<v Speaker 2>have you. So they kind of need their market power

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<v Speaker 2>in order to fight back against that. That's the argument

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<v Speaker 2>that Meta is making. Whether a judge will go for that,

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<v Speaker 2>I think is an open question. The judge in this

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<v Speaker 2>particular case is James Bosberg, who, if you follow politics,

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<v Speaker 2>should be a film hiliar name of late. But he

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<v Speaker 2>has to ultimate decide whether the government is making a

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<v Speaker 2>good enough case. He has indicated that they have a

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<v Speaker 2>pretty steep hill to climb before this trial got underway.

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<v Speaker 2>Despite the fact that the FTCs has emails that Mark

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<v Speaker 2>Zuckerberg sent in twenty twelve and the lead up to

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<v Speaker 2>the acquisition of Instagram saying that he was trying to

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<v Speaker 2>neutralize a competitor by acquiring that company, it does seem

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<v Speaker 2>like there's some challenges for the government here. For one,

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<v Speaker 2>they have to parse out the intentions of tech executives

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<v Speaker 2>from more than a decade ago. That's really difficult. Also,

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<v Speaker 2>the environment for social media was really different back then,

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<v Speaker 2>and they also have to prove the hypothetical right that

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<v Speaker 2>the world where Facebook didn't acquire these companies would have

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<v Speaker 2>been a better world for the consumer, the average social

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<v Speaker 2>media user. That's just not the world we live in, right,

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<v Speaker 2>We don't live in that timeline, meaning that they have

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<v Speaker 2>to prove that with evidence, despite the fact that it's

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<v Speaker 2>a hypothetical scenario.

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<v Speaker 1>That's going to be a really prove How do you

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<v Speaker 1>prove a negative which becomes almost impossible. Mike, thank you.

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<v Speaker 1>You put a very interesting explanation of all this made

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<v Speaker 1>it much easier for us to understand. We'll talk again.

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<v Speaker 2>Great sounds good.

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<v Speaker 1>To take care, Mike Debusky, ABC News Technology reporter. Guy

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<v Speaker 1>really knows this stuff all right now? Spring break, I

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<v Speaker 1>don't know. I was never a spring break guy, Neil.

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<v Speaker 1>Did you ever take a spring break? Were you one

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<v Speaker 1>of those people like to have, Yeah, like Florida or

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<v Speaker 1>any of that. No, I didn't. I never did it either.

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<v Speaker 1>I never did Amy.

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<v Speaker 2>Did you?

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<v Speaker 1>Oh, yeah, you were a spring breaker? Huh oh oh.

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<v Speaker 3>I didn't go to Florida, but we we definitely did,

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<v Speaker 3>you know, Lake Shasta, Rent and house boats and stuff

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<v Speaker 3>like that.

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<v Speaker 1>Oh wow, yeah, you were in the in crowd. I

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<v Speaker 1>never was, so no surprise there. Here's what's going on,

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<v Speaker 1>and I love this is there's you've heard of helicopter parenting,

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<v Speaker 1>of course, and that is not changing. I'm going to

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<v Speaker 1>tell you about a company which I looked at and

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<v Speaker 1>I thought that was so terrific because it says a

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<v Speaker 1>lot about the world of parent and kids. It's a

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<v Speaker 1>company called grad City. It opened up in two thousand

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<v Speaker 1>and eight. It's been around for a while, and it

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<v Speaker 1>organizes spring break trips for high school seniors. Now I'm

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<v Speaker 1>assuming Amy, you did it all on your own. There

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<v Speaker 1>was no organization, just a bunch of you got together

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<v Speaker 1>and decided to go out and party.

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<v Speaker 3>Yeah, but this was college. I'm trying to think if

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<v Speaker 3>we did anything for spring break. I think we just

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<v Speaker 3>hung out and skated on spring break.

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<v Speaker 1>Yeah. No, this is high school. So yeah, I didn't

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<v Speaker 1>do much well whatever, but students do. And so grad

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<v Speaker 1>City just did a trip twelve hundred guests from fourteen

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<v Speaker 1>Michigan high schools and students sleep forward to a room

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<v Speaker 1>and guess who else comes along? Parents? Parents are joining

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<v Speaker 1>their kids for spring break effectively saying we'll let you

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<v Speaker 1>go for spring bak, but you're not going by yourself. Pass. Yeah, well,

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<v Speaker 1>let me tell you, twelve hundred students went for to room.

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<v Speaker 1>Now the parents stay at the adults only section of

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<v Speaker 1>the resort they rented or hotels near and by schools

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<v Speaker 1>are not involved themselves. This is a spring break. But

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<v Speaker 1>this part of the spring break industry, if you will,

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<v Speaker 1>where parents are getting involved, is happening more and more.

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<v Speaker 1>And what does that tell you about parenting today? One

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<v Speaker 1>that there's more helicopter parenting, parents being much more involved too,

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<v Speaker 1>students clearly doing a lot more drugs, having a lot

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<v Speaker 1>more sex, bringing home incredible amount of venereal disease, coming

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<v Speaker 1>home dripping wet without any water, without any rain. That

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<v Speaker 1>is completely disgusting and it is simply just not the

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<v Speaker 1>same as it used to be. So amy back to you, okay,

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<v Speaker 1>I mean you're not going to let your parents go

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<v Speaker 1>obviously during college or not. But typically what you do

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<v Speaker 1>You run a house boat, you say in a bunch

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<v Speaker 1>of you go swimming, sure and get drunk, and.

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<v Speaker 3>Yeah, yeah, we do that kind of thing, or we'd

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<v Speaker 3>go to the coast or whatever. But we had organized

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<v Speaker 3>spring break things not as big as Florida.

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<v Speaker 1>How that used to be. Oh, yeah, that's great. Well,

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<v Speaker 1>you know they what they've done in Florida. I mean

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<v Speaker 1>they've made basically a fire zone area where they bring

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<v Speaker 1>in not only the cops with the fire departments and

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<v Speaker 1>everybody watching out, and they're just they're shutting it down.

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<v Speaker 1>It's zero tolerance. You show up with drugs, or you

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<v Speaker 1>show up with any kind of bad acting. If you will,

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<v Speaker 1>you're done.

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<v Speaker 4>Can you imagine Amy King drunk? Yeah, and she's sitting

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<v Speaker 4>around with all her friends and yeah, she's like, wait

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<v Speaker 4>a second, yeah I will. Yeah, Mini has a dress

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<v Speaker 4>he has as Donald Pooh tigger naked.

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<v Speaker 3>That's not what we're talking about.

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<v Speaker 1>No, that's not what we're talking about.

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<v Speaker 2>Oh.

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<v Speaker 1>I just wanted to point that out. That was kind

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<v Speaker 1>of neat Grad City. I mean, I just love business,

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<v Speaker 1>but I never thought that they would be in the

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<v Speaker 1>business of catering to not only students but parents.

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<v Speaker 3>Well, and it's different today than it used to be.

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<v Speaker 3>Like I would have never hung out with my parents

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<v Speaker 3>when I was my senior year and stuff, But now,

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<v Speaker 3>like my friends who have kids, that's what they do.

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<v Speaker 3>They love spending time with their kids where and the

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<v Speaker 3>kids want to spend time with them different.

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<v Speaker 1>Than you want to. My kids want to spend time

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<v Speaker 1>with me. They love it, well, actually they love the

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<v Speaker 1>credit card. The second that the credit card is done,

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<v Speaker 1>they're done. And they've made that very very clear.

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<v Speaker 4>I'd rather be with Max and Tracy than do anything else. Huh,

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<v Speaker 4>I'd rather do it. I'd rather do anything else than

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<v Speaker 4>be with my kids. All right, fair enough, we're done

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<v Speaker 4>with that. We're done with that now.

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<v Speaker 1>As you can imagine, the lawp is getting sued big

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<v Speaker 1>time because of the Palisades fire, and the argument is

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<v Speaker 1>is that the utility didn't provide enough water to fight

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<v Speaker 1>the Palisades fire. All right, there was that reservoir that

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<v Speaker 1>was empty for a year, and it was three million

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<v Speaker 1>gallons and it could have done a lot to save

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<v Speaker 1>parts of the Palisades. We don't know, no idea, but

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<v Speaker 1>the lawsuit's going to continue. Now. What are the defenses. Well,

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<v Speaker 1>one of the defenses is the fire was too big.

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<v Speaker 1>Nothing could have saved those houses. You could have had

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<v Speaker 1>a thirty million gallon water reservoir and nothing would have

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<v Speaker 1>saved those houses. Okay, that's one defense. How about this one,

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<v Speaker 1>there's one hundred and fourteen year old court ruling that

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<v Speaker 1>says that a utility cannot be sued if it doesn't

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<v Speaker 1>have a contract in fact to supply the resources. Here's

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<v Speaker 1>what dwpsa LADWPS saying, since the LADWP doesn't have a

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<v Speaker 1>contract to provide water for a fire, therefore it can't

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<v Speaker 1>be sued. Wait a minute, by the way, this is

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<v Speaker 1>a big attorney for Amongertoles and Olson in LA that's

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<v Speaker 1>defending the city and the lawsuits blaming the utility for

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<v Speaker 1>running out of water to fight the blaze. The attorneys

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<v Speaker 1>are arguing there was no contract to provide water for

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<v Speaker 1>the blaze, only to provide water for your normal drinking water,

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<v Speaker 1>your normal use. And that actually that was a case

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<v Speaker 1>that happened one hundred and fourteen years ago. If you

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<v Speaker 1>can imagine, this was a case in which there was

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<v Speaker 1>a man who had was a utility customer. Utility wouldn't

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<v Speaker 1>pay the bill, they cut off the water, and he sued,

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<v Speaker 1>and the at that point, the utility said, we don't

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<v Speaker 1>have a contract anymore, we have no duty to this guy.

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<v Speaker 1>And that's exactly what they're saying here. We don't have

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<v Speaker 1>a duty. We don't have a contract to provide water

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<v Speaker 1>for fire suppression. Of course, as you can imagine, the

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<v Speaker 1>plantiffs are going crazy saying, oh no, no, this is

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<v Speaker 1>all there's We're going to distinguish it away. It makes

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<v Speaker 1>no sense, but it's just kind of fun. Well, it's

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<v Speaker 1>fun when you're talking about multi, multi billions of dollars

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<v Speaker 1>of damages. And if you're an LEDWP customer and the

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<v Speaker 1>losses happened, be prepared for big, big increase in water rates.

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<v Speaker 1>All right, we're done, guys coming up, Gary and Shannon.

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<v Speaker 1>I'm taking phone calls off the air and i'll start

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<v Speaker 1>in just a moment eight seven seven five to two

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<v Speaker 1>zero eleven fifty. Handle on the law, marginal legal advice

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<v Speaker 1>eight seven seven five to two zero eleven fifty. And

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<v Speaker 1>there are no breaks. We don't do news or commercials

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<v Speaker 1>or anything. So I go through them very very quickly

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<v Speaker 1>as you can imagine, and no patience. You know that

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<v Speaker 1>by now, All right, tomorrow morning we start all over again.

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<v Speaker 1>Amy and Will are here for wake up call. Neil

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<v Speaker 1>and I join from six to nine, and you've got

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<v Speaker 1>Kno and n also part of the group. To a

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<v Speaker 1>very minor extent. This is KFI AM six forty you've

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<v Speaker 1>been listening to the Bill Handle Show. Catch my Show

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<v Speaker 1>Monday through Friday, six am to nine am, and anytime

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<v Speaker 1>on demand on the iHeartRadio app