Amazon, Google Probed by FTC Over Search Advertising Practices

0:00I don't love the word retirement because I think it has negative baggage. I like the word financial independence. If you were to be financial independent, like how would you spend your time? I think that's a better way to think about the end of life stage versus quote unquote retirement.

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0:52Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.

1:14Scarlet Fu:Bloomberg Audio Studios. Podcasts. Radio. News. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. There was a headline today about how Amazon and Google are being probed by the Federal Trade Commission on their search advertising practices. This is according to Bloomberg reporting, citing people who are familiar with the matter. So we need to bring in Justin Teresi. He is the antitrust litigation and policy analyst here for us at Bloomberg Intelligence.

1:56Scarlet Fu:Justin, just walk us through what these headlines mean to you when you look at it through your antitrust lens. Hi, Scarlett. Happy Friday to you. So interestingly enough here, this case, it really looks like more of a consumer protection investigation, not an antitrust kind of investigation. So what I mean by that here is that we're really looking at the pricing and the terms that perhaps were set forth by Amazon and by Google in their workings with advertisers and whether or not that pricing and those terms was misleading in any way. So a different kind of series of facts here from what we're seeing in the antitrust cases around advertising with a big one coming up in about a week.

2:34The Remedies trial in the Google Ad Tech case starts in Virginia very soon. More risk there, if you ask me. But this one here really focused on those pricing policies, it looks like, at those companies. And the remedies here are probably nowhere near the kind of breakup risk that we would see in a more antitrust-aligned case. That's what I was going to ask, Justin, is whether or not this bolsters the case to break up these tech giants. I also want to make clear that these allegations are now different from what both Google and Amazon are facing. they're facing trials this month, right, with separate lawsuits brought by federal agencies.

3:12Yep, that's right. So you hit the nail on the head there, too. This is really more related to search issues and search advertising, which interestingly enough, that's what we just had that huge remedies ruling on in the Google search case, right? And in that case, there was a lot of discussion in the remedies about increasing transparency and pricing for the text-based search ads right so what could actually say a lot of those remedies are already on their way to being implemented as part of that ruling number one number two yeah absolutely the Google case that's pending that's about open web advertising on on websites that you know little ads you see when you might go to Bloomberg dot com or CNN dot com for example that pop up on the side separate apart from search ads and then the Amazon trial coming up this month that's about Amazon Prime terms right and whether or not there is misleading kind of behavior and how that was sold to consumers.

4:02Scarlet Fu:We should note that the FTC and Google declined to comment on our reporting and Amazon did not respond to requests for comment. So, Justin, when you look at all of this, what does this mean in terms of how much of an overhang this will be for the companies? Is this something that's going to be a month-long investigation or months-long, maybe years-long investigation? Right. I think the latter, definitely, Scarlett. So, I think just now, And great reporting, by the way, as usual, by our colleagues, Leah Nyland and Josh Sisko over at Bloomberg News. But I would say, you know, we're really early on here, I think, is the story, if they're just starting to look into these allegations.

4:40These things can take years, absolutely, to pan out. A lot of times there's no case that's even broad at the end of them. It's really about ascertaining the facts, figuring out what, if anything, happened, and moving on from there. So I don't think we'll see any more announcements from the FTC about how this is proceeding either. Typically, all of this is confidential. So as it moves forward, we may or may not see updates that come out, you know, in different ways about the case. But it's a long term risk. Absolutely. Is this just another example, though, of how the Trump administration is dealing with with big tech, do you think, Justin?

5:15Yeah, you know, I find this a little interesting, too, right? So I think, you know, you look back to the AI action plan that came out earlier in the summer. And, you know, in that plan language, the White House said, hey, FTC, stay away from investigations that might inhibit the growth of AI in any way. So that leads me to believe, you know, are we looking to areas like advertising as a carve out from that messaging? Right. Are we looking to different areas of tech there? There might be a problem that falls out of that ambit of A.I. But it seems like, you know, there is that whiplash, right, where the White House might have one statement on things.

5:50And there might be a visit to the White House, right, by certain CEOs on the other hand. But then you said they have to see file pursuing an investigation like this. So there certainly is a back and forth. But I would say if it doesn't fall within the ambit of AI, there still is a possibility and some risk that things could be subject to investigations.

6:07Scarlet Fu:OK, so very much moving goalposts and a TBD kind of scenario. Justin, you and Jennifer Rhee, who is our senior litigation analyst, have also done some research on Live Nation and how its dominance in events is at risk because of a lawsuit. And this is a lawsuit that is scheduled to lead to an antitrust jury trial that will begin, I think, in the first quarter. Just walk us through what we need to know there. Yeah, so I'll defer to Jennifer on the nuts and bolts of that particular case. She's been following from the start. She's really been knee-deep in that litigation. But what I will say is that it's not just the courts we're looking at here from the aspect of ticketing, right?

6:46Really recently, we've seen legislation introduced at the federal and state levels where we're looking at the secondary marketplace for ticketing, too. and what's happening there. Things like increased price transparency for consumers when they're going through that ticket purchasing process, a whole host of issues there, but perhaps capping the fees that are allowed on the secondary sale of tickets. So there's a lot happening in that particular area. You're right. There is a monopolization suit that proceeds next spring, and I think that's going to be a really bet the company kind of litigation in many ways for Live Nation.

7:16But there also is this kind of political risk that's out there too, really more focused, I would say, on those secondary resale ticket, ticket resellers. You know what? I'm curious. So have consumers really felt the difference yet when it comes to ticketing and pricing regarding Live Nation? I mean, I know they're sort of embroiled in a lot of a lot of lawsuits, actually. Sure. I'd say probably not yet. Right. I think we saw some activity around a class action case just really recently there. But, you know, the FTC's rule mandating these price transparency issues for consumers when they're in that kind of ticket purchasing process, That just went into effect a few months ago.

7:50Right. So really, it's a trickle out, trickle down here, a slow moving kind of issue here with with politics and with litigation. And of course, you know, we haven't even gotten to the liability phase yet of that Live Nation trial, much less remedies that would be imposed if there were a finding of liability in that case. Right. So I think we're at the beginning of a lot of activity, but certainly no no real outcomes are developing just yet.

8:12Scarlet Fu:I mean, I'm a very imperfect example of, you know, what you see when you actually try to buy tickets. But I've noticed when I do try to buy tickets on secondary markets, there's a lot more text about how this is, you know, every single fee included. So we're not going to add anything more to your final price tag. And that's something that's only really started to roll out, I would say, in the last couple of months. Yep, you're right. And that's the FTC rule right there in play, right? You're seeing that with ticketing applications. We're also seeing that in kind of travel websites as well, right?

8:42Where you kind of get to the checkout page and wait a minute, there's all these fees for things like baggage that maybe you didn't know about up front when you saw the fare. So that's kind of how those are rolling out there too. And I'd say to your point, that's really the impact we've had so far on the consumer, more likely yet to come.

8:57Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. I don't love the word retirement because I think it has negative baggage. I like the word financial independence. If you were to be financial independent, like how would you spend your time? And that's exactly what a lot of my clients talk about. And the term they'll use is a work optional lifestyle. I agree, like the next gen, millennials and below are not thinking about retirement. We're thinking about let's find something that we enjoy, that we can have financial independence. I think that's a better way to think about the end of life stage versus quote unquote retirement.

9:32Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options, from on-trend apparel and premium drinkware to tech, totes, and giveaways, so you can find the right fit for any audience, purpose, or budget. You can customize it all, your logo, your message, your look, and many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point so you can make a real impact while staying on budget.

10:05Plus, you'll get expert help, fast turnaround times, and their 360-degree guarantee. So you can be 4imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today at 4imprint.com. 4imprint. 4certain. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf.

10:42Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market.

11:21Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures.

11:37Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Lots of news in tech. Adobe's earnings beat OpenAI closer to becoming a for-profit company. I want to break some of this down now with Anurag Rana, Bloomberg Intelligence Technology Analyst, coming to us from our Chicago Bureau. So, Anurag, let's break down Adobe first, because I know it was sort of the stepchild of the AI craze for a long time. But I think with this earnings report, it sort of has Wall Street rethinking that.

12:17Yeah, no, it's still the stepchild. It's still not up. I mean, you could see that, imagine what would have happened even if they would have missed the numbers. So this is definitely the one that has the biggest AI cloud in terms of being disrupted. And it's going to take some multiple quarters like this for people to get comfortable with the story. I think last night, they showed really good numbers, really good AI adoption, but they really have to continue to do that for a long period of time.

12:41Scarlet Fu:I think you hit the nail on the head that it's going to take multiple quarters of this to convince Wall Street that this is a story where Adobe has figured out AI and how to monetize off of it. Up until this point, and until very recently, it feels like investors were souring on app software makers. Why is that? And how does Adobe's results start to push back against that idea? See, again, that halo is not going to, again, go first multiple quarters. The concept is very simple. Because of large language models, you can spin up a software very quickly, which means if you do not, you don't need to go to apps, software vendors, you know, whether it be Salesforce, Workday or any function that you're looking at where your large language model can do for it.

13:26We think it's a bit false narrative over there, but it's going to take some time again for people to get comfortable. We think it is not going to be easy to get rid of the system of record for finance, for HR, for sales. People are not just going to get rid of those software and just put in a prompt and let, you know, let somebody take care of it. So, but again, the software industry is declining right now. That is not tied to AI, but that has to do with macro spending being bad, the overall economy being bad when it comes to enterprise IT spending. So I think those are the two opposing factors that are happening there.

14:00Oracle, I mean, Adobe's results do help them a little bit, but I think it's going to be multiple years before we get comfortable with that. And Yoram, I want to switch gears and talk a little OpenAI because we know the company is trying to move closer to becoming a for-profit company. We know that it is facing criticism from Elon Musk, who's accusing the company of defrauding investors about its commitment to its charitable mission. Just tell us how this might work. How might this conversion work? Yeah. So, again, we don't have any details of what happened, but the only good thing is that Microsoft and OpenAI have, in principle, agreed that they will move forward with this.

14:37The question, you know, for us, the biggest thing is, will Microsoft still have access to OpenAI's, you know, top of the line models or not? So that's the biggest thing. And second, what kind of revenue share they will have at Microsoft on the influencing side. So when people are using MoreChat GPT, whether that operation will run on Microsoft Cloud or not. So those are the things if, and we think Microsoft will be willing to give some equity for these kinds of deals for these two factors. And, you know, that would be in the best interest of Microsoft shareholders.

15:11Scarlet Fu:Let me ask you about something else that John had mentioned, which is about Apple delaying the launch of its new iPhone Air in mainland China. These are regulatory approval issues that are holding that up. Is that on the side of the U.S. or on the side of China? And how big of a knock is this for on Apple's revenue line? Yeah, it sounds like it's more from the, China side of it. Now, the big question is, what happens is the iPhone is going to be available a week from now. So from September 19th to October 31st is, you could say, a few days of revenue recognition of the newest model that you get in the current quarter.

15:49Most likely, that gets pushed out in the next quarter. So that's the only difference it's going to have. I know it's for the Chinese users who are looking forward to this phone, they may not get it in the next 10, 15 days. But, you know, I don't think it's going to be longer before they'll be able to get that. And in about 45 seconds we have left, just want to get your take on Microsoft Teams, basically avoiding a hefty fine with the EU. Bring us up to speed on that. Yeah. So this has been a case that's been around for a while. And the question is, do you disaggregate Teams versus Slack? So Microsoft has to do it.

16:24There's always a tying aspect of Microsoft products, it bundles in these things and competitors think, you know, that's an unfair advantage for them. And, you know, they have to do with it, frankly speaking, otherwise, you know, this is, you know, their lawsuits otherwise that they will face because of it.

16:40Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options, from on-trend apparel and premium drinkware to tech, totes, and giveaways, so you can find the right fit for any audience, purpose, or budget. You can customize it all, your logo, your message, your look, and many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point so you can make a real impact while staying on budget.

17:18Plus, you'll get expert help, fast turnaround times, and their 360-degree guarantee. So you can be 4imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today at 4imprint.com. 4imprint. 4certain. Support for this show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf.

17:55Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market.

18:34Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off.

19:13deep in the work that moves the business. Let's create smarter business. IBM.

19:19Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. I'm Alexis Christophorus along with Scarlett Fu and Paramount Skydance. Boy, wasting no time when it comes to making acquisitions, right? The Hollywood studio taken over just last month by the independent filmmaker David Ellison, now reportedly preparing a bid for Warner Brothers Discovery. And Wall Street seems to like the news because Warner Brothers up about 14 percent right now.

19:57We've even got Paramount Skydance on the plus side by nearly three percent. Let's break it down with Geetha Ranganathan, Bloomberg Intelligence Analyst on U.S. Media. He's watching it all for us from his perch in Princeton. Gita, great to see you. I guess Bloomberg was the first to report this, but we should make clear no official offer made yet. So what do we know? Yeah, so what we know right now, Alexis, is that Paramount is definitely interested in making a bid for Warner Brothers Discovery. And what's interesting, I mean, you pointed out the timing. That's definitely a very, very critical aspect here.

20:33The second thing that's very interesting about this offer is that it's going to be for the entire company. Now, the reason I bring that up is because Warner Brothers Discovery was actually planning to split off its different assets. So, you know, the company owns TV networks like a CNN, a TBS, a TNT. They also own one of, you know, the biggest Hollywood movie and TV studios. And of course, they have their, you know, iconic HBO Max streaming platform. So there's a whole, you know, portfolio of different assets there. And they were planning to separate out the TV assets, which have been challenged for the past few years by cord cutting and separate that out from the studio and the streaming part of the business.

21:15And so really what we were kind of thinking was that there would be a lot of M &A interest, a lot of appetite for the studio and streaming portion of the business, just given that, you know, those are kind of the crown jewels of the business, if you will. But, you know, having Paramount kind of come in for the entire company is obviously a little bit of a surprise. There's no deal or dollar value yet, though, Alexis. And you are saying, Geetha, that this, if it were to happen, would be a cash offer, like an all cash offer? That is what has been reported. It would be a majority cash offering for all of Warner Brothers Discovery.