Google Dodges Chrome Sale in Antitrust Case, Must Share Data

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2:14Eastern 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. Big news in a textbook. Big news for Google and Apple and others. The U.S. government proposal to break up Google did not get the support of the courts here. Let's talk to an expert on this stuff. Jennifer Reed joins us here, senior litigation analyst. She covers all the antitrust stuff for Bloomberg Intelligence. It looks like this. First of all, Jen, what did the courts rule?

2:44Jennifer Rie:You know, really, the court aligned much more so with what Google proposed than what the Department of Justice proposed. no divestiture of Chrome or contingent divestiture of Android, because that was in there. Some data sharing, no exclusive agreements, some search syndication, meaning a search engine can basically provide results that just come straight from Google, right? They're mimicking Google. The surprising thing, though, here, and what was great for Apple, is that the judge said Google could continue to pay for search default positions. That's with Apple, with Mozilla. It pays some OEMs to pre-install Google search on the Android phones that they manufacture.

3:20Jennifer Rie:And that, I think, was a really big surprise. How is this remedy consistent with the original ruling, with the original finding of the court? You know, I actually have a really big problem with aligning those two things because I don't think that it is. In terms of no chrome divestiture, I think it's very consistent. And, Paul, you know I've been on this show before and I've been saying for two years that there would not be a chrome divestiture ordered here. But where it's inconsistent is with this default position, because having a monopoly is not illegal, but it's the conduct that maintains the monopoly that's exclusionary that is illegal.

3:52Jennifer Rie:And what the judge found in that liability decision, that the conduct that was illegal were the default agreements, right? This was exclusionary. This kept other search engines from being able to grow and scale and get better. He's allowing those default positions to stay in place. Now, it's a shorter term. It's only for one year. theoretically in one year or one year after that other search engines that have improved can compete for that contract. But it's still odd to me that what is found to be illegal is allowed to continue. Well, the stock market likes it. This is a company that's got$2.8 trillion in market cap.

4:25It's up 9 % today. You just don't see that very often here. So what does this mean for just Silicon Valley in general. Can I sit back if I'm a CEO in Silicon Valley and say, hmm, the courts are maybe a little bit more aligned with our industry, how we think about the world than maybe the government?

4:46Jennifer Rie:I would say that the way Silicon Valley can think about it is that this judge was cautious and this judge did talk about needing to apply caution when you're dealing with tech markets and Silicon Valley companies because judges don't understand it. They don't want to impact the route, the innovation and the natural course of the industry, right? They don't want to distort that. And so it does suggest that it's more likely a judge is going to be cautious in future remedies for other cases. But what I think everybody has to keep in mind, because I've seen people talking about the fact that there's read through for some of these other monopolization cases.

5:20Jennifer Rie:I don't really think that there is because the facts are entirely different case by case. The markets are entirely different. And what made a divestiture remedy inappropriate here doesn't necessarily exist as a fact pattern, let's say in FTC v. Meta or U.S. DOJ v. Apple or the other DOJ case against Google in the ad tech space. Those are different cases with different facts. And I don't think that there's necessarily a read through that companies are safe from divestiture orders because of this one. Do we think that AI, the quickness and how it's developing played any kind of role in the judge's decision here?

5:54Jennifer Rie:Oh, absolutely. 100%. The judge even observed that in the liability hearing, which was now a year and a half or so ago, that AI barely came up at all. Other than by Google, it barely came up. But in the remedies hearing, it was all about AI and the witnesses were all AI. And he says it just shows in a year or year and a half how much things have changed. And the fact that you now have real competition to general search other than other general search engines. And I think that impacted him a lot. Stay with us. More from Bloomberg Intelligence coming up after this. Everyone's talking about how AI is transforming work, especially in sales.

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8:51that's a good thing right that is a very good thing absolutely you know who gets a lot of those green bee things he's walking to the studio right now mark german and it's usually about like tech stuff apple particular stuff um and he's got another one today i i don't know um apple's lead artificial intelligence researcher for robotics has departed the company to join meta platforms I feel like I've read this kind of piece from Mark almost on a weekly basis over the last... You mean Apple losing on AI? Yeah. I mean, people kind of walking out the door. At some point, it's got to be a problem, even for the apples of the world.

9:26Mark Gurman joins us. He's a managing editor for Global Consumer Technology, Bloomberg News. He's usually out there in LA, but something's going on there because Mark Gurman's here in New York. Who was the other dude we had on? The entertainment dude. Lucas Shaw. Lucas Shaw. He's in New York, so I don't know what's going on out there in LA. Maybe they're cleaning the offices or something, painting the offices. No, we both have colleagues here. All right. Mark, talk to us about Apple. Is it a problem that they're losing some of their AI folks, their robotics folks, that kind of thing? You don't typically see that too often.

9:58It's only a problem if it impacts the consumer. And right now, Apple's AI efforts are impacting the consumer. because Apple Intelligence and Siri lag very much in comparison to competing products on other platforms. Now, this can all be turned around, right? You've got the ability for Apple to do partnerships. I predict there'll be some sort of big AI partnership for Apple. I've reported that they're in talks with Google on an AI partnership. I've reported they've been in talks with Anthropic and OpenAI on potential AI partnerships. They get one of those done, it's a different ballgame. They buy a company.

10:36I reported, first reported over the summer that they've talked to Mistral, reported that they talked to Perplexity. I don't expect either of those deals to get done, but that certainly shows you where their head's at. Okay? If this all gets turned around with a major new version of Siri next year, if they get the Apple intelligence pipeline heading in the right direction, if they buy and hire the right LLM people, they could be in pretty good shape. Don't forget, Apple has the best ecosystem. They have the best hardware. and they're able to deploy new features and operating system upgrades faster than any other company.

11:09And so at the end of the day, this is still their game to lose because there are so many levers they can pull, especially with their cash balance to turn this thing around. So why haven't they done any of those things so far? Why are they waiting? What's the holdup? Well, you know, Apple, unfortunately for them, they're very tied to a couple cycles, right? They have their spring cycle and then they have their fall cycle. The fall cycle has been set for some time. There's really no changing that. That's locked and loaded. You'll see the introduction of those products and those software features next Tuesday at the iPhone 17 launch event.

11:45The spring is really the next opportunity for there to be major new features, right? That's when they're going to roll out a pretty big update to iOS 26 called iOS 26.4. At that time, I expect them to release an overhauled version of Siri that are going to fix a lot of these issues. That's a long time from now, though. It is a long time. Yeah, it is a long time. And the truth of the matter is, is that the AI space runs far more quickly than even the mobile space. You saw a lot of innovation in the smartphone space over the last two decades. AI is moving 10 times as fast as that. And they're aware of that.

12:17They're smart people. I guess they've made the decision that they're comfortable with their timing. Did they run the risk of making a fundamental error in their judgment of that timing? I don't think they're comfortable with the timing. I think that the timing was actually even further out. I wasn't expecting a major new version of Siri with incredible enhancements for consumers, probably not until the end of 26 or sometime even at the tail end of 2027. So this is going to be happening at least six to 12 months sooner than Apple had originally planned. They are probably one or two years away, if they did nothing, of starting to bleed share to competing smartphones with major AI features.

12:59Right now, to tell you the truth, we talk about AI all day, every day. It's very important to the market. It's very important for the current technology age. Nobody's buying phones because of AI or not because of AI. But we are moving towards that. And that is going to happen. It's one or two years away. And so if they're not in good shape by then, they're going to start being impacted, not only in terms of what we talk about, not only on Wall Street in the stock market, but in actual purchasing decisions by consumers. Because right now, consumers only care about a few things when they buy new phones.

13:28They want to fix their broken screen. They want a better camera. And they don't want to pay too much for it either. That's the other thing. I mean, well, incorporating all these AI gee whiz factors bring up the price to$1 ,500 for, you know, your standard phone. That's something that consumers may not stand for. Well, to your point, it's a very good point. You may see AI cost drivers increase because in many cases it requires, especially on Apple's side, improved chips, more processing power, improved battery life, improved cameras to take advantage of these things. So you may see the core technologies in these devices actually go up in price in order to enable these next set of AI features.

14:08Because unlike Google and OpenAI, Apple's less reliant on the cloud. It's really a hybrid model. So to your point, the core hardware is very important here, too. The Google legal announcement here, the ruling, obviously very positive for Google, but also positive for Apple in the stocks. Yeah, it's a big deal for Apple. and some people have said there's a bigger deal for apple than google is complete nonsense to be honest with you uh google had hundreds of billions of dollars at stake here they could have lost their ability to strike search agreements at all default search agreements they're basically giving up some data and pretty much nothing else so massive win for google big win for apple gigantic win for the technology industry because you ask you is that yeah you have precedent here is set now.

14:56So, you know, Meta is probably in better shape than they would have been otherwise. You know, Apple has this DOJ trial, too. You know, that we've Google just had its moment. Apple's going to have its moment in a couple of years. And this sets a lot of the precedent for that. So at this point, it's anyone's guess, but I would assume that Apple is going to get off scot-free also. I mean, so, I mean, again, in Silicon Valley, I got to think that this feels like a little bit of a little bit of a reset on the regulatory front, which was front and center. A little bit of a reset. You know, the European Union is still, you know, going fast and furious.

15:26But if you're a technology consumer, this is amazing news. If you work at a technology company, if you invest in a technology company, if you're into technology, this is great news. These companies are going to be able to innovate at the pace that they want to. And, you know, move fast and break things, I guess. Stay with us. More from Bloomberg Intelligence coming up after this. Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same, the thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals.

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17:50You'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. Macy's on earnings. The department store chain lifted its outlook, but did take care to point out that the consumer is still feeling pretty cautious. So for more, let's bring in Emily Cohn. Emily is Bloomberg's consumer team leader, also a Big Red alum, graduated from Cornell University and was an editor at the Cornell Daily Sun to discuss Macy's latest results.

18:26So it sounds like a good news, bad news kind of story, but investors are taking the good news here. Thanks, Scarlett. Yeah, maybe I would say cautiously optimistic. That's a favorite term of CEOs. I think this falls in line with what we've heard from other retailers. Shoppers are still shopping. Tony Spring told us on a call earlier this morning, he used the word surgical. So they're being precise about what they're spending on being choosy. They called out home furnishings and apparel as strong sellers, also citing high demand for fine watches, jewelry, mattresses. And so they are shopping. I think the main question I have is, how long will this last?

19:05How promotional are some of these retailers? How promotional do they have to be? Because I know that goes right to the margin. Yeah, I mean, that's an interesting segue into Dollar Tree. I think Dollar Tree raised prices so far this year to offset the cost of tariffs. And shoppers felt that. And that has a limit. There's only so far you can raise prices. and I think that is starting to eat away at their bottom line. They can't really raise prices that much anymore. I think these retailers are in a difficult spot. They want to keep prices low because of how the consumer is feeling, but also their costs are up on account of tariffs.

19:45I would imagine Dollar Tree has a lot less cushion, as you say, to raise prices given who they're targeting and given how they're seeing a lot of higher-end consumers trade down to Dollar Tree than a Macy's. Macy's did say explicitly that price increases are on the way, didn't they? Yes, they said that they have already started and that they're coming. But their sales are strong. And I think, you know, they're in the midst of a turnaround. There were signs that Tony's Spring Strategy is taking hold. Comp sales rose more at his reimagined stores than they did overall. So I think that that's a good reason behind the stock jump this morning.

20:23What's different about a quote-unquote reimagined store? Good question. I think that is a really good question. I think these are the stores where they believe that they can have the greatest edge. So they're doing a lot to reinvigorate sales. They're redesigning the stores. They're rethinking their assortment. And these are the stores that they say we should really watch. This is the future of Macy's. And Tony Spring is also a Cornell guy. Oh, there you go. Oh, it's a big red gathering here. I didn't even know that. Let's put this into context, what we heard from Macy's, what we heard from Dollar Train, of course, Dollar General earlier in the month, or was it this month or last week in any case.

21:06What are we hearing from retailers overall? Because investors are punishing some and rewarding others, even though the message, I would say, is fairly consistent that consumers are spending. They're just being really, really weary and careful. I think you nailed it. I think retailers continue to point to strong sales momentum. People are shopping, even in the face of tariffs and threats of inflation. I think the question I have is knowing that retailers stock up months ahead of time. They had their inventory that they sold through now months ago, perhaps even before tariffs. I don't think we've really seen the full paths through of the costs of tariffs yet.

21:46And I think we'll continue to see that in the coming months and especially during the all important holiday shopping season. Let's go there. What's is there a consensus building to how the holiday season may shape up? It's still early. I think the the the the outlook isn't great so far, although Tony Spring did say that the back to school shopping season was he used the word good. And he said that back to school is generally a good bellwether for the holiday shopping season. So there was a slight note of optimism there, but not totally bullish. Emily, you cover the consumer team. You're the team leader for this group.

22:26Which company is most interesting, is most exciting right now? Like who is leading the way in terms of being innovative and coming up with novel solutions to the persistent challenges that this industry faces? Yeah, for sure. I mean, I think that discount retailers are really the ones to watch right now. So I'm really interested in TJ Maxx, Marshalls. These are the companies that people really look to for deals. They have an interesting buying model where they're buying like the extra inventory that other retailers didn't sell. So they're a little bit isolated from the tariffs. And they also are benefiting from the fact that a lot of retailers bought a lot of stuff ahead of tariffs.

23:06I'm also really interested in the dollar stores. dollar stores, you know, have a huge footprint. They're in these rural parts of the country that traditionally the big retailers don't reach. That has given them a big advantage. Now Amazon and Walmart are coming for those dollars from e-commerce in a really big way. So I'm really interested in how these value retailers. Do any of those companies have a large online presence? um no i well they are doing things like partnering with uber eats and and delivery um delivery services like that but i think the main draw is like if you're living in a rural part of the country like the place that you go to buy a gallon of milk at the end of the day is your dollar general like that's the store that you have um but increasingly walmart and amazon are looking to these rural areas as their last frontier stay with us more from bloomberg intelligence coming up After this.

24:03Everyone's talking about how AI is transforming work, especially in sales. While the landscape shifts, one thing remains the same. The thrill of closing a deal. Whether it's a gong or a confetti machine, every team has its celebration rituals. Adio is designed for that moment. It's the agentic CRM that turns customer signals into actionable insights, helping you close deals faster with revenue agents and automations working around the clock. You'll have everything you need to scale your go-to market efforts. Elevate your wins with Adio. Start your free trial at adio.com slash iHeart. Amazon Health AI presents Painful Thoughts.

24:39I, um, I can't stop scratching my downtown. Yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud. There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24-7. Healthcare just got less painful.