Google Survives Second Breakup Attempt & LA Clippers Unprecedented Fine

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1:29This is Bloomberg Law with June Grosso from Bloomberg Radio. The federal government won its second antitrust case against Google. But once again, Google has escaped without having to pay the penalty the government asked for, a forced breakup. In April of 2025, Judge Leoni Brinkema found that Google illegally monopolized two advertising technology markets. But last week, Judge Brinkema decided against a forced sale of Google's ad exchange, instead ordering proposed behavioral changes to Google's business. It's the second time in a year that a court has denied the government's attempt to break up the company, even though it was found liable for engaging in illegal monopoly tactics.

2:19Last September, Judge Amit Mehta, after finding that Google's tactics for dominating online search were illegal, ruled that Google didn't have to sell off its popular Chrome web browser. Why did both judges refuse to order a breakup? Joining me to answer that question is antitrust law expert Harry First, a professor at NYU Law School. Harry, why order behavioral remedies instead of a breakup that would solve the problem?

2:50June Grasso:Well, two parts. We don't know what the behavioral remedies are exactly. She said she took, quote, most of what the parties asked for. I think they were pretty close on that. so most of is not all of so we just don't know exactly what it is but no doubt it will include some sort of a monitor and it's continuing and you know question is how long and that is a problem with behavioral remedies is that you have to continue to behave and you need a parent to watch out and hit them when they don't so there's that and then she said she's not ordering the structural remedies that the Justice Department and the state plaintiffs asked for.

3:36June Grasso:But she didn't say why, because that's presumably in her opinion, which she gave the parties 14 days to take a look at to make sure there's no confidential information in there that they would like redacted. So we're in the waiting game now. And so if we could judge by what was reported from the hearing on remedies, or hearings on remedies. I think she's a pretty practical judge and not a pushover judge for anybody. And I think she was skeptical, as one might be, about, you know, how this was going to happen. You know, you're sitting there, you're, you know, a judge in the Eastern District of Virginia, and now you've got this high-tech thing that you, you know, you have to oversee.

4:26June Grasso:And, And, you know, you don't want to be blamed if it goes haywire and how's it going to happen. And the Justice Department didn't come in with a buyer or with anyone having apparently expressed interest in acquiring the exchange, the advertising exchange. So she was concerned about how it would happen and over what time. So you also had Judge Mehta finding that Google ran an illegal monopoly in search and not ordering a breakup there either. I mean, both respected federal judges. What does it take to get a judge to say, Google, you committed anti-competitive acts. We need to break you up. Trying to think of what metaphor to reach for.

5:14June Grasso:So I'm not going to reach for any of them. The first thing I would say is the divestiture, the breakup that the plaintiffs sought in the search case was actually not so central in some sense to the case they presented. So they wanted Chrome divested. They didn't make how Google used Chrome to help to make Google search a monopoly or to maintain the monopoly. The focus. I mean, that was a part, but it wasn't the focus. and the government didn't say that they'd actually done anything illegal with chrome so the legal case for divesting chrome was probably weaker than it should have been if they had actually built that case when they were trying the liability case for you know what did you do wrong so on remedy the first thing the judge says okay we found here's what parties did wrong now what's the remedy for what they did wrong i mean i'm not you know an engineer you know i'm not an entrepreneur.

6:15June Grasso:I got a case in front of me and that's what I'm remedying. So although it would have made sense to divest Chrome, and in fact, there was a buyer for Chrome that had surfaced. There was an offer for Chrome, you know, that was pretty substantial. It was on the table from an AI search firm. So Judge Mehta was also concerned about how this was going to work because Chrome is an international platform, you know, exactly how is it going to work? So in some sense, the cases are distinguishable. The divestiture that the plaintiffs sought in the ad tech case is actually central to the theory of liability.

6:54June Grasso:Their control of the exchange, which is what the plaintiffs wanted divested, was critical for Google's control of this whole market and for Google managing to squeeze more money out of the parties than they otherwise would have, the publishers in particular. And the judge found that. So it was really central to the case. So in that sense, legally, it's more important. They don't have a buyer. So that cuts the other way. And judges are judges. I mean, they're generally conservative with a little city. You know, they recognize they're judges. They're not business people. And they're concerned about doing this.

7:34June Grasso:So in a way, it's not surprising they're cautious. But it's in some ways a little more disappointing in the ad tech case because control of that exchange between both sides is really critical to Google being able to squeeze monopoly profits out of this market. Google's ad tech stack sits between publishers selling display space and advertisers bidding on it, giving the company this powerful position in how prices are set and which ads appear. Do you think behavioral remedies can actually cure anything? Behavioral remedies do something. And if they're well-designed, they can do something. They maybe can prevent Google from preferencing things.

8:22June Grasso:I don't know exactly. It's complicated how these auctions run. And Google, in fact, changed the auction rules on an ongoing basis. I mean, so something will change. But the fundamental insight from economics is follow your incentives. you know, people act in their incentives. So if Google still owns the platform in between, you know, the buyers and the sellers, both sides, they have certain incentives that an independent buyer doesn't have. So, you know, as a general matter, putting that in someone else's hands, their incentive then is to run that marketplace as efficiently as they can. So I would rather that.

9:03The government would rather that too. Do you think Judge Brinkema had some valid reasons for being cautious for this more restrained approach?

9:12June Grasso:I can understand why she's cautious, but I think this really was the relief that you needed to get competition going in this market. And, I mean, in some ways it's not as critical, you know, messing around with search is one thing. You know, there's a lot more money involved there. You know, here it's only six or seven billion. But it was central to the case and seemed to me there was a good case for it. I wish, although I know how hard this is, I wish that government plaintiffs had something more concrete when they presented the case working on the remedy to the judge. I think there's a natural tendency to, you know, spend a lot of time on the liability, you know, because then you never get to the remedy if you don't get through liability.

10:01But maybe not as much time working on the remedy itself.

10:06June Grasso:I can't say whether they did or didn't here, but not having some idea of who the buyers might be or some indication that there might be interest. It must have been tough to stand up in court when the judge asked and they said, oh, don't worry about it. Actually, the lawyer for the Justice Department said it would be inappropriate now to have a buyer before you. So it is a little disappointing, but I'm waiting to see what she writes in her opinion and then to see what happens with the appeal, whether the Justice Department, whether the lawyers who really made a strong case for this can convince the higher-ups in the Justice Department that they should appeal it.

10:52June Grasso:And whether, you know, you have very strong state plaintiffs' offices, you know, representing the states, and they could very well take this up on their own. Well, we've seen the states be more aggressive than the federal. Yes, and successful. So there are three offices involved, among others, but that are particularly strong, Colorado, California, New York. and I could see a world in which they do appeal. It's not over until it's over, someone once said, right? Yes, that someone was in the baseball space, I believe, and not the ad tech space. Harry Stanley Woodward, the number three official currently overseeing antitrust enforcement at the Justice Department, said, The timing of the court's order reflects the trade-offs between immediate relief and remedies obtained through years of litigation.

11:51What does he mean by that?

11:52June Grasso:We done here. The chances are that the Justice Department will not appeal. That would be your bet. That's how I read that, you know, years of litigation. Oh, my God, we might have. Now, they are appealing the Google search remedy. So years of litigation didn't seem to. And Woodward, he hasn't, you know, moved his office to a different floor of the Justice Department. He's still there. The antitrust division still has no permanent head. I mean, things haven't changed in that sense. If I recall correctly, I think he signed the briefs in the Court of Appeals. So, you know, he is willing to appeal Google search.

12:32June Grasso:So, you know, that's a we're done here sort of statement to me. But, you know, the Justice Department's not the only plaintiff, you know, as they were in Google search, They're state plaintiffs here, and they certainly could appeal. They filed independent appeals in the search case as well, although their positions were pretty much the same. And in the Google search case, both the Justice Department and the states objected to part of Judge Mehta's order, not to the failure to divest Chrome. No one's actually objecting to that, but to the failure to stop these conditional payments that Google has used to stay dominant in search.

13:18June Grasso:So both the states and the federal government appealed in Google search. Now, whether the states, if the federal government chooses not to appeal in this case, whether the states would appeal anyway. and they're all going to be filing briefs because Google's going to appeal the liability decision. So, you know, it's not like the Justice Department says, oh, thank God we can move our lawyers, you know, into immigration cases or whatever else they do. And the Justice Department, no, they still have to defend Judge Brinkham's decision on liability unless someone above Woodward says, I'm done with these cases, man, just throw in the towel.

14:02June Grasso:But they haven't done that yet. So they're still chugging along. Why would Google appeal? This is a win, isn't it? What more can they hope for? To get the judge's decision overturned? That seems unlikely. Well, yeah, it seems unlikely. But, you know, unlikely doesn't seem to dissuade any litigants these days. But, you know, so more time and not having an adverse decision on the books, has its own utility for any monopolist to be able to wipe that out. So they have said they're going to appeal her liability decision, and I have no reason to think otherwise. So what about European regulators? They're having fun kicking Google.

14:50June Grasso:I mean, in the search case, they imposed a very large fine, which at one point had triggered the president to suggest that he was going to retaliate with tariffs. We haven't heard that, but we never hear the end of anything. So who knows what will happen? So there was a very lengthy opinion in Google search. I haven't seen a decision in ad tech, I don't think. But I mean, the Europeans have preserved the option of ordering a divestiture restructuring. But they haven't used it. And they're particularly unlikely to use it, I think, against an American tech firm. It's really be pushing things, maybe legally, but certainly politically.

15:35June Grasso:So they're actually not as concerned about structure as we've been in the US. So, you know, they're a little more comfortable with regulating monopolies. And that's the way they've gone with the Digital Markets Act. They're not trying to break up the major tech companies, but trying to control their behavior. Is the Microsoft case the only time that a court has ordered a breakup of a tech company, at least at the trial level? There have been other breakups, yes. I mean, the one people turned to was Standard Oil, American Tobacco, back at the beginning of antitrust. And the other one that people often point to, which was done by consent, but sort of under the gun of federal legislation and also litigation was the breakup of the AT &T system, which really was quite a historic event.

16:33June Grasso:So it's been pretty rare and used sometimes when it's easy in a sense, when the illegal act has been acquired. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful.

17:13Put ChatGPT to work on your most ambitious ideas and projects. Get started at chatgpt.com by selecting work mode, available on plus and pro plans. If you listen to financial news, you know a lot of time is spent thinking about what's next. The next opportunity, the next investment, the next move. But sometimes what matters most is being ready for what you never saw coming. A storm damages a second home. A pipe bursts above a collection you spent decades building. An unexpected loss puts a growing business on pause. Those are the days no one sees coming. But for more than 75 years, Cincinnati Insurance has been ready when they do.

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18:59June Grasso:Hiring a company and you can still just sort of, you know, break it apart that way. But these companies, the tech companies, it happens not to be the case with some of them, but some of them just have grown sort of organically. So not so much through acquisition. Although there's been a lot of acquisitions. You talk about Facebook? Facebook. I mean, meta. But also Google AdTech. I mean, the tool, the platform for publishers stems from an acquisition of DoubleClick, which the Federal Trade Commission allowed in 2007, I believe. And the district court found was not a violation of any trust laws, but it did stem from acquiring DoubleClick.

19:41June Grasso:And it's still called DFP, DoubleClick for Publishers. So we'll hear more about this latest decision from Judge Brinkema later in the month, and then the inevitable appeals. Never-ending litigation. Thanks as always, Harry. That's Professor Harry First of NYU Law School. For the past year, the Los Angeles Clippers have been under investigation by the NBA for circumventing the salary cap. The Clippers were accused of using endorsement deals to pay star player Kaui Leonard. Last Wednesday, the NBA imposed one of the toughest penalties in its history, citing deals it says were designed to circumvent the salary cap.

20:24The league stripped the Clippers of five first-round draft picks, fined the team$30 million, suspended owner Steve Ballmer and two executives, and ordered Leonard to pay$700 ,000. In response, the Clippers say they vehemently reject the NBA's findings and will challenge them. The team has good reasons to fight. While the$30 million fine is a trifle to a franchise owned by one of the world's wealthiest people, draft picks are different. Joining me is Martin Eidel, co-chair of the sports practice group at Colston Stores. So tell us what happened, Marty. OK, so the clip they have put out a press statement saying they didn't do this, but there's a detailed investigative report by a well-known law firm, Wachtell Lipton, which concluded that for a number of years, Steve Ballmer, the principal owner of the Clippers, assisted Cowie Leonard through his uncle and agent, Uncle Dennis, he calls him, Dennis Rommel.

21:33Robertson, in putting together what seemed to be sham deals, sponsorship deals. Leonard, for instance, got$28 million over four years to deal with Aspiration Parks. What did he do for that? I think the legal term is bupkis. He did nothing. He had deals with Boingo. He had deals with Dactronics. He had deals with Lockton. Again, did nothing, was paid millions of dollars in consulting fees, even though these companies, according to the Wachtell Lipton report, had no consulting arrangements with anyone. So they were using that to get around the salary cap. Correct. You know, again, a player of Cowie Leonard's stature was being paid tens of millions of dollars per year.

22:25But Uncle Dennis and supposedly Leonard thought that wasn't enough. So they wanted sponsorship deals, which didn't require him to do anything. And Balmer, according to the Wachtell-Lipton report, along with his executive vice president for basketball operations and some other executives, facilitated deals with these companies. And what's your take on the punishment that was imposed here? The Clippers lost each of their first round draft picks for a five-year period starting in 2029. That's an enormous penalty. Is there precedent for it? Let me start with that. The answer is there's precedent for forfeiting first round draft picks.

23:13That happened with Joe Smith, a first round draft pick back in the 1990s, who had two contracts, one of which was presented to the league and the other of which was hidden. And when the league found the hidden contract, why? Because Joe Smith fired his agent who negotiated that deal, and the agent turned over this hidden contract. Anyway, Smith was not permitted to invoke the Larry Bird rule, which is a rule dealing with how much a player could pay and how much a team would charge under the salary cap. His contract was voided, and I think it was the Minnesota Timberwolves was also deemed to forfeit a number of draft picks.

23:57So that's where we get that number. The$30 million, I'm not sure where we get. I just haven't had the time to do all the research on that. But I'm sure there's some compensatory aspect to it and maybe some punitive aspect as well. throwing executives out of basketball for a period of time and both without pay. That, I think, presents a bit of a problem, how they can be suspended without pay. But Robertson was thrown out of basketball for five years. This is the Uncle Dennis character. And yes, Cowley Leonard was fined$700 ,000, which is supposedly the amount he actually pocketed. Not entirely clear to me why he would pocket so little.

24:43Now, the Clippers sent a letter to the NBA commissioner, Adam Silver, promising to explore every legal remedy to address this gross injustice. Do they have legal remedies here? So the answer there is yes. Everybody always has a legal remedy. The question is, what is the likelihood of success or even them bringing a legal action? They have to tell a court that they're undermining the very agreements they signed, the owner's agreement, the league agreement with the team, which gives the commissioner the unbridled authority to investigate and punish people who violate what goes on there. That is a right which is non-arbitrable and not challengeable under the agreement.

25:40So they're saying that notwithstanding their agreement to that, they never thought that would happen to them. So therefore, they should be relieved of it. Not a very good argument. You know, I think the one thing to keep in mind is what the NBA did here was it investigated before it acted. That's sometimes better than other professional leads, which seem to have a more knee-jerk reaction. Here, they hired a well-known firm. The firm, according to its report, conducted 73 interviews, reviewed over 200 ,000 pages, made each of their findings or proposed findings available to Leonard's attorney, to Balmer and the Clippers attorney, so they could challenge or give more information.

26:29That's at least the rudiments of fundamental due process. I mean, it's a civil action. Due process doesn't apply to private leagues, but they've given them the rudiments of due process, which makes the challenge even more difficult. So we'll have to see where that goes. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version.

27:08So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com by selecting Work Mode, available on Plus and Pro plans. If you listen to financial news, you know a lot of time is spent thinking about what's next. The next opportunity. The next investment. The next move. But sometimes what matters most is being ready for what you never saw coming. A storm damages a second home. A pipe bursts above a collection you spent decades building.

27:47An unexpected loss puts a growing business on pause. Those are the days no one sees coming. But for more than 75 years, Cincinnati Insurance has been ready when they do. With deep expertise, coverage for businesses, homes, valuables, and more, Cincinnati Insurance works with independent agents who take the time to understand what matters to you. Together, they help protect more than what you own. They help protect what you're building toward. And when a bad day does come, Cincinnati Insurance has real people there to help make things right. Because planning for the future isn't only about knowing what's next, it's about making sure you're ready for what you can't predict.