Amazon Sued in Massive Monopoly Case & Victoria's Secret Fashion Hits Streaming

0:00What should you invest in? And how often? Making investing decisions is easier with Fidelity. With their step-by-step experience, you can find investments based on your goals and comfort level. And if you'd like, you can decide how much and how often to invest with recurring investments that happen automatically. Ready to make your next investing decision? Head to fidelity.com slash trading. Investing involves risk, including risk of loss. Fidelity Brokerage Services, LLC, member NYSE, SIPC. Tonight on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life.

0:40They will be battling it out to see who can impress the world's biggest brands. This is a huge opportunity. This is the battle for the next big idea. This is not play play. We're spending millions of dollars. I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere tonight on NBC. Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. On today's pod, the Victoria's Secret fashion show is back, but not like you remember, and that's probably a good thing. Then the FTC is once again coming after Amazon for monopolistic practices.

1:15Could this be the antitrust case that finally sticks? It's Wednesday, September 27th. Let's ride.

1:27Okay, so Survivor returns for its 45th season tonight with 90-minute episodes for the first time on CBS. Toby, if you want to have longevity, I'd say skip the full-body MRI scans and just study Jeff Probst. Having started way back in 2000, Survivor is older than the iPod, the Pumpkin Spice Latte, and Olivia Rodrigo. Okay, low-key, I'm not trying to inflate your ego here. Toby, you would easily win Survivor. You just have the temperament for it. I think I would too. And it's almost a bad thing because you're basically saying, Toby, you are good at manipulating people into getting what you want, which is sometimes true.

2:07I mean, I play a lot of these board games like Catan or any hidden identity game I'm often pretty good at, like Mafia or something like that. So I don't know. I need to start watching Survivor. I haven't really watched any of it. And I know that people are going to crucify me for that, but I'll get on it. How do you think you would do? I would not do well at Survivor. I was thinking about what reality show I would do best, and I'm thinking I would be a really good judge on American Idol. Oh, my God. I would. Come on. Jeopardy, Neil. Jeopardy. That's your sweet spot. All right, Neil, let's jump into the news where Amazon is once again drawing the ire of the U.S.

2:39government. The FTC in 17 states are suing Amazon in yet another monopoly-focused case that alleges Amazon abused its size and economic dominance to harm fair competition. The complaint is 172 pages, but centers on the idea that Amazon pretty much acts as a monopoly everywhere you look to artificially raise prices, hurt shoppers, and stifle competition. The case centers on two arguments. First, Amazon punishes sellers who try to discount their prices too much, which ends up keeping prices higher for products across the internet. And two, Amazon effectively requires sellers to use its expensive fulfillment services in order to obtain that all-important prime badge for their products.

3:21Combine those two, and FTC chair Lena Kahn, who first rose to prominence in 2017 as a law student for writing a paper about Amazon's monopolistic practices, finally thinks she has a case against Amazon that might stick. Neil, it's unclear if the FTC is actually pursuing a full-blown breakup of Amazon here, but could you see that being on the table maybe? She wouldn't say. So basically, her idea was, OK, we're going to first prove that Amazon is a monopoly here and then we'll figure out what the potential remedies are. She did say in an interview with Bloomberg that the first option here is to just stop them from doing this unlawful conduct that you talked about, which was punishing sellers from selling on discounting their prices on opposing sites.

4:06And one thing you didn't mention that was kind of interesting was one thing it accused Amazon of was this pay to play scheme in terms of, you know, how you go on Amazon and often even when you're on mobile, the only thing you see is ads. So they're saying if you don't buy ad, if a merchant doesn't pay for ads, then basically it becomes invisible on this particular site. But going back to Lena Khan, she didn't say whether she would want to pursue a breakup in Amazon. I don't know if that's particularly on the table. Yeah. And on the monopoly front to the logistics side of things feels very monopolish as well, because what are you supposed to do if you don't accept Amazon's returns or terms?

4:44Are you not supposed to use their fulfillment centers? You lose that prime badge, which is pretty much the gold standard on Amazon. So I can totally see how the FTC is looking at its kind of the way it operates its marketplace as one of the reasons why it thinks it's monopoly. But then Amazon fired back saying, listen, if the FTC gets its way, there will actually be fewer products to choose from at higher prices and slower delivery. So that's always Amazon's pushback against these kind of FTC cases is the bottom line. The consumer is the one that ends up going to eat any price increases and whatnot if you break us up.

5:20So I see both sides of it. I know there was a lot of pushback to this lawsuit because monopoly to determine whether a company is a monopoly, you have to first define the market that it operates in. And the FTC is defining Amazon as operating within an online retail marketplace. Opponents of the FTC in this particular lawsuit say that you can't distinguish Amazon's online marketplace with the physical retail. Like you're saying that it's not competing with Walmart or any of the local businesses in the area, because when I want when you and I go to buy a toothbrush on Amazon, there is the thought that we could either go to the local toothbrush store and buy a toothbrush there or we go to Amazon.

6:02So Amazon only accounts for six to seven percent of the market share of all of retail. So they're saying this is not a monopoly because it's six to seven percent of the total retail market. Maybe it owns online shopping, but Amazon does compete with physical retail as well. Plus, in a monopolistic marketplace, you would expect prices to rise, right? Because if there's concentrated power, then they can jack up prices. That is a hallmark of a monopolistic market. But when you look at online prices, they've actually decreased over the past few years. They decreased 3.9 % on average each year from 2015 to 2019.

6:36So if you're saying that Amazon is a monopoly and in this particular marketplace, why are prices decreasing? That's a good point. I just got caught up on the toothbrush store there for a second. Do you have a toothbrush guy? Williamsburg is an amazing place. We have a toothbrush store. We have a deodorant store. I love that. Also, just to zoom out, I did say the FTC has come out of Amazon already. They sued the company back in June for allegedly tricking millions of customers into signing up for Amazon Prime. Remember, we talked about that briefly. And then also they reached a settlement in May over alleged privacy violations linked to its smart home devices.

7:10So, again, we've mentioned the history of Lena Khan and Amazon. She wrote this paper about them in 2017. And this has finally come to the conclusion of, all right, I'm taking on Amazon. So this is where she makes her breaks, kind of her antitrust legislation. Fun fact, right now the U.S. government is taking on three of its big tech companies. There's that Google trial that's happening right now. And it also sued Meta. But the FTC has had a string of losses recently. It tried to block Microsoft's acquisition of Activision Blizzard, which did not work. It tried to block Meta's acquisition of this ER firm within, which did not work.

7:47So I want to go over three, but this trial is probably not going to happen for many years because there's a lot of stuff to work out. All right. Let's move to another legal proceeding. In a major decision, a New York judge found that former President Donald Trump and his company were liable for defrauding banks, insurers and others by massively inflating the value of their assets by as much as$2.2 billion in order to secure favorable loans, lower insurance costs and pay fewer taxes. Those assets include properties like his golf courses around the world and his flagship building on 40 Wall Street in lower Manhattan.

8:23The ruling was part of a civil lawsuit brought by New York's attorney general who accused Trump of illegally inflating his net worth to gain a business advantage. It's a big win for James as a trial around her claims kicks off next week and will determine the extent of the penalties. But the penalties associated with the judge's ruling are already severe and could significantly hamper Trump's ability to make money. Trump's companies will lose their certificate to operate in New York where they're based and employ hundreds of people. And ultimately, he could lose control to his iconic properties, including Trump Tower on Fifth Avenue.

8:57Trump is still by far and away the leading candidate to secure the Republican nomination for president. And he's been indicted in four criminal cases elsewhere this year. But this ruling strikes really at the heart of his real estate empire, the one he promoted on his initial run to the White House in 2016. Yeah, it's not just that he verbally bragged about them because obviously he's prone to do that. It's that he lied about them on annual financial statements. and then yeah it reaps these favorable rewards like favorable loan terms lower insurance costs digging into this case one of the big ones was he exaggerated the size of his apartment in new york he repeatedly claimed it was 30 000 feet when they found that it was a third of the size and they're saying like listen he's bragging about the place that he's lived for for decades yeah what else is he bragging about and then the other big one was mar-a-largo as well which is that giant estate down in Florida.

9:46And the case, the judge found that it was only valued between 18 and 27 million dollars. And Trump has said on record, it's been upwards of 500 million dollars. I've seen 700 million dollars. Again, these things are not easy to pin down necessarily unless you sell them. And so Trump's legal team is saying if Mar-a-Lago is worth 20 million dollars, that's an a front to our legal system. And then Donald Trump Jr. said, if Mar-a-Lago is only worth this month, I'll take 10 of them. So there is this back and forth on like, how much is this estate really worth? And the judge thinks it's worth a lot less than Trump.

10:22Commercial real estate valuation and real estate valuation in general is very nebulous. And there's this appraisal process where you get third party appraisers to come in to signify the valuation. But it does seem like you can kind of go back and forth on it. It's not exactly a particular science. The Trump camp did push back and his lawyers said they were trying to nationalize one of the most successful corporate empires in the United States. And Eric Trump, who is also found liable for fraud, said that they've never missed a loan payment. All of the transactions have been profitable. But the judge replied that, you know, you are defrauding banks and insurers if you inflate your valuation to get a lower rate because they're missing out on money that they would have had had that valuation been properly disclosed.

11:13So that's where we got. And we're going to trial on Monday to figure out all of the financial penalties. The New York's attorney general wants$250 million in penalties. Yeah. And if the Trump organization, LSE, is dissolved, which is on the table here, you're right. It's a pretty large organization. It would be pretty disastrous for Trump and anyone one who works for it. All right, Neil, let's move on to our next story, which is about a far away from Donald Trump and Mar-a-Lago, as you can get. And that's because it's about the Mississippi River, specifically how dry it is right now. Prolonged drought conditions in Louisiana have led to very low water levels within the river, making it vulnerable to an intrusion of saltwater from the Gulf of Mexico.

11:55It's gotten so bad that New Orleans Mayor Latoya Cantrell signed an emergency declaration on Friday over concerns that saltwater intrusion up river could affect the availability of safe drinking water in the coming weeks. Already some residents south of New Orleans have been instructed to rely on bottled water this summer after saltwater infiltrated the area's freshwater systems, and an estimated 1 million people in the greater New Orleans area could be effective if low water levels persist. This is one of those news stories that you might not have heard about if you don't live in the affected area, Neil.

12:28But once you do hear about it, you realize the severity of what's going on. Yeah. Plus, I want to make a point that this is not just happening in the Mississippi River Delta or New Orleans. Saltwater intrusion is happening in coastal communities all around the world, from the Jersey Shore to Bangladesh, where you have low levels of freshwater of these rivers. It means that a lot of the saltwater from the ocean is intruding on the land and has very harmful effects. There's the drinking water example here, But in Bangladesh, it's also ruining all of their crops as well. So and that could easily happen in the United States as there are more droughts.

13:07So this is like a global problem, this saltwater intrusion. What stood out to me from this particular Mississippi thing is the engineering feats that are going on in a race against time and Mother Nature. They're building a huge well, they've built a huge underwater sill, which is basically a levee. They're basically building a huge wall underwater because, as I know you'll point out later with the thermodynamics of the hydrology of saltwater versus freshwater, it matters where this wall is. So they're building a huge wall, which they need to make a little gash in so that ships can go through because the Mississippi River accounts for 60 percent of all grain exports in the United States.

13:49So they need ships to go through. They need to build an underwater massive wall to keep the saltwater out. There is just a huge engineering operation going on to make sure that people have safe drinking water. Yeah, if you want to put Toby's science hat on for a second, if the river is flowing downwards towards the ocean, then how is saltwater encroaching upwards? That was a question I asked myself. Well, first of all, the mouth of the Mississippi River sits way below sea level, which means some saltwater naturally creeps in from the Gulf of Mexico anyways. But so also saltwater is denser than freshwater.

14:21So it flows on the riverbed underneath the moving freshwater. And if that flow is not powerful enough to kind of push back the encroaching saltwater, that's when it starts to encroach. And so speaking of flow, scientists have said that saltwater intrusion becomes an issue when the river's flow falls below 300 ,000 cubic feet per second. As of last week, the flow stood at just 148 ,000 cubic feet per second. So clearly not getting enough pushback to stop this from happening. So there's your science hat, Toby. So this is not affecting New Orleans right now, but the governor said and the governor warned people against panic buying water.

15:00That was the big thing that he stretched. He's like, don't panic buy bottled water. We have this under control for now. But in late October, it's expected to reach the treatment facilities near New Orleans. So we'll just have to watch and see how these engineering efforts work out. They're also barging in tens of millions of gallons of water to treatment plants to lower the salinity levels of the drinking water. Yeah, definitely a big story to keep an eye on. All right, Neil, before we jump into our next story, we're going to take a quick break.

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16:26Minimum spending requirements and terms apply. Offer ends October 29th, 2025. The Victoria's Secret fashion show is back, kind of. After a five-year hiatus, the lingerie company brought back its annual fashion extravaganza, but it's not like you remember. The event, now called The Tour, is a feature-length movie that began streaming on Amazon Prime Video yesterday, and it's more of a documentary than a runway show. The return of Victoria's Secret fashion show, whatever it wants to call it, is intended to showcase its transformation from a brand that promoted unrealistic and unhealthy beauty standards to a more inclusive one that recognizes that all women don't necessarily look or should look like Adriana Lima.

17:09The film highlights models and artists from all over the world to showcase women and body types it had previously neglected. But according to reviewers, the disorganized, chaotic movie shows that while Victoria's Secret clearly realizes it was out of touch in the past, it still doesn't seem to have a vision of what it wants to become in the future. And it's got plenty of upstart competitors who identified the industry's shift toward comfort and inclusivity way before it. So the one-time juggernaut is still playing catch up here. The Washington Post described this show as part extended fashion show, part gonzo experimental documentary, part cringingly unfunny Gigi Hadid voiceover open mic hour.

17:50So you can see that even their revamped Victoria's Secret fashion show they don't have a clear vision for. And if we just want to zoom out, Victoria's Secret has not been doing well over the past decade. The business has lost about$1.8 billion in sales since 2018, and revenue for its last full fiscal year fell 6.5%. Shares reached an all-time low in September, down 78 % from 2021, and just this year alone, down 49%. So, again, it keeps trying to reinvent itself in the past five years or so. Still hasn't found its groove, even though it is still a dominant player in the laundry space. It just hasn't found what its new path forward is.

18:28It has completely missed the boat on this massive push towards inclusivity, different body types, gender neutral things like that is where this industry is going. And a bunch of startups have completely understood this and capitalized. I mean, Kim Kardashian's Skims, American Eagles brand Aerie, I think, is doing over one point five billion dollars in sales. So they're catching up super quick. Victoria's Secret's like this brick and mortar retail that completely missed the Internet. And so it has no idea kind of where it's finding its niche right now. And the fashion show used to be, I mean, you used the word juggernaut.

19:05It used to be huge. It was during its peak in 2001, it drew 12.4 million viewers, which is just absolutely nuts in the era of where sports are the only ones fetching those kind of live show numbers. The 2018 version drew just 3.3 million viewers. And then also, if we want to talk about a sign of the times, The fact that it's debuting on a streaming platform instead of live, that's a secondary story beneath all of this is that they're bringing back the fashion show, but it's going straight to Prime Video. So it is interesting. One brand that shows that a turnaround could be executed, though, is Abercrombie.

19:41Remember, we have talked about Abercrombie on the show and how it just completely solved all the issues that Victoria's Secret is kind of facing. Remember, one, they just decided not alienating your customers by only appealing to a certain body type is a good idea. And then two, just making good-looking modern clothing is another big reason why Abercrombie has come back. So looking at brand turnarounds, they don't happen overnight. But Abercrombie is kind of like this light at the end of the tunnel that if Victoria's Secret can execute a similar style playbook, they got a chance to come back. Right, but if you go into their stores, which I don't really do, but I've heard that the stores look completely the same.

20:18Right. They haven't like fully bought in. Victoria's Secret stores. Victoria's Secret hasn't fully bought in. Abercrombie kind of bought into this transformation. They said, we're completely shedding our former self. Meanwhile, Victoria's Secret, you can see, is still kind of clinging on to the glory days of the past. They've had a lot of executive turnover. So it's tough for them to chart a path forward. I don't know. They have the brand recognition, which is a really hard part in terms of, you know, in the fashion and apparel industries. but they're not totally sold on their new vision. Yeah, got to nail down that vision, Neil.

20:52All right, Neil, remember when Russia first invaded Ukraine in a global task force went around seizing the assets of rich Russians? Every other day we are seeing headlines about how this Russian elite had their soccer team taken away, or that Russian oligarch had their yacht taken away. Yachts in particular were popular items for seizure, but what happens when a government takes a mega yacht? Do they destroy it? Far from it. Instead, it's often up to the governments that seize the crafts to maintain them, usually at the expense of taxpayers. One yacht that was seized while moored in Antigua and Barbuda has been sitting there for over a year while costing citizens$28 ,000 a week to maintain.

21:32That includes the salary of the captain and crew,$2 ,000 a day in diesel to keep the AC running, and various other maintenance costs. This is part of a broader trend, too. In total, the multinational government coalition known as the Russian Elites, Proxies and Oligarchs Task Force has seized around$58 billion of Russian assets. But the U.S. has only managed to deliver 5.4 million in assets to Ukraine, while the U.K. and European Union haven't managed to return anything. Neil, this is a pretty sobering look into what happens after the song and dance of freezing an asset actually goes down. It reminds me of this Seinfeld line where, sorry, he talks to a person who's taking a reservation, but they don't keep the reservation.

22:16And he says, it's not enough to just take the reservation. You got to hold the reservation as well. And this is kind of like what it goes from when you freeze an asset to actually owning it and selling it. Because you can freeze an asset all you want if you sanction somebody, but you can't take ownership of it and sell it and net the proceeds unless you go through this lengthy legal process where you have to prove that the person who owned this particular asset committed a crime. So they've sanctioned all of these oligarchs, but they haven't proven yet that these oligarchs committed any crime, which they have to do to actually, you know, to move these yachts and sell them for hundreds of millions of dollars, what they're worth.

22:55Then the problem is you don't even know who owns this because they're owned through like hundreds of shell companies. And so you have to prove that, yes, the oligarch owns this particular yacht. And yes, they committed a crime which takes years, if at all. And you mentioned it. It's very hard to move these yachts because no one really wants a sanctioned boat just because of all the baggage that comes with it. The yacht that I mentioned that was more than Antigua was actually ex-Google CEO Eric Schmidt agreed to buy it for$67 million. But then a last-minute legal fight from the previous owner kind of put a kibosh on it.

23:29And then so now the Antigua government is left holding it once again. Eric Schmidt did jump out the chance to buy this$120 million yacht for$67 million, but then got cold feet at the last minute. So it just goes to show you the headache that comes along with these giant mega yachts. They are very much a depreciating asset. Okay, let's go to our final story. Google has one more year left before it gets kicked off its parents' health insurance because the tech giant celebrates its 25th birthday today. Among its peers, Google is relatively young. Both Microsoft and Apple are nearing 50 years old, while Amazon was founded four years before it.

24:04In fact, a young entrepreneur by the name of Jeff Bezos was an angel investor in Google in 1998. Anyway, to mark the occasion, I've created five trivia questions about Google for Toby, and I hope you all will play along, too. Absolutely no Googling. All right. Here is the first question. The first Google Doodle was published in 1998 when founders Larry Page and Sergey Brin wanted to find a clever way to remind their employees that they would be out of office for an event. What famous event were they going to? It's held every year. I know this one. Burning Man. Yes. Of course they were burners.

24:38Just checks out. Yeah. So Brent and Page were big burners. They love Burning Man. And turns out when they were looking for a new CEO in 2001, the guy you just talked about, Eric Schmidt, rose to the top of the list because he also went to Burning Man. Oh, my God. We got to go, Neil. We got to go. All right. So you're one for one. Nice job. Here's the second question. In 2006, Google acquired YouTube for$1.7 billion. And what may go down as the savviest acquisition in American history? My question, Toby, is can you name two of the top five most viewed YouTube videos? Oh, gosh. Gangnam Style? No.