DOJ Sues Apple in Antitrust Case & The World's Most Expensive Drug

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0:28Good morning, Brew Daily Show. I'm Neil Freiman. And I'm Toby Howell. Today, the DOJ drops the hammer on Apple with an antitrust lawsuit that was not shot on an iPhone. Then what is going on with the gambling scandal involving MLB's golden boy, Shohei Otani? It's Friday, March 22nd. Let's ride.

0:54It's only been one day officially of March Madness, and so far it's lived up to its billing. Three 11 seeds knocked off their higher six-seeded counterparts with Duquesne, Oregon, and NC State all progressing last night. But the highlight of yesterday was Michigan-based Oakland University taking down Kentucky behind 10 three-pointers from a 24-year-old grad transfer. Those results have left just 1 ,825 perfect brackets from the over 22 million that entered ESPN's bracket competition. Neil, are you one of them? Actually, no, I'm not. But I had a great performance. I had all three of those 11 seeds going forward.

1:34And then I also had Oakland beating Kentucky for some reason. I filled out very fast yesterday morning right after our podcast. But I'm feeling really good headed into the weekend. You are sitting very pretty right now. The women's tournament also kicks off in earnest today. Most of the people I've talked to are more interested in that because, I mean, we've talked about this on the show. no one can really name a men's college basketball player right now but everyone can name a women's college basketball player so caitlin clark begins her title charge uh in this upcoming few days so excited about the women's tournament the only men's player i can name right now is golki the guy on oakland i mean that was an incredible performance he could become a mythological hero if they go into the next round on saturday i love it because he has shot 97.7 percent of his attempts from the field from behind the three-point arc.

2:24The man knows what he's good at. He stays in his lane and he does it very well. Now let's hear a quick word from our friends over at Factor. So we talk about Factor on the show a lot, but one of the reasons it's easy to do that is because they are always switching things up. Yeah, a weekly meal service is perfect content for us because the meals are always changing. When writing these, I like to jump on the Factor website and take a look at a section called Explore the Menu. It's like a mini Instagram feed of amazing chef cook dishes. It shows the 35 meals that are on the menu for the week that could head your way.

2:56If you sign up, listen to some of these sweet and tangy barbecue ground turkey, truffle butter, filet mignon, garlic, herb, roasted barramundi. Not going to lie. I don't even know what barramundi is, but as long as it's garlic herb roasted, I am in Toby. It's a fish. You know that. All right. Yes, chef. All right. If you want to see what's on the menu for this week, head to factormeals.com slash morningbrew50, then use code morningbrew50 to get 50 % off. That's factormeals.com slash morningbrew50, then use code morningbrew50 for that tasty 50 % discount. Race the runners. Raise the sails. Raise the sails.

3:35Captain, an unidentified ship is approaching. Over. Roger. Wait, is that an enterprise sales solution? Reach sales professionals, not professional sailors. With LinkedIn ads, you can target the right people by industry, job title, and more. Start converting your B2B audience today. Spend$250 on your first campaign and get a free$250 credit for the next one. Get started today at linkedin.com slash campaign. Terms and conditions apply. Apple turning me and other Android users into green techs is finally coming back to bite it. The Department of Justice and 17 states dropped a sprawling antitrust lawsuit on the iPhone maker yesterday, accusing it of using illegal tactics to make it hard for iPhone users to switch to competitors' smartphones and allowing it to entrench its monopoly in the market.

4:22This isn't just about green techs, of course. This lawsuit goes after the heart of what makes Apple Apple, that its hardware and software work in perfect harmony together. But when you try to integrate something outside the Apple ecosystem, everything goes out of pitch. The DOJ is essentially laying siege to Apple's so-called walled garden that has turned it into one of the most valuable companies in the world. You can bet Apple will defend itself like the fellowship at Helm's Deep, and it's not any stranger to antitrust action. But this suit is potentially the most damaging one yet because it targets the core of Apple's business, the iPhone.

4:55Yeah, the government looked at a few different ways that they think Apple is kind of carrying out this monopoly. One of them is suppressing the quality of messaging between iPhones and platforms like Android. We are all very familiar with the blue text versus green text debate there. But another thing that they've been doing is blocking the creation of these bigger super apps that can make cross-platform switching a little bit easier. For instance, I'm locked into Apple because I have my credit card saved on there, my passwords, my autofill setup, my email. It's very difficult for me to switch at this point.

5:25And they kind of make it so that there's none of these apps that also capture all that information for you. They've also been blocking developers from creating digital wallets that maybe could go toe to toe with the Apple wallet. So you start to see this has been a long standing case that the government has been building for a long time, taking a lot of different attack vectors at Apple right now. Right. And it's not being a monopoly isn't inherently illegal in itself. And Attorney General Merrick Garland took pains to say that. But he argues he and all these other states are arguing against Apple that it's using illegal tactics to entrench its monopoly in the smartphone market.

6:00to make sure that you, an iPhone user, are never going to switch to an Android because of these particular strategies that Apple is using. And I also think some historical context is necessary when talking about a case like this, because really the last meaningful big tech regulation we got was Microsoft suit back at the early 2000s, honestly. Apple execs testified in that case. And when that suit was successful, it allowed Apple to do things like put iTunes on Microsoft platforms which led maybe to the creation of the iPod, which also led to the creation of the iPhone. So you start to see how these kind of tech cases can have ripple effects and invite competition that lead to some of the mega companies like Apple that we know today.

6:41So before you say like, oh, the government is just attacking Apple because it's too big, there truly is some anti-competitive practices that open up lanes for other companies to thrive that right now Apple is squashing. Right. And that's what the government is arguing. But Apple will probably invite that comparison to the Microsoft case because back then in the 90s, Windows had well over 90 percent market share. Some estimates had it at 97 percent of operating systems on all computing devices in the year 2000s. Apple does not have that much of a stranglehold on the smartphone market as Microsoft did on operating systems.

7:19It just has, I mean, it's a lot, but it has 64 % of the smartphone market. I said iPhone market. There you go. In the United States, which is well ahead of No. 2, Samsung, at 18. So, Apple will probably invite that comparison and say, you took down Microsoft for being a monopoly in the 90s, but we are completely in different markets here. We have much different market share. Yeah. And finally, the big part of these suits is the relevant market that the prosecutor kind of targets. The DOJ thinks it should be the American smartphone market, while Apple thinks it should be the global smartphone market.

7:56So that delineation will also make a difference when it comes to how monopolistic their practices actually are. But we should say this thing's going to last many, many years. This is just this. We'll talk about it. We'll talk about it again. The Microsoft case lasted three to seven years. So this is not going away. Yeah. MLB megastar Shohei Otani has only been a Los Angeles Dodger for two games so far, but he's already in the middle of a mega controversy. Despite being one of the faces of the league, Otani, who hails from Japan, doesn't speak English very well. As such, his translator, Mizuhara, plays an outsized role in how he interacts with the world.

8:33Mizuhara is constantly with him, shadowing him in virtually all aspects of his life, both on and off the field. But now Otani's attorneys have accused Mizuhara of perpetrating a massive theft against Otani for stealing millions of dollars from him in order to pay off gambling debts. Key to the accusations are four and a half million dollars in wire transfers sent from Otani's bank account to a California bookmaking operation. Neil, this whole story has tons of intrigue. Otani is an immensely marketable star with a spotless record. So immediately people started speculating that maybe Mizuhara was taking the fall for him.

9:10Also, the Dodgers just signed Otani to a 10-year, $700 million deal. So they are clearly very interested as well. What do you make of all the twists and turns? This is absolutely wild. I think the timing is the craziest part. We were just talking about how the Dodgers and Padres were playing the first MLB game of the regular season in Korea. And this was Otani's coming out as the Dodgers,$700 million man, the golden boy of baseball. And then just hours after that game ended, this crisis really started to unfold with multiple reports from the Los Angeles Times and ESPN about this paying off of gambling debts.

9:48And there was a huge changing of the story from both camps that only added to the mystery and the intrigue. Yeah, there's been a bunch of weird switch-ups from both their camps. So on Tuesday, there was this prearranged interview where Mizuhara told ESPN that he asked Otani to pay off his debt that he thought he had placed legally. He said that he wanted to know that Shohei had nothing to do with it. He was just helping a friend out. But then on Wednesday afternoon, Mizuhara switched his story and said Otani had zero knowledge of his gambling debts and that Otani had not transferred the money.

10:20So there's definitely some confusion as to what actually happened. I think that there's clearly a lot of different parties are trying to protect Otani here. And you can tell that via that little switch-up that we saw from Tuesday to Wednesday this week. Right. All parties involved said that Otani had nothing to do with gambling. He doesn't gamble. So it seems like that's one of the few facts we can hang our heads on. Don't want to speculate, but one of the most plausible scenarios that have been floated is that Otani did lend this translator the money because he was in a tight spot. And so that was the first story they went with.

10:55And then they looked at the sort of laws, which which refer to wire transfers for gambling. and they found that that was illegal. That is a crime in the United States. So then they kind of changed their story to say that Ohtani did not have any knowledge of it because he could be implicated for a crime for this money. And so maybe that sort of recognition of you're not allowed to do that led to the switching of stories. Yeah, absolutely. And Ohtani and his translator have a very unique relationship because MLB franchises are actually required to have full-time interpreters for a lot of the Spanish-speaking players on the roster.

11:30Spanish-speaking players comprise about 30 % of the entire league, and those translators are usually just provided by the team or someone, and you don't have a super tight relationship with them. But for Japanese players, the dynamic is totally different. They often handpick their interpreters. They often are more than just your interpreter. They help you with renting a car or renting a place, going to the supermarket, just living daily life. So that is also why this hits so close to home is that on the surface, the two look like they're inseparable. So clearly there's some tensions growing in that relationship.

12:03Yeah, the big picture here is this is not how Major League Baseball wanted to start the season at all with this big rollout of Otani in a Dodgers uniform. And it shines a harsh spotlight on major professional leagues across the board, signing bigger deals, bigger partnerships with gambling companies. OK, you're going to need to scrub up for this next part because we are headed to the hospital to run down the biggest health care news of the week. First up, a video circulated showing a paralyzed man playing chess just with his brain. This man is 29-year-old Noland Arbaugh, and he is the first patient to receive a brain computer implant from Elon Musk's Neuralink.

12:40Back in January, Musk revealed that the first human patient had received a Neuralink chip in their brain, but no one knew who that patient was until this week. On the video, Arbaugh said the device was not perfect and he's run into some issues, but that the surgery was super easy and the implant has already changed his life. Yeah, he said it felt like he was using the force on the cursor, which probably is the best kind of example to reference here because you are controlling it with your brain only. So one of the big leaps here that Neuralink actually made because moving a cursor isn't this massive leap because as far back as 2004, brain chips helped paralyze people move a cursor.

13:19The big difference is Neuralink has no external wires, nothing protruding from your skull. The other big breakthrough is that Arbaugh was multitasking. He was playing chess while speaking about his experience. So that is a big leap that if you can have multiple thoughts going on, I don't know how that technology works, but that is clearly a step forward in this brain-human interface. Yeah, pretty exciting stuff for this relatively controversial technology. Next up, NVIDIA wants to flood hospitals with robot nurses as a way to alleviate significant nursing staffing shortages and make it easier for patients to receive low-risk care.

13:54In a collab with the startup Hippocratic AI, the tech giant unveiled voice-based digital agents that can help guide you through things like taking penicillin or checking in after an appendectomy. And here's the key. They'll work for just$9 an hour, much less than human nurses get paid and lower than minimum wage in most U.S. states. Critics call this dystopian since these robot nurses undercut human nurses wages and AI isn't exactly known for its reliability, which you absolutely need in a healthcare setting. Still, it's a sign of how AI is barging into the hospital like the Kool-Aid man. Yeah, they are not shying.

14:29Hippocratic AI is not shying away at all from saying we are undercutting human nurses. Human nurses cost upwards of$90 an hour. We cost$9 an hour. And they kind of switched it to say like, hey, listen, there are nurses shortages right now. It was exacerbated during the pandemic. But even stretching back before the pandemic, we needed more nurses. Here we are to address that nurse shortage. And we can do stuff like post-op check-ins, nutritional guidance, pharmacy calls, nothing diagnostic necessarily. But there's some stuff that AI could probably jump in and help alleviate some of these shortages.

15:01Finally, there is a new most expensive drug ever, a gene therapy that costs$4.5 million per dose, about as much as you'd pay for a Miami mansion or a 20-second Super Bowl spot. The drug is called Lenmeldi, and it treats an ultra-rare disease that affects only about 40 kids in the U.S. each year, but it is devastating and often fatal. The company that made the drug Orchard Therapeutics says the price reflects its clinical, economic, and societal value and will actually save the healthcare system money over time. Toby, these new class of gene therapy drugs are incredible. I mean, this is literally a lifesaver.

15:37But they've also come under fire for their eye-watering prices. Yeah, pharma companies working on gene therapy treatments in particular saying that we're actually saving money over time because we're not just treating a patient, we are curing a patient. And there's a big difference between those two. So over time, if you kind of extended out the care that the patient would have had to receive versus the upfront treatment that they're receiving, potentially that they're saving money. And again, a lot of development goes in these drugs. So they do have to monetize it because the total addressable market share is very small for a lot of these treatments.

16:08So it's going to be controversial, but if it can save lives, then maybe the price tag is 100 % worth it. Up next, hold on to the caffeinated beverage of your choice because we've got Stock of the Week, Dog of the Week, coming up right after this. Eczema isn't always obvious, but it's real. And so is the relief from EBCLIS. After an initial dosing phase, about 4 in 10 people taking EBCLIS achieved its relief and clear or almost clear skin at 16 weeks. And most of those people maintain skin that's still more clear at one year with monthly dosing.

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17:28When did making plans get this complicated? It's time to streamline with WhatsApp, the secure messaging app that brings the whole group together. Use polls to settle dinner plans. Send event invites and pin messages so no one forgets mom's 60th. And never miss a meme or milestone. All protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. We are back and it is Stock of the Week, Dog of the Week time, where we look at one stock that has a perfect bracket and one stock who keeps talking about their back in the office even though no one really wants to hear about it.

18:07As always, Neil and I are just humble podcasters, so please do not take any of this as financial advice. Neil, congratulations. You won the pre-show game of subway surfing. So you're up first. What is our stock of the week? My stock of the week is Digital World Acquisition Corp., which is the shell company that's planning on acquiring Donald Trump's Truth Social platform and taking it public. Shares were up 6 % this week ahead of a shareholder vote this morning that could approve the deal, which would allow Truth Social to start trading publicly next week. It has been a long and bumpy road for the public markets for Truth Social, filled with infighting, litigation, and other debacles.

18:44But if the deal is approved today, it could provide Trump with the financial windfall he needs right now as he's racked up a legal bill in the hundreds of millions. Trump owns 60 % of Truth Social, and he could be in line for a$3.5 billion payout from his shares. And it is crazy to think that Truth Social could be Trump's savior, because as a business, it is a disaster. Since launching three years ago, it's pulled in just$5 million in revenue. But thanks to Trump's presidential candidacy, it's become a meme stock of sorts that's benchmarked against his odds for retaking the White House. So as he's progressed in his campaign, it's skyrocketed in value.

19:21It's not quite this perfect golden ticket though, because even though Truth Social could go public as soon as next week, this still needs to be approved by shareholders. And then also, even if that happens, Trump technically needs to hold on to his shares for six months. There are some financial workarounds that you can do to get access to some of that$3.5 billion windfall. But still, it is hilarious. I mean, you called it like it's basically a proxy for his election chances at this point because there are no underlying financials. It's an awful business that hasn't made any money so far. So it's purely speculation and kind of vibes at this point.

19:54Right. So it has an implied valuation right now of$6 billion, which is about the same as Reddit when it went public. yesterday. So these two businesses have the same valuation, even though one is making a lot more money than the other. Clearly. My dog of the week is Gucci. Things are not all Gucci at Gucci right now. Its parent company, the French luxury fashion group Caring, dropped 12 % yesterday after it revealed that sales at Gucci were down about 20 % in the first quarter of the year. Gucci is known for its loud and brash designs, a trend that hasn't been resonating with consumers recently, especially in the all-important Chinese market, which suffered a steeper-than-expected decline.

20:35Luxury sales in general have cooled, but competitors like LVMH and Hermes have been able to weatherstorm better due to LVMH's more expansive brand portfolio and the insanely long wait list for stuff like Hermes' bags. Caring, on the other hand, is left with questions once again about its reliance on Gucci, which accounts for two-thirds of its sales. As Gucci go, Karen goes, and Gucci is fading, Neil. It's fading. I mean, it's funny because last year we talked about quiet luxury and we kind of laughed about it. It's all tied up into the succession trends. But here we are seeing it actually play out in real life.

21:12The loud, brash designs are not resonating with consumers compared to the more understated elegance that other companies have perfected. And Gucci has to pivot hard to that if they want to sort of turn the ship around. Gucci is trying to turn the ship around because it just hired a new head designer, Sabato De Sarno, which is just a perfect head designer name for a fashion house like Gucci. His first collection in September did show a more elegant, more minimalistic aesthetic. So it is kind of indulging in that quiet luxury fashion trend that we've been seeing. The jury is out still on if China will embrace quiet luxury, and that's like the all important question here.

21:48But clearly they are trying to steer their ship towards more of that aesthetic that has been resonating with consumers. Yeah. The question is, is Gucci a canary in the coal mine for the entire luxury industry? Are Chinese consumers pulling back? They account for more than 30 % of the revenues across luxury groups in general. So as they go, so goes the luxury market. Okay, Toby, you know how we're planning to launch a huge marketing blitz promoting Morning Brews Daily's use of AI, so we can capitalize on the AI gold rush? Oh, yeah. Tell me all about it. Well, I'm having second thoughts, to be honest.

22:22We might get in trouble. That's because the SEC is cracking down on a practice known as AI washing, where companies tout their use of AI when they don't use AI. This week, the regulator fined two investment advisors for AI washing, accusing one of them of saying they have expert AI-driven forecasts, when that is just not true at all. The penalties weren't big, just a few hundred thousand dollars in fines, but they are big in symbolism. SEC Chair Gary Gensler is holding up these offending companies as a warning for others who might be tempted to slip AI into their marketing materials, because it is tempting.

22:55Whether you want to call it a bubble or not, AI is the name of the game on Wall Street right now, and investors will send you to the moon if you're using AI or dump you if you're getting left behind. Yeah, we've heard a lot of talk about greenwashing in the past, where companies overstate how much they're doing to actually help the environment or something like that. We also can't talk about AI washing or greenwashing without remembering the blockchain craze of kind of mid-2017 to 2018. Remember back in December of that year, Long Island Iced Tea, who makes beverages, announced it was changing its name to Long Blockchain Corp.

23:29The stock totally went nuts. It jumped 200 % on opening the day after that it changed its name. So we have seen this time and time again. And whatever new trend is kind of hitting the retail investors, companies want to jump on that. It's a very disingenuous way of doing so. And the SEC wants to get out in front of it. Yeah. I mean, there is such a strong incentive to say you're using AI. We've seen companies that have been on the forefront of AI, NVIDIA, Supermicros, companies you've never heard of, but are in the data center business, just absolutely skyrocket. While others like, say, Google, who have been viewed as stumbling in the AI space, have taken a huge bunch.