Google Dodges a Breakup, China’s Growing Trade With Africa & Anthropic’s $183B Valuation

0:00Support for the show comes from Gelt. Don't ignore taxes until it's tax season. Avoid the stress and get year round tax strategy with Gelt. Gelt is your partner in taxes. Proactive premium and bill for business owners. investors, and high net worth individuals. With features that include filing and review directly from the platform, a roadmap to track progress and ongoing expert guidance, their elite CPAs provide personalized tax strategy for both your personal and business taxes. Get a personalized consultation and 10 % off your first year of service when you mention PropG markets. Visit joingelt.com slash propg to learn more.

0:34That's joingelt.com slash propg for more information. Rinse takes your laundry and hand delivers it to your door, expertly cleaned and folded. So you could take the time once spent folding and sorting and waiting to finally pursue a whole new version of you. Like tea time you. Mmm. Or this tea time you. Or even this tea time you. So did you hear about Dave? Or even tea time, tea time, tea time you. Mmm. So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. These days, every business leader is under pressure to save money, but you can't crush the competition just by cutting costs.

1:18To win, you need to spend smarter and move faster. You need Brex. Brex is the intelligent finance platform that breaks the trade-off between control and speed with smart corporate cards, high-yield banking, and AI-powered expense management. Join the 30 ,000 companies that spend smarter and move faster with Brex. Learn more at brex.com slash grow. Today's number, 14. That is the percentage of Burning Man attendees who are in their 20s, down from a third in 2015. Meanwhile, in that same period, the over 60 population has doubled. And in related news, a hot new drug has taken the burner community by storm.

2:04It's called Cialis.

2:18Welcome to Prof G Markets. I'm Ed Elson. It is September 4th. Let's check in on yesterday's market vitals. The S &P and the Nasdaq climbed amid a tech rally following the Google antitrust ruling. More on that in a second. The Dow was flat. Meanwhile, Treasury yields fell on weaker than expected job openings data. Openings fell to their lowest level in 10 months, strengthening bets that the Federal Reserve will cut rates this month. At the time of this recording, the probability of a cut in September has risen to 96%. And finally, gold hit yet another record high on ongoing tariff uncertainty. Okay, what else is happening?

2:59Google stock soared 9 % yesterday on news that the company has dodged the breakup bullet and will get to keep Google Chrome. US District Judge Amit Mehta's order follows his ruling last year that Google illegally monopolized the search market for more than a decade as a remedy for that monopolization. The judge has now ruled that while Google must end its exclusive deals with Apple, Mozilla, Samsung, and others, it can still pay partners for default placement on their products. We don't really know what that means. Google will also have to share certain search index and user interaction data with competitors.

3:35But that is about it. The ruling rejected recommendations from the DOJ, which was great news for Google, also great news for Apple. The DOJ had requested that Google be broken up, that it stopped paying Apple the$20 billion a year it spends to remain the default search engine on Apple devices. Judge Mehta rejected those arguments. He wrote, quote, there are strong reasons not to jolt the system and to allow market forces to do the work. In sum, we thought that we were going to have some antitrust enforcement here. That was at least what we were all expecting. That was what the market was expecting.

4:14But it appears, no, we're not going to have much enforcement. The judge has said essentially go on and continue as normal. So to help us make sense of all of this, to help us make sense of the remedy, what kind of precedent it's setting, we're going to bring in former assistant attorney general for the antitrust division of the DOJ, Jonathan Cantor. I will also remind you that Jonathan was the one who originally brought this lawsuit to Google in the first place.

4:45Jonathan Cantor, thank you very much for joining us again on ProfG Markets. Good to see you. Good to see you. And it's great to be back. So Google is up almost 10 % or it rose almost 10 % yesterday because of this ruling. Just remind us, we've discussed this case before. We've had you on the podcast and we've talked about antitrust at large. But remind us what the case was and then what the ruling from Judge Meta is now saying. So there are two separate antitrust cases against Google that we brought at the Department of Justice, and we won both of them. So this particular ruling regarding Judge Meta relates to the search case.

5:26And then the second case, which we're waiting on remedies, relates to ad tech. And so happy to talk about that separately. In connection with the search case, the government, along with a whole bunch of state attorneys general, alleged that Google monopolized search, doing things like paying Apple billions of dollars to make sure Apple wouldn't work with any of Google's rivals, to make Google the search default on Safari and iPhones and all sorts of other devices. Doing the same thing with Android, making it so that if a device manufacturer, a phone manufacturer like Samsung wanted to have Android and the Android Play Store, they would need to also make Google the search default or use the whole suite of Google products.

6:11Google did the same thing with respect to Chrome and with respect to third-party browsers and the like. And so the allegation was that Google did this for roughly 10 years, paid a ton of money each year to lock out competitors and lock itself in, and in the process, secure this massive moat around its business, which allowed it to create a monopoly. And it used that money that it got from all that search advertising to pay back to its partners like Apple billions of dollars in sharing monopoly profits in order to continue locking in its position. And so we brought that case. We did this massive trial.

6:56It took about five years from start to finish. So the Trump administration, the first Trump administration, started the search case. When I was overseeing the Department of Justice, we litigated the search case and we won. And then we handed the reins over to the Trump administration, who litigated the remedies, which is the phase we're at right now. Okay, so just as an observer of this, the way I think of you is you kind of revived antitrust. At least that was what it appeared to be happening when you were in charge of the DOJ. And I think people on both sides would agree with that. And so you bring this case against Google.

7:35It's this landmark decision where the judge rules in agreement with you and says, yes, Google is a monopoly, which to us observers was a very big deal. And it was also a big deal to the market. and then suddenly we're discussing the remedies and I know that the Department of Justice recommended that perhaps Google be broken up, perhaps Chrome should be spun out or sold, it should be broken away from the company. You know, this is what we're all expecting and then we get the ruling and the ruling is basically nothing. I mean, tell me what the ruling is But my understanding is this ruling basically doesn't really do anything to Google.

8:23Even that exclusive contract with Apple, they can still keep paying Apple to be the default browser. I mean, what has this changed? Right. So this is an incredibly important moment in time, right? And so we brought a whole host of antitrust cases. We brought two cases against Google, and we won them both with definitive court rulings, including this search case. We brought a case against Apple, and a judge has already agreed with us that it passes the initial legal test as a sound case. The FTC is litigating in cases against Facebook and Amazon. And then we have additional antitrust cases against the likes of Ticketmaster and others.

9:02Now, this is coming at a time, especially in tech, where we've seen no regulation, no legislation. Nothing has passed. There's virtually no rules, no guardrails in this country for big tech. whether it's privacy or antitrust or anything else, they are operating effectively in a lawless society. And so this was the first direct shot on goal that a court had to impose some rules, not extraordinary rules, not rules that are being applied willy-nilly, imposed rules after finding that Google, in the court's words, is an illegal monopolist and behaved like one for a period of up to close to 10 years.

9:47And so they had this opportunity. The DOJ gave it a bold but sensible proposal, which would require their divestiture of Chrome and prohibit, for example, Google from paying companies like Apple billions of dollars a year to be the search default. The court, notwithstanding its bold statement that Google broke the law, decided to take a much more nuanced and cautious and, frankly, weak approach to imposing remedies on Google. So now there are some remedies. Google, for example, can't pay Apple or others to be the exclusive search default, although it can pay to be a search default, which is very confusing.

10:28And it's not clear how that's going to work mechanically. Google has to share some information with would-be search competitors. And the restrictions on exclusivity apply not just to Google Search, but to Gemini. It's AI chatbot. So overall, when I think of this is, yes, there are a number of aspects of the remedy that are deficient. And I think the court got wrong and I'm happy to talk through those. But where I really come down is this was an opportunity, a legitimate opportunity based on a finding of law to hold a company accountable and put guardrails in an industry that desperately needs it.

11:07and the court, in the interest of nuance and caution, decided not to do that. And I think that is a disappointment to many. I think what is so surprising, to me at least, is I thought that we had already taken the opportunity. I mean, that is the way I think the market felt and I think that's the way a lot of people felt is that the opportunity had been seized and that was when the judge said, yes, this is an illegal monopoly. And so it is so surprising to be in this situation. By the way, I remember a lot of people said that I was being too lenient when I was saying, you know, maybe the most appropriate remedy here would be to get rid of that contract with Apple.

11:52But now we've got Apple up 4%. The market's basically telling us Apple's still going to be getting paid billions of dollars by Google. So not even that happened. And so I guess my question to you is, what happened between the time where the judge said, yes, this is an illegal monopoly, and now? Because it seems that those are totally different places to come down. And I don't know what happened. Did he change his mind? Was it something to do with the way the Trump's DOJ litigated this? Like, what happened in that time period? Yeah. So if you read the decision, what it says is that it appears Google persuaded the judge that the surge of AI competition from the likes of OpenAI and perplexity and anthropic and massive amounts of money coming in made it such that the court felt it didn't need to restrict Google from paying companies like Apple.

12:54because if it did, OpenAI with backing from Microsoft, Anthropic with backing from, guess what, Google, and Amazon and others would have the money to pay in turn. Now, the court did something interesting, which I found puzzling, which it said that there are a lot of good reasons why Google should not be able to pay for default placement. But the court was concerned that if it prohibited payment, it would have a chilling effect on innovation. and companies like Apple might not use that money to innovate. We can put a pin in that because Apple spends more money on stock buybacks every year than it does on R &D.

13:34But setting that aside, that little nugget, the court was concerned that the lack of payments would have a chilling effect. But it said that it can revisit the remedy. And so if the remedy that is in place isn't working and competition isn't improving, it can revisit the remedy and perhaps require a ban on payments in the future. I personally think the right thing to do would not be give Google, the monopolist who was found to have violated the law, the benefit of the doubt. And if anything, you start more aggressive, especially given the longstanding pattern of anti-competitive behavior and illegal conduct, and then you modulate back.

14:22Right. So, again, that's disappointing. That was the court's rationale. And it is where it is. Now, the DOJ can appeal that. I actually expect Google is going to appeal both the remedy and the underlying decision, notwithstanding the perception that it worked out well for them. So we may yet go another few rounds here. And then the other interesting piece of this is the court has ordered Google and the Department of Justice to go back and propose a new remedy that is consistent with the court's decision. But reading the decision, it's confusing. So, for example, how can you prohibit exclusives but then allow Google to pay?

14:58So let's say Google picks the amount of money that's designed to induce exclusivity. In fact, even if not in terms, is that illegal or not? I think there are going to be some challenging questions the court has invited about what behavior is legal or not. So it's going to get messy and we're far from done. How do you address the multiple years in which, as the judge clarified and said, Google was operating an illegal monopoly? I mean, in other words, the judge is saying times have changed because we're in the age of AI. But what about all of those years previous where the judge said, yes, this was an illegal monopoly?

15:40Is there a remedy for that? Well, that's the issue here, right? So the remedy is supposed to deny Google the fruits of its violation, and it's supposed to address the monopoly that it has gained and essentially cause the monopoly to cease. The court declined to do that. Instead, it felt that the onslaught of competition from AI vendors like the OpenAI and Perplexity and others and Anthropic, plus the relief that it did put in place, would be sufficient in the current age to erode Google's monopoly power. But the thing that concerns me as a former enforcer and somebody who cares about this space deeply is that we need accountability.

16:23Companies who break the law need to understand that it doesn't pay, that if the consequences of breaking the law are less than the consequences of violating the law, then they're going to make the decision to violate the law and they're going to view it as a cost of doing business. And so here you had, after generations of lax antitrust enforcement, you have antitrust enforcers who put their lives on the line, their professional lives, that is, and personal lives to litigate this case forcefully and win. um now what message does it send companies are looking at this and they might say well if i violate the law then if it's only a slap on the wrist then yeah it'll be painful and it'll be expensive in terms of hiring lawyers but it's worth um it's worth doing if i get billions of dollars or tens of billions of dollars an upside from having a monopoly and so i do worry that that in the court's effort to avoid chilling innovation, it will have the opposite effect, which is promoting future violations because the consequences are not significant enough to create a disincentive to engage in the conduct in the first place.

17:42It almost feels as if this undoes most of the work that you and Lena Kahn did in years previous. I mean, at least from a technology perspective, if the precedent now is, yes, we will say that you're a monopoly, but then companies think to themselves, well, I doubt we're even going to get punished for this. The same thing that happened with Google could happen to us. Doesn't that kind of undo the work you've done? Or is that, am I going too far? How do you feel about this on a personal level? I'm of mixed minds. So, yes, I am deeply concerned about that. And that's, in fact, the upshot of what we were just talking about.

18:24On the other hand, I'm not ready to wave the white flag and declare the whole endeavor futile. We won a major case against Google. There's a significant precedent. And the public had the opportunity to see in a published decision what it did to violate the law. And there are a lot of private lawsuits now that are going to ensue. We have a second case against Google in Virginia that we won as well relating to ad tech. And a remedies trial is about to kick off this month in that proceeding. And then you have proceedings in Europe and you have private cases. And so this is going to be, you know, a longer battle than just one case.

19:06And, you know, when I started doing this work, it was, you know, about 15, 20 years ago when the idea of big tech violating the antitrust laws was seen as something that was impossible to prove. And when I took the job, I was told there's no way we will ever be able to win in court. And we made it, you know, significant strides on the law. I'm disappointed because I felt like we needed more time to litigate these cases to their completion, including on remedies, including on appeals. And so now it's up to the current administration to to take the the torch and hopefully they'll continue a pace.

19:48But they're going to be ups and downs. And I you know, but I think the cause is just too important. And again, I'm pro-tech. I love tech. I love innovation. I want to see more investment. I want to see us in the United States be the cradle of innovation and little startups become the next great big U.S. company. But in order for that to happen, we need to make sure that the incumbents can't suck up all the oxygen. And we need to make sure that the technology is safe. We need to make sure that kids can use it. We need to make sure that they're not using their power of manipulation in ways that are harmful to society.

20:29And in the absence of comprehensive legislation being passed by Congress, which the big tech companies are adept at blocking, we need to take the shots we have and make them work. And so in that sense, it's disappointing, but it's also not the only shot on goal we're going to have. so much more that we could discuss on this. We're going to have to have you on for a longer segment soon, but we really appreciate your time, Jonathan. Thank you for joining us. Thanks for having me.

21:01That was Jonathan Cantor, former Assistant Attorney General of the Antitrust Division of the Department of Justice. Also one of the great leaders in American antitrust. It is always an honor to have him on the show. I'm going to switch gears for a moment. And I'm going to point you to Google stock, which rose 9 % on the day, added$234 billion in value. I will clarify, the real story here isn't the stock. The real story here is the erosion of antitrust, the consistent deference to big tech that we keep on seeing in the US justice system over and over. However, having said that, you may remember Google has been our top stock pick this year.

21:48I've said this on the podcast many times that Google is way undervalued when you look at every business from Search to Gemini to YouTube, the number one streaming platform, to Waymo, the number one autonomous driving platform. This stock had zero business trading at under 20 times earnings as it had been earlier in the year. And as I said, it was really only a matter of time. I think Google is way undervalued right now. If you're thinking about buying Google, I would argue the time to buy is right now. It's gotten crushed year to date, down almost 20%. It's trading at its cheapest levels in a decade, 17 times earnings.

22:32compared to the S &P, which is trading at like 25, 26. You know, Google, it's a juggernaut tech company, and yet it's being valued today like it was like a dying industrials company. Well, here we are. Since the time of our Time to Buy Google episode, the stock is up 45%. We are now at$230 per share, $2.8 trillion market cap, all-time high for the company. So yes, this is a loss for antitrust. It is a loss for, in my view, the rule of law. But let's be clear, it's a huge win for Google. And so if you bought this year, well then, huge win for the investor as well. After the break, a look at what is happening in China.

23:22If you're enjoying the show so far, give Prof G Markets a follow.

23:32Avoiding your unfinished home projects because you're not sure where to start? Thumbtack knows homes, so you don't have to. Don't know the difference between matte paint finish and satin? Or what that clunking sound from your dryer is? With Thumbtack, you don't have to be a home pro. You just have to hire one. You can hire top-rated pros, see price estimates, and read reviews all on the app. Download today. Nobody knows your customers better than your team, So give them the power to make standout content with Adobe Express. Brand kits make following design rules a breeze, and Adobe quality templates make it easy to create pro-looking flyers, social posts, presentations, and more.

24:13You don't have to be a designer to edit campaigns, resize ads, and translate content. Anyone can in a click. And collaboration tools put feedback right where you need it. See how you can turn your team into a content machine with Adobe Express, the quick and easy app to create on-brand content. Learn more at adobe.com slash express slash business.

24:36Tuesday on NBC, Jimmy Fallon and Bozema St. John host the highly anticipated new competition show. I hired 10 creatives from all walks of life. They 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 Tuesday on NBC.

25:10We're back with Profity Markets. Nigeria, South Africa, and Egypt have emerged as China's top trade destinations, with exports jumping by 25 % year over year. Chinese exports to Africa have totaled$122 billion so far in 2025. They are on pace to top $200 billion for the first time ever. That is more than double what China sold to Africa just five years ago, and it's now more than what they are selling to the US. Meanwhile, Washington is moving in the opposite direction. We've reimposed tariffs on 30 African countries. Compare that to China, which has cut tariffs on 19 African countries. By the way, in the first half of the year, Africa signed$30 billion in construction contracts with China.

25:57That is five times more than last year. So China and Africa are reforming their alliance. But this isn't just a China-Africa story. A bigger shift is happening. And that is many alliances all over the world are being formed, especially with China, but especially not with the US. As we said earlier this year, we are driving the world into each other's arms and we are seeing this everywhere. The EU just signed its largest ever trade deal with Mercosur. That's the South American trade bloc that includes Brazil, Argentina, Paraguay, and Uruguay. They've also finalized a deal with Mexico. They are re-upping their bilateral trade agreement with Switzerland.

26:39India just signed a trade deal with the Eurasian Economic Union. That includes Belarus, Kazakhstan, Armenia, Kyrgyzstan, and yes, of course, Russia. They've also signed deals with South Africa and Australia. They have new accords with Qatar and Saudi Arabia. Put another way, deals are happening, as we've said. They're just not happening with us. And this is all coming at a very precarious time. As you probably know, So Putin is off in China right now, and he's partaking in the Chinese military parade. So there's a lot to unpack here. Let's bring in Scott Galloway. Let's hear what he thinks of all of this.