A Big Tech reckoning has arrived

Speaker 0:00 What Brendan Carr's doing would be, you know, an, a, aathema to, you know, conservatives of old. He's, he's just, like, basically, you know, censorship regime right here. [upbeat music]

Kara Swisher 0:15 Hi, everyone. Today, we're talking about all things tech, media, and legal with entertainment law expert Eriq Gardner. He's a founding partner and national correspondent at Puck, who mostly writes about legal affairs, and I am surprisingly a legal wonk, and I read him all the time. He's an expert on these issues, and he'll be able to be our guide as we cover some of the biggest stories on his beat, starting with the latest on the proposed $112 billion Paramount-Warner Bros. merger. This is a really interesting time. There's so many legal issues, but they all point to people wanting to sue tech. All these companies are facing a lot more pushback on a lot of issues when before they sailed through, largely because Congress did not do its duty and create guardrail regulation that was adequate to control them, and now you're seeing this through the courts, and so Eriq is a great person to talk to right now. Lots to get to today, but it's also fun, so stick around. I promise, law is fun. Eriq, thanks for coming on On.

Speaker 1:11 Yeah, thanks for having me.

Kara Swisher 1:13 Um, for people that don't know, I'm a huge fan of Eriq's writing. I'm not a lawyer. I don't play one on TV. I don't do anything like that, but everything he writes I didn't either know about or understand quite the way, so I really appreciate your work quite a bit.

Speaker 1:26 Yeah. I, I appreciate that.

Kara Swisher 1:28 So let's talk a-- I'd love to know, like, how did you get started writing about, like, legal issues on Puck?

Speaker 1:34 I've written about legal affairs f- you know, uh, go-going back decades, and it, it was something that I... You know, for, for a while, I thought about becoming a lawyer, but then I decided, uh, the last thing that I wanted to be was a lawyer.

Kara Swisher 1:46 Mm-hmm.

Speaker 1:46 I thought about, you know, maybe teaching law at a, at a university or going into public policy, but I-

Kara Swisher 1:53 Right

Speaker 1:53 ... really, what I really loved doing was, was writing, and to me, law was the ultimate way of getting a, a venue f-for which to write about.

Kara Swisher 2:03 Right.

Speaker 2:03 There's always drama involved, and, um, also I, I feel like my one skill is, is puzzle solving, and law is, is a great place to go as a puzzle solver.

Kara Swisher 2:13 100%. But let's start with the big, the big case right now, the proposed Warner-Mount merger, I guess that's what you call them, uh, along with other mega mergers have benefited considerably from Trump administration's friendly regulatory environment. The deal is facing opposition, namely a lawsuit from 12 states. Uh, given the landscape, how much runway is left in the consolidation wave, and will Warner-Mount be one of the last attempted media mergers, or do you expect we'll see more? And we'll, we'll talk specifically about Warner-Mount in a second, but overall, is this the high point of these things?

Speaker 2:48 Uh, you know, it wouldn't surprise me to see another year or two, especially as, uh, you know, the, the Trump administration kind of winds down for some other media companies to try to sneak in under the, uh, what they see as a favorable regulatory environment for clearing their mergers. Uh, you know, Comcast has, you know, s-spun out, uh, some of their assets, and, you know, there's rumors that, that, uh, you know, you know, Universal could be, could be up for sale. You know, Lionsgate's up. I know that's not as big as, as Warner and Paramount. Um, but I, I, you know, I, I wouldn't be surprised to see a f- a few more mergers. Um, you know, and you never know, you know, whether the tech companies will try to swallow some of the, uh, some of the entertainment ones or whether Netflix is still in the market. I mean, they-- at one point, they were about to, uh, buy Warner, Warner Bros., so what's their next move? Um, so, so we'll see. Uh, uh, yeah, but, you know, over-overall, I, I would expect that in a few years, uh, this M&A frenzy to, to die down a bit.

Kara Swisher 3:51 So let's get to Warner-Mount itself, um, and the latest round. This just-- Uh, I think a lot of people are surprised. I'm not so surprised given they're quite arrogant. They were quite arrogant in how they were wandering around the environment, up to having a dinner for Trump, which I think everyone was sort of gobsmacked that they-- that's how arrogant they were. So earlier this month, a federal judge set a March 2nd court date. This was after Paramount struck a deal to delay the closing, uh, until June. Last week, Paramount Chief Legal Officer Makan Delrahim, whom I know, just for people to, to full disclosure, told Politico that all options are on the table when negotiating possible deal with AGs, and some look, looked to him to mean that it might mean selling CNN, but he wasn't specific. And attorney, uh, California Attorney General Rob Bonta said to me that it was, it's not about CNN. He said it, he reiterated it again this week. Um, uh, it, it, it-- and Paramount supposedly said it's not on the table. I'm not sure what Makan was talking about. I don't want to talk about the s-sale of CNN, but I don't think it's-- I don't think it-- that's what the biggest deal here is, even though, uh, the, the Paramount people would like to focus on it. David Ellison wrote an entire op-ed that said, "I'd like to focus on CNN," and then didn't, uh, or n- or note anything that was going on at CBS. But talk a little bit about where we are right now.

Speaker 5:08 Yeah, I, I think there's a real antitrust case. I mean-

Kara Swisher 5:10 I do too

Speaker 5:11 ... you look at the complaints, CNN hardly comes up at, at all. Does politics at all animate this case? Maybe. Yeah, you can't take away the context or the calculus and everything like that. Um, but when you-

Kara Swisher 5:22 These are blue states that are doing this. That's-

Speaker 5:24 Yeah

Kara Swisher 5:24 ... that's what their argument is.

Speaker 5:25 Yes, and, and I'm sure they have in mind, you know, like who CNN's gonna, um, wind up with. But s- that doesn't explain the fact that they went after Live Nation, T-Ticketmaster, or they w- you know, intervened in, in all these other merger cases. Obviously, they have an antitrust theory. Uh, they like to protect labor markets. Um, a-and, you know, and, and they have a real case in-involved Um, you know, is it the biggest slam dunk case? It is not. I mean, they, they are, you know, trying to slice and dice this marketplace, uh, in, in terms of blockbuster movies and, uh, like what is defined as a blockbuster, you know, a wide release. Um, the market obviously is not the same as it was decades ago. A few, uh, you know, back in the 1980s and 1990s, it would be inconceivable that, that Warner Bros. and Paramount would, would merge. Those, you know, two companies had the largest sh- uh, share of the market. But we're not regulat- we're not, you know, litigating what Hollywood as it was. We're h- litigating it as it is now, and there are, you know, lots of other new companies out there, Netflix and Amazon and Apple. And so they, you know, Paramount probably has a, a good case to be made that, you know, that, that, you know, the states are-

Kara Swisher 6:42 Things have changed. That's their-

Speaker 6:43 Th- thing, things have changed.

Kara Swisher 6:44 Yeah.

Speaker 6:45 Um, I actually think that their economic case is better than their, you know, their PR case that this is all politics. Um, but it's not a slam dunk in either direction. I c- I could see-

Kara Swisher 6:54 Especially on cable.

Speaker 6:55 Yeah.

Kara Swisher 6:56 So let, let's take a step back and look at the lawsuit itself-

Speaker 6:58 Yeah

Kara Swisher 6:59 ... by Bonta and 11 other states' attorneys general to block the merger. By the way, Paramount did not know it was this many, I can tell you that. And they also thought, uh, it wasn't gonna happen for a little bit, um, which was interesting, you know, 'cause they had won all over the world, and they kept saying, "We won all over the world." I'm like, "So what?" Like, I was like, "And?" Like, it doesn't really matter. Like, a, the, a lot of it is it doesn't really matter.

Speaker 7:20 The rest of the world is also analyzing something different. I mean, in the rest of the world, they're, they're looking at distribution markets.

Kara Swisher 7:27 Absolutely.

Speaker 7:27 Whereas California is, is much more interested in production.

Kara Swisher 7:31 Production and-

Speaker 7:31 Um, yeah, so-

Kara Swisher 7:32 And so is New York and New Jersey-

Speaker 7:33 Right

Kara Swisher 7:33 ... and others. So you described it as a fairly conventional antitrust challenge. You said it's notable, and this is from you, for what it embraces and what it avoids. For people who don't know, what exactly are they alleging in, in the overall strategy, and what did they leave out that was critical?

Speaker 7:48 Yeah, I mean, they basically allege, um, monopolization in three markets, uh, two of them being, uh, related to th- theatrical, uh, and, and w- and wide re- specifically wide release, uh, films, tentpole f- films, so blockbusters.

Kara Swisher 8:05 Mm-hmm.

Speaker 8:05 And then the other one-

Kara Swisher 8:06 Avengers, whatever.

Speaker 8:07 Right. Right. And then the, and then the third is, is cable television, basically that they have enough, uh, must-have, uh, cable networks that they have so much leverage over distributors, and they can exact high prices that eventually-

Kara Swisher 8:21 So prices for consumers eventually.

Speaker 8:22 R- right. Right. So, so that's basically what they are, uh, alleging to ha- be done. Uh,

Speaker 8:29 the states still have to prove that, uh, you know, uh, they have not only enough of this market, and it is a market, and it's not, you know, forgetting important things like streaming, but, uh, also that there are bad competitive, uh, impacts to h- making this merger go through, you know, w- whether that means decreased output, decreased films, less jobs, uh, that sort of thing. And, and the one, the other thing I want to point out here is that this isn't really just one case. It's actually t- two cases, and no one should forget the, the Writers Guild case because they are also suing, and, uh, it, that case has mostly been consolidated, and even if the states decide at some point that they're going to settle, uh, the, uh, the Wri- the Writers Guild still has a seat at the table, and, and they will, uh, you know, have an important voice too, so-

Kara Swisher 9:17 So they don't have to settle. This could go on.

Speaker 9:18 They don't have to s- to settle.

Kara Swisher 9:19 Right.

Speaker 9:19 And that, that's, you know, really what complicates it. If, if, if there's one topic I think people are, are kind of overlooking, it's, it's that Writers Guild case.

Kara Swisher 9:27 The Writers Guild.

Speaker 9:28 Yeah.

Kara Swisher 9:28 And what, did they leave anything out? So their strategy is winning on at least one of these, correct?

Speaker 9:33 Yes.

Kara Swisher 9:33 'Cause I've g- and they're quite discreet, the, the, the choices they've made.

Speaker 9:37 Yeah, the states don't have to win on everything. They can win on one thing and win it all, right? And, uh, you know, I mean, but, uh, what's being left out, I would say, you know, uh, from Paramount's perspective, uh, they say that the states haven't done a good job defining the market. They say, you know, "Look at these tentpole films. You're counting in studios, but what does that not count?" It counts, you know, some of the biggest films, uh, out this year, Backrooms or, or Lions Gate's Michael or, or that sort of thing. And, and so, uh, they can say, like, even with this kind of, you know, manipulated market thing, you, you say that we have, you know, 27% share of the market. Well, 27% is actually not that big. You know, usually, uh, the presumption of, of, uh, you know, illegality comes after 30%. Um, so even with the manipulated market, it's 27%, and then you get to the, the studios that weren't counted, and maybe that pushes it down to 20%, and then you start talking about, you know, how the industry's changing.

Kara Swisher 10:37 We're so small.

Speaker 10:38 Artificial intelligence is coming up.

Kara Swisher 10:41 Right.

Speaker 10:41 The, the, you know, the industry is shedding jobs. You know, theaters are hurting, and so maybe th- there's, you know, pro-competitive reasons for letting-

Kara Swisher 10:49 Yeah

Speaker 10:49 ... the merger come through. Now, I'm not saying I buy all this-

Kara Swisher 10:51 Well, th- that, that's their new one, if this takes too long.

Speaker 10:53 Yeah.

Kara Swisher 10:53 Y- that they shifted-

Speaker 10:54 Right

Kara Swisher 10:54 ... from their dumb stuff, and this is their new one. I've noticed-

Speaker 10:58 Right. Yeah

Kara Swisher 10:58 ... like, "Oh, if it takes too long, it'll hurt everyone." Well, guess what? Again, I was like, "Okay, and?" Like, that's not gonna really make... I think it's they're trying to push California into settlement, and one of their ways is, is, is brute force. Your colleague Matt Belloni reported last week that David Ellison confirmed his plan to move Paramount Skydance out of California to Tennessee, uh, Texas, Georgia, or another state. I think it's Tennessee is where he's looking at. If they don't-- Uh, that's what I understand. If they don't reach a, uh, [chuckles] according to real estate people. Um, if they don't reach a settlement. Here's what Rob Bonta told me about Paramount potentially moving out of California on Pivot the day he filed the lawsuit last month.

Speaker 11:35 I mean, it, it feels like a potential monopolist [chuckles] trying to bully a state that is doing its job to regulate them, and it f- feels like a last-ditch, you know, desperate effort to try to blackmail California and 11 other states into not enforcing antitrust law, into allowing an illegal ... proposed merger to go through, and that's not gonna happen. It didn't work. We're not doing that

Kara Swisher 12:01 So why did he do that? Why did-- And, and it's planned to move this October 1st deadline. Uh, there was some rumor that there was-- they're gonna move CNN, uh, also out of New York, you know, which was hair on fire there last week, I can tell you. Uh, what, what, what, what are these threats for? And they first, they started with the op-eds, and then you had Ari Emanuel feels like he's going rogue for them. Um, then you had Chris Wallace inexplicably writing a piece, um, and then others, you know. And what is the, the threat here? But the threat of leaving is, I think, their biggest move so far.

Speaker 12:35 Yeah, it's a, it's a leverage play. I mean-

Kara Swisher 12:36 Yeah

Speaker 12:36 ... you know, it's, it's, uh, you know, putting, uh, political crosswinds at the in there. You know, I'm sure Rob Bonta's gonna hear from, uh, Newton, Governor Newsom or-

Kara Swisher 12:45 Yeah

Speaker 12:45 ... you know, it, it-

Kara Swisher 12:45 Xavier

Kara Swisher 12:46 Becerra said they should settle. Paramount issued a press release pressing for settlement, or I mean, the state attorney generals to, quote, "Engage in us with good face," uh, "faith," excuse me. So what, what-- talk about the bullying and then the, "Please engage with us, sir," like that kind of thing.

Speaker 13:01 Yeah, I mean, I, to extent, I mean, I think it only works for so long, right? You only have, you know, so many moves to be made. I mean, you, you put, you put the threat out there. Uh, at some points maybe they'll, you know, put their lot up for sale or maybe move their headquarters or something like that. But at some point it, it stops having effect. And, you know, one of the things I, I might expect is that they will move on to something else, a different threat. Maybe they'll put out the, the fact that, that CNN could be sold and, and, and, and wind up in, in worse hands than their own. I mean-

Kara Swisher 13:33 Elon. Elon

Speaker 13:33 Exactly. Exactly.

Kara Swisher 13:34 Right. Yeah.

Speaker 13:34 I think that's where we're go- gonna go.

Kara Swisher 13:36 Yeah, you know that

Speaker 13:37 You know, private equity acquiring CNN, Elon Musk acquiring CNN, um, you know, really just getting, uh, Rob Bonta to, to think like, "Okay, well, maybe it's time that we come to a deal here and start negotiating."

Kara Swisher 13:52 Well, that would be such-- that would be something. That would-- I think that would blow up in their face, I suppose, but maybe not. Maybe not. Do you think it is any of these work? Or th- Bonta's already kind of won with the trial way out into March, correct? In that regard. He doesn't-

Speaker 14:06 I-

Kara Swisher 14:07 You, it was either you or you don't have to win. You just have-

Speaker 14:10 Right

Kara Swisher 14:10 ... to get to March, essentially.

Speaker 14:12 Well, I, I think that he's, you know, getting to March was, was a big thing. I mean, uh, the outside date on this, uh, merger is next June, right? And so, you know, putting it to March makes it really close to June. Who knows when the judge comes back with a decision-

Kara Swisher 14:28 Right

Speaker 14:28 ... whether there's gonna be a time to appeal or not. I'm sure the judge will try to get, uh, get her decision before June.

Kara Swisher 14:34 She's pretty quick, yeah.

Speaker 14:35 Um, so, so, you know, it, it's possible that there could be some emergeny- emergency appeals last second, but I'm sure Paramount would prefer to have, uh, uh, the, the trial much sooner. I mean, they, they proposed November. Um, so, so yeah, from, I mean, from, uh, but, you know, Bonta doesn't seem like he's in any rush to, to negotiate.

Kara Swisher 14:54 Why would he?

Speaker 14:54 Uh-

Kara Swisher 14:54 From a legal point of view, why would he, right? Bonta has said he'd consider structural remedies to resolve the lawsuit, but dismissed behavioral remedies. Deadl- uh, you, you, you referenced the Live Nation, Ticketmaster breakup case as example of behavioral remedies ultimately being inadequate. Um, looking for a shorter, is, what is this, what does a settlement look like? And if not, I have said Paramount has to settle. There's just no other way around this, and soon, if they can. What, what do, what do you think the settlement could look like and what something Bonta would accept and that Paramount was willing to do?

Speaker 15:29 I, I think the framework of a deal starts with a divestiture of, of some of their TV assets, CNN or maybe, maybe broader than that, the, the Turner things. I think there would be kind of a nice, uh, syllogism to, to the fact that, you know, like Turner, TBS, and CNN, uh, w- you know, may have to be divested because that was, you know, exactly what, uh, what the DOJ under Makan Delrahim tried to stop AT&T from buying, uh, a, a few years ago. Um, could it, could there be some sort of structure where, uh, David Ellison holds onto a minority share and, and spins it off? I, I, I don't know, but I think that that's where it starts. But that's not enough because it doesn't really get to, uh, you know, the heart of the complaint, which is, is theatrical. Um, I think that there would probably need to be, um, some

Speaker 16:25 ways to ensure that Warner Brothers and Paramount remain independent studios, um-

Kara Swisher 16:31 To, as separate

Speaker 16:31 ... that they're-

Kara Swisher 16:32 Separate

Speaker 16:32 ... that, yeah, that they're run separately. Um, I, I don't, I don't think it would be just-

Kara Swisher 16:38 How do you do that?

Speaker 16:39 Yeah, I don't think it would be divestitures, but it would have to be some sort of, you know, board level, uh, operational, uh, Chinese wall-ish sort, sort of things. I don't, I don't know precisely. Um, on top of that, you layer in behavioral s- concessions, and then I think you-

Kara Swisher 16:58 Jobs. Jobs.

Speaker 16:59 Jobs. Right, right.

Kara Swisher 17:00 Right. And the number-

Speaker 17:01 And, and maybe even modern-

Kara Swisher 17:02 This whole number of movies made-

Speaker 17:03 Yeah

Kara Swisher 17:03 ... seems insane. Like they could just put out like a cartoon, right? Or...

Speaker 17:08 Yeah. Yeah. So, so I think that's, you, you start layering all this stuff together and you get to maybe the, the beginning parameters of a deal. But even then, I start thinking, okay, well then what, what does the Writer G- Writers Guild need to settle their end of the case? Because remember, uh, Paramount agreed not to close their merger until five days after, uh, a decision in both cases. So even if the states settle, then the Writers Guild are gonna want something and, and so maybe they want some sort of, uh, you know, not just assurances over jobs, but maybe that they try to like bring back FinCEN and, and, and, uh-

Kara Swisher 17:46 Explain that, what that is.

Speaker 17:47 Oh, it, there used to be, you know, back in the '70s and, and early '80s before the Reagan admin- administration, all these rules about, uh, uh, distribution of, of content that you owned and produced. Um, so it, it's basically rules to manage vertical integration. And so if you're gonna have, uh, a company that, that, you know- Owns much of the prod- production lines like, you know, Warner Brothers and Paramount, and then they have this big platform like Paramount Plus and H- HBO Max. Uh, you know, y- you need rules to establish that, that, you know, writers come in, talent comes in, and they can still, you know, get a piece of the back end.

Kara Swisher 18:28 Especially independent productions, right? The am-

Speaker 18:30 Ex- exact- yeah. They, they want the pipeline. They wanna make sure that there's no foreclosure as, as, you know, economists call it, um, where, you know, if you're an independent voice out there, uh, there's still pipelines for you to get your, you know, your product out there.

Kara Swisher 18:44 Mm-hmm. So when you, when you think about what's going forward here, there's also the, obviously the politics. Um, and, uh, and David Ellison wrote a defense of the merger. Many-- It was, says, "The issue is whether it can be trusted as a steward of Warner's CNN." Um, and there's been, quote, "Speculation, my politics, my loyalties, my intentions." He, he went on about it, but then of course he's been sucking up to Trump rather a lot. So was his dad for years and years. The, his dad is a longtime, uh, you know, Larry Ellison, um, didn't initially support Trump, to be fair, uh, he-- but he's, uh, he gave roughly $45 million to a nonprofit group supporting Trump's election, and

Kara Swisher 19:19 David has given d- money to Democrats also. Um, talk about the political issue here and, and, and now that possibly the Democrats are coming back to power. I'm hearing from them, like they haven't even figured this one in, like the political elements, and it... That's away from the legal issues here, but it certainly counts, correct?

Speaker 19:39 Yeah. I, I, I-- and, you know, actually, I don't think I blame David Ellison for this. I blame Trump more for this because, you know, he was the one-- he's the one who's kind of put this, uh, feeling out there that, that, you know, if you kiss the ring, uh, you get approval. So they were just doing what kind of the message that was put out there, uh, you know, to, to be o- on the good graces. And you could see why this like pissed off the, the Democratic, uh, establishments in the l- in the long run. It doesn't look good to have, you know, uh, someone who, who, you know, your, your mergers before them, uh, like in the same room together. And, and there used to be all these, you know, hard lines about independence of, of the Justice Department, and now-

Kara Swisher 20:22 Right

Speaker 20:22 ... there's not, and this is the price that, that, that, that gets paid.

Kara Swisher 20:25 Yeah.

Speaker 20:25 So, you know, even though, you know-

Kara Swisher 20:27 Now, some DOJ lawyers objected to this deal, and it went right through anyway.

Speaker 20:31 Yeah. There, there, there are people, there are career prosecutors. There are people who just, you know, work there. They, they are not political whatsoever, uh, and they analyze it on the merits. And, um, and, you know, maybe, maybe they did analyze this deal and maybe this deal, you know, deserves to be, uh, you know, approved. Uh, the but the fact is that, you know, because the Trump administration has been paying favors to, to, to people and, you know, we saw what happened in the Live Nation case. There was a, a, a lot of lawyering there. Um, and so, you know, people can't help but look at some- something and wonder, like how much did, you know, uh, politics play a part in it?

Kara Swisher 21:09 Mm-hmm.

Speaker 21:09 And, and, and-

Kara Swisher 21:10 And not law. And not law.

Speaker 21:11 Right. And, and, and so the perception kind of fuels the reality. So regardless of, you know, whether or not the deal was, you know, approved on its merits or not, uh, you know, there are suspicions out there, and then-

Kara Swisher 21:24 Plus he said it. Plus he said it several times.

Speaker 21:27 Yeah.

Kara Swisher 21:27 I love-- I can't wait till it changes.

Speaker 21:29 So. Right.

Kara Swisher 21:29 Or, you know, he's, and he's gotten, there's rumors he's gotten promises. Now, it also, by the way, people don't realize the deal also still requires FCC approval because Paramount holds licenses for local television stations. A recent ProPublica investigation found that two out of three FCC commissioners, Chairman Brendan Carr, whom I call a moron, and Commissioner Olivia Trustee, whom I don't, uh, accepted luxury gifts from Paramount while FCC was reviewing or about to review major Paramount business decisions. Carr reportedly accepted honors gala tickets from CBS Paramount eight times since 2017, totaling over $75,000 in gifts. And it seems like the total value of the gifts might actually have been much more. Could anything come up, uh, these ethics complaints against these commissioners? And-

Speaker 22:11 So, so-

Kara Swisher 22:11 Is it a problem?

Speaker 22:13 Yeah. So the FCC already approved Skydance's, um, uh, uh, control of the Paramount, uh, portion of it, and Paramount owns CBS and, and, and all that. Warner does, uh, doesn't actually have any licenses. But, um, it, th- there are some, you know, first of all, there are some like edge satellites i- in this, and also as part of this process, there's, um, some foreign money coming in. I don't expect the FCC to, to, you know, kick up a fuss, but, you know, um, this is a company that continues to do business with the FCC. And so if, uh, you know, Brendan Carr wanted to, uh, you know, you know, deci- and put his, his foot in the gears of this and, and, and glime it up, maybe he could. But I, but I don't expect it. I think, you know, mainly right now, uh, it's, it's the loss-

Kara Swisher 23:04 The court case.

Speaker 23:05 It's, it's a court case, right.

Kara Swisher 23:06 Right. It's a court case. He just has to be gone, essentially. Um, where is your over and under on this? Where it, where it's gonna go? I mean, it obviously isn't good that it's gonna take till June. I assume there'll be a settlement 'cause they're, financially speaking, they're fucked if it keeps going-

Speaker 23:21 Yeah

Kara Swisher 23:21 ... essentially. I mean, the economics collapse.

Speaker 23:23 I mean, I mean, my-- If I had to put money on it, I would probably say that settlement too. I just can't imagine that, that this actually

Speaker 23:30 gets to trial. Um, but you know, it's, it's... I don't have, uh, the biggest conviction o-on it. You know, if it did get to trial, I wouldn't be shocked. Um, you know, I mean, these are parties that like are, are really, you know, digging their heels in o-on some, on some of this stuff. And, you know, I'd, I wouldn't wanna play poker with, with Rob Hattep because I [chuckles] it's hard to, it's hard to read him right now. I mean, he seems-

Kara Swisher 23:56 Right. Yeah

Speaker 23:56 ... he seems like he's like going full tilt o-o-on this stuff. And then as I said, you know, the WGA has its own, uh, complicating factors.

Kara Swisher 24:04 That's a really good point to me.

Speaker 24:06 But, but that, but that, that being said, um, when I book my ticket to Oakland, uh, it will be with the option to get a refund [chuckles] if it-

Kara Swisher 24:14 With a refund, right

Speaker 24:14 ... if the, if the... Yeah.

Kara Swisher 24:15 Because just like with Justin, uh, Justin Baldoni and Blake Lively, they did eventually. They seemed very angry until they settled, correct?

Speaker 24:23 Right. A lot of these things settle on the eve of trial, that's for sure.

Kara Swisher 24:27 Support for the show comes from Whatnot. If you have an amazing product to sell but aren't sure how to cut through the noise and reach your customers, Whatnot might be the answer. Whatnot is the largest dedicated live shopping platform, whether it's beauty, collectibles, electronics, luxury fashion, even cookies, sellers are building real thriving businesses. Anyone can sell, whether your business is big, small, or yet to exist. People selling on Whatnot sell 10 times more than on any other major marketplaces. That's because you're not just listing products, you're building real connections with buyers. You go live, show off products in real time, and turn what you love into real income. Whatnot buyers spend more than an hour a day in the app. They're not just browsing, they're engaged, buying, and coming back. One of our producers tried Whatnot, and this was a totally new buying process for her. She loved being able to request different angles of a product in the seller's live chat room, and the sellers were interacting with her in real time. She says that now, after spending some time on Whatnot, she's definitely picked some favorites, and she checks in with her favorite sellers every now and again to see what they've got on the docket. And you can, too. Search Whatnot, W-H-A-T-N-O-T, in the App Store, download, and you can start selling or buying right away. Every episode, we get a question from an outside expert. Here's yours.

Speaker 25:49 Hi. It's FCC Commissioner Anna Gomez here. As the lone Democrat at the FCC, I've spent a lot of time thinking about what's happening to local broadcasting as a result of media consolidation. Eriq, I've been following your reporting at Puck, and I wanted to ask this question to you directly. Local broadcasting is going through a lot of change, and there's no shortage of ideas about how to help it survive and to stay competitive. For me, the priority is protecting localism, meaning real local journalism from stations rooted in their own communities. I don't think the answer is letting big national companies take over and call it local news. So what changes do you think could make local broadcasters stronger while keeping that local focus intact? Thanks, and I look forward to your answer.

Kara Swisher 26:38 And this will have to do with Disney and stuff later, but w- talk a little bit about this.

Speaker 26:41 Yeah. I mean, it is a great question, and, uh, you know, I, I totally agree that, that local, uh, public broadcasting is, is, you know, quite important and special and really just, you know, taken for granted. And I wish I knew the answer to this. I... What I do know, though, is that I, you know, Brendan Carr's solution of just lifting ownership caps and, and letting the, the Sinclairs and Nexstars of the world kind of take, take over everything, uh, you know, defunding, uh, PBS and, and NPR, I, just, the, the solutions don't exactly seem to me like it's going to let that marketplace thrive. Um, I, I would hope that there's, you know, lots of competition out there, that there's, uh, you know... I think we should cherish it. I, I really wish I had better answers for how to, to-

Kara Swisher 27:30 No, but, but talk about the, the case-

Speaker 27:31 Yeah

Kara Swisher 27:31 ... of, of Disney and, and the FCC going forward.

Speaker 27:35 Yeah. Yeah. I mean, I mean, I... What Brendan Carr's doing, he's, he's just, like, basically, you know, censorship regime right here. Um, you know, doesn't like a joke and says,

Speaker 27:48 you know, puts their li-

Kara Swisher 27:48 This is Jimmy Kimmel.

Speaker 27:50 Yeah, license is up for, uh, review. Um, it, it's, you know, trying to kind of like, like reinvigorate the, the fairness doctrine, which honestly was something that the Reaganist administration decided that, you know, couldn't stand-

Kara Swisher 28:06 Mm-hmm

Speaker 28:06 ... uh, the test of time. Um, so I, you know, on the merits, I don't think that, uh, the FCC, I don't think Brendan Carr has much of a case. I think that, that, that-

Kara Swisher 28:15 With Disney

Speaker 28:15 ... that the courts will, will, uh, agree with Disney on, on this. But, you know, there's a cost to, you know, just having this float out there and, and hanging over Disney's, Disney's head and, you know, having this in hearing and taking discovery and, and, and all that. And I think that's, that's basically what Brendan Carr is after, is, is, is basically just to keep a dark cloud on this. And I don't think that this is, is particularly healthy because in the long run, the Democrats will retake power, and they will try the same things towards Fox and towards, uh, Nexstar and Sinclair. And, and so it's, it's just not a great cycle. I mean, the f- i- it... On the merits, the thing is so disastrous, I just wonder if it's some sort of like Trojan horse for getting rid of the FCC altogether. I mean, it just doesn't make much sense.

Kara Swisher 29:06 I think he's surprised Disney's fighting back so hard to do.

Speaker 29:10 Uh, is he surprised that, that Disney's fighting back so hard? I don't know. I think he loves the attention. He think he seem-

Kara Swisher 29:15 Yeah

Speaker 29:16 ... a- ambitious, and the fact that Disney fights it makes it, him look good in front of Trump. Like, it makes him seem like he's doing,

Speaker 29:23 doing something. Um, but, uh, you know, I, uh, ult- ultimately, he's not going to cancel Disney's, uh, license. I, I, I-

Kara Swisher 29:33 Right. Right

Speaker 29:33 ... don't see that happening.

Kara Swisher 29:34 Trump and Disney will win this one. So let's shift to another topic, speaking of President Trump, the defamation cases that you cover, as you call them, one of his favorite pastimes. The nonprofit watchdog Citizens for Responsibility and Ethics in Washington reports that Trump has filed lawsuits and claims demanding over $70 billion since the second term candidacy announcement. Some of the more recent targets include the BBC, The New York Times, and The Wall Street Journal. Uh, you recently wrote about the legal argument that may put the brakes on Trump's many defamation cases.

Speaker 30:02 I mean, he's, he's after e- everything. Like, there's one against how the Pulitzer, uh, committee awarded their prizes. I mean, uh, uh, a lawsuit against The Wall Street Journal and his friend Rupert Murdoch over, over, you know, a birthday letter to Jeffrey Epstein. It's, it's just ridiculous. I mean, like-

Kara Swisher 30:20 So-

Speaker 30:20 ... these lawsuits are, you know, t- terrible.

Kara Swisher 30:22 What might put the brakes on this?

Speaker 30:24 I mean, you know, better policing, I think, of, of jurisdiction. I mean, right now he's, uh, filing everything in Florida, uh, 'cause he sees that it's a fa- favorable place for him. Um, you know, anti-SLAPP laws that, you know, make Make him pay if he loses. Make him pay the, uh, opposing side's legal costs. Um, you know, uh, kind of tighter gatekeeping by judges at the, at the front end of things. Th-those are things that, that, um, I don't know would stop him. I don't think anything's gonna stop him from filing these-

Kara Swisher 30:58 But you, you wrote about the unitary executive

Kara Swisher 31:00 theory and how it could actually prevent Trump from filing more lawsuits.

Speaker 31:03 Oh, yeah, yeah. There, there's some-- a, a theory out there that as president, because he's, um, you know, he's part of, part of the government, um, that if you can't sue an officer in, in the government for, for, for, uh, defamation, they're immune. Uh, that, that it should, it should go both ways, where a-as long as you're, you know, you have an office of, of the government, you can't really sue in your individual capacity, and therefore, you should be, uh, you know, uh, forbidden, not forbid- forbid-- um, from, from basically suing. Um, so there's, there's some, you know, thoughts out there that that could be one of the defenses that, that's next tested. Uh, unfortunately, I, I don't think that that would be resolved before he gets out of office, so it, it, you know, it, it might, uh, affect Don, Don Jr. more than, than Don Sr.

Kara Swisher 31:54 You also, uh, noted that the media outlets and the reporters should consider going on the offense in libel cases more of- uh-

Speaker 32:00 Absolutely

Kara Swisher 32:00 ... more often. This seems counterintuitive. Make a case for that.

Speaker 32:04 Well, a couple things. F-first of all, you know, I don't think that there's anyone who is, you know, under the bleeding gun like, like those in the media. I mean, our reputations are attacked. Uh, there's the suggestion that, you know, all we're doing is, you know, biased reporting, uh, making up facts. Uh, you know, this, this is libel per se. I think that there is, like, a case to be made that, you know, uh, journalists, uh, you know, uh, can... should be collecting damages sometimes for, for kind of like the, the worst criticisms of their work. The other thing I, I think is that, you know, these libel laws and libel defenses are seen as kind of gifts to the media, when really it's a First Amendment defense that's a gift to everyone. Uh, and people have forgotten that, and I think that by putting some of the critics of the media on the defensive, it might remind everyone, um, might remind courts, uh, uh, about, you know, why we have some of these defenses. So, you know, I, I think that, you know, you know, one of the ways that, that, you know, people who defend the media should be thinking more, um, is going on the, going on the offense to, to litigate our reputation as much as our legal rights.

Kara Swisher 33:17 So what

Kara Swisher 33:18 would that-

Speaker 33:18 You know

Kara Swisher 33:18 ... what would that entail from a legal perspective?

Speaker 33:21 That, that would mean su-suing. I mean, if, if some-someone, you know, suggests that you've, you made up a story to advance your career, I mean, it, it would mean, you know, putting that person on, in, in the defensive, uh, seat of, of the courtroom and, you know, trying to collect damages there. Look, I, I don't think that it's appropriate in all circumstances. I-- You know, for journalists, uh, it would, you know, open the door maybe to discovery of who their sources are. And so, so as a, as a journalist, you have to be careful about, uh, those instances, and there are lots of considerations. But I, I, I, I think generally, uh, there might be more, uh, instances where journalists start thinking, uh, you know, about, about go on, going on the offense and, you know, I don't know.

Kara Swisher 34:07 To me, the CBS case was the, the perfect example, and of course, they were sort of pressured into selling it to finish the deal, um, that with-- this was the C- the "60 Minutes" editing. And I, I know some of the people involved, and, you know, they wouldn't apolo-- They, they, they-- The, the executives settled, but the, the people quit over saying, "I'm sorry," didn't-- refused to say, "I'm sorry," uh, which was their only ability to protect themselves, I think. But they couldn't control the company from settling.

Speaker 34:36 Yeah, I mean, I, you know, a, a lot of people in, I'm sure, a lot of newsrooms have been under, under the gun with, you know, suggestions like this and, and so. So yeah, I, I wouldn't be surprised if-

Kara Swisher 34:47 So punching back is your-

Speaker 34:48 Punching back, exactly.

Kara Swisher 34:49 Punching back legally. Yeah, he's a classic bully, isn't he? You punch him in the nose, and he backs off. Um, let's shift to copyright litigation against AI companies, starting with Disney. Last December, Disney announced a $1 billion investment in OpenAI, allowing Sora, its now-defunct video tool, uh, to use Disney characters. Disney didn't move forward with the investment after OpenAI pulled the plug on Sora earlier this year. Talk about, uh, th-these approaches to AI and the licensing first. Uh, what does it tell you about it? Uh, Sora, by the way, was not very good for anyone who saw it for a long time. But t-t-- And I thought this

Kara Swisher 35:22 investment was purely a marketing announcement that would go nowhere. Um, but OpenAI has made several content licensing deals with major publishers, including News Corp. and Axel Springer. The New York Times has ongoing lawsuits, though, against OpenAI and Microsoft and Perplexity. And when I asked, uh, New York Times CEO Mark, uh, Kopit Levien about it, the lawsuits, and why some publishers are making deals with AI firms, she pointed to The New York Times' content licensing deal with Amazon and said they're absolutely open to it. So talk a little bit about these cases and, and, and, and where they're going for publishers, the dis-- uh, especially the disjointed way publishers are working-

Speaker 35:57 Yeah

Kara Swisher 35:57 ... through their issues.

Speaker 35:59 And by the way, just this week, uh, we have, uh, you know, the, the Hollywood studios making a deal with, with, uh, TikTok, Sonar, and, um, ByteDance and, uh, Over AI and all that. And so a lot of times that there are threats made, and then there's settlements, and they call them licensing, but they're-- it's really, like, the settlement of potential litigation. And the other thing I would point out is that, you know, these feed, feed into each other because when you go into copyright litigation against AI companies, one of the things that gets analyzed when, when the question of, like, is this fair use, is, well, what's the market? Is the market being harmed? Um, and if you can say, well, yeah, there's, there's a big licensing market for, for, for training, uh, AI, and, uh, you know, all these other companies have, have, uh, you know, made deals, but this company has not, uh, that's powerful evidence. So it doesn't surprise me to see, uh, you know, the publishers ma-make deals. Uh, also, it's big money. I mean, like, you know, th-this is, like, a line item for, for OpenAI and, and a lot of these companies to do, to do these licensing deals. Um, but for, for the publishers, uh, they're in a business that's, uh, you know, tough.

Kara Swisher 37:08 Why are they so disjointed? Why are they some signing, some others? And what-- And is the lawsuit an effective way, s-such as The New York Times lawsuit? an effective way to do that

Speaker 37:18 I mean, it's, it's kind of a carrot and stick approach. Um, you know, i- if you don't, uh, make a deal with us, uh, you know, we're gonna sue you. I mean, that's, that's a, a time-tested approach to doing these sort of deals.

Kara Swisher 37:32 Yeah. Well, legal threats are, are settlement talks.

Speaker 37:35 But, but I also think that, you know, a lot of this stuff is really new, and so it, it's hard to kind of figure out what, uh, licensing parameters should be. For, for, for instance, you know, you could say, um, you know, that The New York Times, uh, should settle with OpenAI, and maybe OpenAI wants to do it, but, you know, to the-- from OpenAI's perspective, uh, you know, is The New York Times about the same as any other publisher? Um, because, you know, we might think of The New York Times as being prestigious and, and more influential in how we, uh, appreciate the news, but when it comes to training data, uh, it, it, the weights might be different. And so, and so, you know, a lo- a lot of this licensing activities is very complicated in, in how, how it's approached.

Kara Swisher 38:27 And again, it's all over the place.

Speaker 38:28 Yeah, I mean, uh, I mean, all the AI companies have been, have been sued. Why OpenAI is, is picking on... I, I mean, why New York Times is picking on OpenAI in particular, I mean, I think, uh, you know, uh, has to do with, you know, they were the most visible, you know, uh, company in, in the space. Uh, it, it was the path towards, you know, big ticket, uh, damages. Uh, it, you know, it was more of a text chat bot, bot versus other, uh, AI systems which were more visual in, in nature. Um, there, there are a lot of different factors, but, you know, I, I think that, you know, uh, New York Times has a few, a few lawsuits out there, not just against OpenAI. Um, so, so, you know, this... Right now, I think we're talking about somewhere between 80 and 100 lawsuits in total in, in discovery.

Kara Swisher 39:19 Yeah. Now, none of these AI copyright cases have made it to trial in the US yet, though.

Speaker 39:23 Right.

Kara Swisher 39:24 Uh, yet, and last month, Anthropic reached a $1.5 billion settlement with authors who accused the company of using pirated books to train its Claude chatbot. It work, uh, it works out to $3,000 per book they stole. Should we expect more settlements, or will any go to trial?

Speaker 39:39 There will... Both. I, I think that there will be lots of settlements.

Kara Swisher 39:42 And, and what's the difference? And what's the difference?

Speaker 39:45 Oh, wheth- whether or not it goes to trial or not?

Kara Swisher 39:47 Yeah. Mm-hmm.

Speaker 39:48 I mean, uh, you know, tri- trials are big. They, they, they, and, and they're-- the stakes are large. Juries get involved. Um, you know, it will be influential in how the next generation perceives th- these legal threats, how, how seriously they take them. Uh, I think that, you know, the exposure is something that a lot of the tech companies are, are, you know, want to avoid. But, uh, at some point, they are going to take their chances. They're gonna look at the, the demands and say that's just unre- unreasonable.

Kara Swisher 40:18 Like YouTube did.

Speaker 40:19 Yeah. We like the, we like the fact pattern here, and, and we're go- we're, we're going to take this as the test case. Um, I think that, you know, uh, s- some of these cases are nearing the, the summary judgment phase, and what the, the judges, uh, decide, uh, will be influential in, in the calculus about whether to take it to trial. Also, keep in mind that, that it isn't just binary. It's, it isn't like, you know, is training legal versus is training illegal? It's, you know, like where did you acquire the data in the first place? How do you, how do you warehouse the data? Uh, what are the, if, you know, how are you weighting your models? Uh, what does the output look like? And, you know, these, these AI companies can win on four of the five of the issues and then lose on the, the fifth issue and decide that that's the issue that they wanna, you know, take up. Uh, meanwhile, you know, y- we have, uh, you know, at least one case, uh, the Westlaw case, which has to do with, uh, uh, w- legal, uh, uh, headnotes and all that. That's on appeal right now in the Third Circuit. You know, it could, you know, maybe get to the Supreme Court next year. And so there are going to be things like, you know, Supreme Court decisions that impact the calculus-

Kara Swisher 41:35 Of course

Speaker 41:35 ... on whether it goes to trial or not. I, I expect that we will see at least one trial in 2027.

Kara Swisher 41:41 Of, of a, of a big one. One of the things it reminds me of during the YouTube days, um, when I was covering Google in the early days, I was around when they did the book stuff. They just tired them out. They tired the publishers out ultimately and got what they wanted. And I, I'll never forget walking around Google with, uh, Larry Page, and they had a room full of televisions. They were taping all of television to get closed caption searching, and they didn't have any deals with any of the television companies. They just did it.

Speaker 42:09 Yeah. And the, the other thing I w- I would point out is that, you know, the plaintiffs have to decide to, uh, to deal, too. For instance, y- y- you know, you talk about that $1.5 billion deal that Anthropic made with book pu- book authors, but some book authors, like John Carreyrou, and, and like, they didn't wanna take the deal. They don't wanna take the $3,000.

Speaker 42:29 And so they opted out of the settlement, and they're pursuing their own claims right now. So how do you settle, how do you settle with them?

Kara Swisher 42:35 Right. Right.

Speaker 42:35 And so maybe those will be the, the cases that end up at trial.

Kara Swisher 42:40 Yeah, because but then you have to go through them. They w- they, their, their theory is to tire you out with all their money, right?

Speaker 42:45 Yeah.

Kara Swisher 42:45 That they will ultimately beat you down. That's what happened with YouTube. It really did. They cheated until they didn't cheat, and then, you know, everyone's happier now. I guess same things with Napster or same... You know, it's kind of their, their patented way. Uh, let's go to the most important thing for me, social media addiction litigation, um, uh, which, and a new lawsuit against Netflix, by the way. Section 230, broadly speaking, protects platforms from being held liable for content posted by their users. It's long been the focal point of legal theories about the responsibilities of these platforms, but now plaintiffs are succeeding in addiction litigation against Meta and YouTube with a different tag, product design liability. Um, it's at the center of another landmark trial against Meta that began this week, which is quite troublesome, I, I think. What do you talk about this legal strategy and your thoughts on it? We'll get to how it's expanding beyond social media companies at the moment.

Speaker 43:35 Let me, let me put it this way. I mean, th- there are ways in which, uh I feel comfortable with what's going on and other ways that make me uncomfortable.

Kara Swisher 43:44 Well, tell me.

Speaker 43:44 And, and when, when you think about, you know, so- social media and the way it's, uh, you know, it's given to the users, you can think of it two ways. One is, you know, it, it's like a cigarette. You know, it, it's, it's compulsive, uh, it har-

Kara Swisher 44:01 Addictive

Speaker 44:02 ... addictive, it harms you, and that's, you know, basically what all these plaintiffs are trying to show, that, that it's, it, that, you know, the playbook kind of rhymes with the old, uh, you know, nuisance suits against, uh, uh, tobacco makers. Um-

Kara Swisher 44:16 Right, which took a long time for people.

Speaker 44:18 Right. So on, on the other hand, uh, you know, the social media companies, they're, they do have some benefits. It is speech, um, you know, uh, and I guess the question is, is it like, you know, those rap albums from the 1980s that, that Tipper Gore tried to, to ban, you know? And, and so, you know, you know, even st- stuff like algorithms is just editorial curation in, you know, digital form. And so the question is, how much of this do we see as product design and how much of it is d- do we, uh, see as speech? And when we look and we break down the features like, uh, you know, infinite scroll or autoplay or notifications, you know, does that go more towards, uh, design elements or does that go more towards editorial curation in how, uh, you know, a newspaper decides what goes in the op-ed page or, uh, a, a parade organizer, uh, decide who marches with you? And so these are tough questions and we're, we're, you know, getting to these trials.

Kara Swisher 45:22 Where do you see it heading? Obviously-

Speaker 45:24 Yeah

Kara Swisher 45:24 ... public opinion is against these companies.

Speaker 45:26 Yeah.

Kara Swisher 45:26 It's moving very heavily against it, and, you know, they, they are stymied by Section 230, which I doubt will be overturned. It would be disaster- from a... It would be the Lawyer Employment Act of all time, um, if they overturned Section 230. Um, it's im- almost impossible to do so from what I understand from various experts. What is the, what is the move? Product liability has to be the move, correct?

Speaker 45:49 Yeah, pro- I mean, I mean, yeah, although Section 230 is not going, going away and isn't being repealed, there was an important decision by the Ninth Circuit a couple weeks ago that says that, that basically it's not immune, it's a defense. So that means that these cases against tech companies, against social media companies, will continue to flow. There will be these product design, uh, you know, and nuisance suits that put a huge amount, uh, on the line. That, the case that's beginning this week in Oakland, the one that's, uh, being brought by, by a few, be, a few states against Meta, I mean, they want, uh, I think $1.4 trillion-

Kara Swisher 46:25 Right, they do

Speaker 46:25 ... which is the, the market cap of Meta. They want, you know, uh, uh, s- structure changes to how the platforms run, and, uh, you know, so I, I see a lot of this ca- in these cases ticking on. There'll be appeals. There will, you know, there'll certainly be some settlements as, as well. Um, but, uh, you know, it is, this is going to be in the background for, for years and years to come.

Kara Swisher 46:48 Years ago, I interviewed Mark Benioff, and he said they're like cigarette companies, and when he was being... He's changed, not that particular opinion, but, um, when you think about it, that did take a long time, and ultimately it didn't kill the cigarette companies, but it certainly put them in a line of decline, right? It does, it seems to me that a lot of this, especially around the, the lawsuits around data centers, around this, is all of the same feeling

Kara Swisher 47:14 of these people need some rules.

Speaker 47:16 Yeah, I would say that, that there are s- uh, you know, a lot of similarities, but there are also s- some differences, and we should keep in mind the differences too.

Kara Swisher 47:22 Sure.

Speaker 47:23 Um, you know, cigarettes, uh, were addictive and they hurt everyone who touched them. Uh, as f- far as social media, uh, uh, goes, I think some people are, are, you know, are okay with, with using social media.

Kara Swisher 47:35 Right.

Speaker 47:35 And some people, uh, uh, bear the-

Kara Swisher 47:36 Think it's addictive

Speaker 47:37 ... bear, bear the brunt of it. Um, you know, s- some features are, are probably good, uh, for, for society to have, uh, and other features are not. So, you know, it, it's easy to, you know, take a look at this stuff and say at large, "Oh, you know, these, the t- the tech companies, they're all evil, and they should all go away."

Kara Swisher 47:58 It's not exactly go away. It's let's see some controls, right?

Speaker 48:02 Right.

Kara Swisher 48:02 Cor- right.

Speaker 48:02 Right, and, and so that's, that's the, the answer to it. You know, I th-

Kara Swisher 48:05 Like age verification, things like that. Like let's have some rules.

Speaker 48:09 Right.

Kara Swisher 48:09 Which you have none of. I think that-

Speaker 48:11 There, there should be disclosures. There should be, uh, common sense rules, uh, you know, stuff like age gating if they, you know, can think of it and, uh, make it reasonable. Um, I don't see why they, they would resist it. Um, so, you know, at some point I, I hope, hopefully we'll get to a point where, uh, some of this stuff can exist without constant litigation, but we're not at that point yet.

Kara Swisher 48:37 That's 'cause they wouldn't cooperate in the first place.

Speaker 48:40 Yeah.

Kara Swisher 48:40 They wouldn't do anything in the first place. But in May, uh, this is an interesting case which is related, Texas Attorney General Ken Paxton filed a lawsuit against Netflix alleging the streamer is spying on users, including children, profiting from their data, and using, quote, "dark patterns" to keep- Kids engage. N- n- what's Netflix's defense here? 'Cause it's a broader issue, and the limits of the product liability argument when it's applied to a streamer, 'cause this could go a lot of directions.

Speaker 49:05 Well, w- well, first of all, Netflix, you know, s- response is that Ken Paxton doesn't know what the hell he's talking about. He, he, he doesn't understand the system or, like, uh, i- it's just, you know, junk, junk science i, i- in his complaint. But put it, pushing past that, you know, the point that I've made is that there's not a huge jump, uh, to be made when we're moving from social media to, you know, how, you know, uh, digital entertainment operates. We're, we're still talking about algorithms and, and, and deciding, you know, which content gets, uh, you know, uh, first on your scroll, what gets recommended to you. So if you're going to make the case that, uh, that, you know, uh, Facebook or Instagram is addictive, uh, someone, uh, can easily make the case that, you know, Netflix is doing the same thing. And-

Kara Swisher 49:51 Or Peacock or whoever, yeah

Speaker 49:52 ... right. I guess their response would be, "Well, this is even more connected to speech. Uh, this even, uh, you know, broader First Amendment, uh, cons- considerations here. Uh, you know, um, we're not just pushing third-party, uh, uh, speech out there and, and organizing stuff. We're actually producing our own content and, and all that, and, you know, if you stop us, y- you're really endangering the First Amendment. You're, you're giving s- the state the, the ability to control what you see." And so, uh, the First Amendment implications are, are pretty broad here.

Kara Swisher 50:28 Is that the same thing with Facebook, the, the defenses they should have? Or w- where they, in these... I'm using Facebook overall 'cause it's a bunch of different product liability lawsuits, including with kids and chatbots.

Speaker 50:40 Yeah, I, I, I certainly think that Facebook has a First Amendment defense that they're, that they're pushing. It's not just Section 230. Uh, they are, they are, you know, s- saying that, "This is our speech." Uh, which is, you know, it's kind of funny. Like, in, in some ways they say it's someone else's speech, but, uh, it's also our speech. And so, so yeah, I mean, courts have to deal with that, and, uh, that, that's something that's gonna come up at the trial in the, in the next few weeks. It's gonna come up in the appeals down, down the line. Uh, a lot of this is, is very unsettled. I mean, the Supreme Court nods to this a few years ago. Uh, they, they, in, in, you know, some of their cases, they're, they were like, "Well, if the algorithm is doing the heavy lifting here, is it actually speech or is it not?" And, and that's a question that really hasn't been settled yet.

Kara Swisher 51:29 And that ultimately these cases do go to the Supreme Court, presumably.

Speaker 51:33 Oh, yeah. Definitely.

Kara Swisher 51:34 Correct? All of them. Um, which is the one you f- think is most, uh, makes them most vulnerable? Probably this one kicking off this week, right?

Speaker 51:43 Oh, yeah. I mean, there, there's also one in Tennessee that's going on, uh, right now. Um, but uh, yeah, this, this case that, I mean, it's hard to be the trillion-dollar, you know, case that, um, uh, it, it, that has, uh, that has these stakes. But, you know, just behind it, there's a case brought by a cons- uh, consolidated school districts around the nation. Uh, there are cases against other social media companies. Uh, you know, uh, TikTok was smart enough to try to, like, settle out its way of, of the California one, but there's... I- it's just gonna go on and on. And now that, um, you know, plaintiffs, the plaintiffs bar have found product design as, you know, a way to at least beat 230 on the front end of things, not have their cases, uh, you know, quickly dismissed, uh, it, it incentivizes them to, you know, come up with a similar theory.

Kara Swisher 52:33 Right, the plaintiffs bar, this is, like, money to be made here.

Speaker 52:34 Yeah. Right.

Kara Swisher 52:35 What is the Tennessee case?

Speaker 52:36 Uh, Tennessee is a, is a nuisance case. Um, you know-

Kara Swisher 52:39 Nuisance case

Speaker 52:40 ... sim- sim- sim- similar, uh, similar, um, yeah.

Kara Swisher 52:44 Kind of thing.

Speaker 52:44 Yeah.

Kara Swisher 52:44 Which I think that they're gonna be caught in litigation.

Speaker 52:46 Yeah.

Kara Swisher 52:47 This is not good for them. By the way, for people who don't know, Netflix has also been hit by a number of high-profile defamation lawsuits for shows including Baby Reindeer, When They See Us, and Inventing Anna.

Speaker 52:57 Yeah.

Kara Swisher 52:57 The last two were settled. And Netflix's def- defamation case, when making shows about real people, is that a plaintiff's attorney opportunity?

Speaker 53:06 Uh, you know, not really. I mean, the, the funny thing, most people don't realize this, but if you add up, you know, all of the defamation lawsuits from, like, Fox News and New York Times, tho- those are symbolically important, but n- but Netflix is the defendant in more cases than any of them. Why? Because they love this, the docudrama-

Kara Swisher 53:24 Right

Speaker 53:24 ... uh, you know, fictionalization of true events. Basically, they say, "Okay, we're gonna take something that actually happened, but make up stuff." And once you get that, you know, it, it collides with an area of law wh- which, you know, makes it, you know, tough to say false things about people. So if you identify a docudrama and it's about, about you, and it's, it's telling audiences stuff that you didn't actually do, um, and, and harms your reputation, yeah, they're g- they're going to s- sue over it. And so Netflix finds themselves in, uh, in an incredible amount of, uh, a number of these cases and, and, you know, uh, some of them they haven't... You know, some of them they've, you know, they've won, but others they've struggled with. And, uh, so they're making lots of interesting law on, on this topic, and, uh, you know, I see them as probably, like, the most important libel defendant, uh, going these days.

Kara Swisher 54:17 Really? Interesting.

Speaker 54:18 Yeah.

Kara Swisher 54:18 All right. So we've covered a lot of ground today, but looking ahead, what do you think will be the most consequential cases, stories of the next year in media that people should pay attention to or should be paying more attention to? If you pick out tech, media, you know, any of these, 'cause you write about so many esoteric cases too that suddenly you make me think are actually really important, um, including ownership of people who've died, things like that. Is there any cases that are like, you're like, "Hey, this is gonna matter"?

Speaker 54:48 That, that are, like, completely under the radar? I mean, I, I, you know-

Kara Swisher 54:50 Or, or ones that you think are the most important ones

Speaker 54:52 ... No, I, I, I think that competition is, is a big issue these days in, in just so many different k- kinds of forms, whether it's the, the, you know, uh, challenge to a merger or a challenge to, you know, the way that non-competes work with, uh, uh, in, in the workplace. Uh, you know, uh, even, even these copyright cases against AI are essentially, um, competition cases, you know. Copyright gives you an exclusive right to, uh, you know, uh, leverage your, your own works, your, your creative authorship. There-- It's supposed to incentivize, uh, you to create, and here are, you know, these tech companies out there saying, "You can't have a monopoly over, over this stuff," stuff like journalism. And, and so, you know, I think all this is im-important.

Kara Swisher 55:37 Mm-hmm. And is there any unusual case do you think is coming that people should pay attention to?

Speaker 55:42 Um, you know, I, [chuckles] I, I, I'm always on the lookout for, for, for these unusual cases. Uh, I think, uh, you know, it-- the Justin Baldoni thing settled, but that was a kind of unusual-

Kara Swisher 55:54 You liked that one.

Speaker 55:55 Yeah.

Kara Swisher 55:55 Yeah.

Speaker 55:55 It was... It's, it's a, it's a fun one. It had to do with, you know, how PR works and how employment works and kind of the, the post-Me Too era and speech in its kind of purest form and, like, whether you can complain about the powers that be and whether the repercussions there. I think that was, uh, uh, incredibly useful.

Kara Swisher 56:17 Uh, this has been really interesting, Eriq. I will keep w- reading your stuff and look for more strange and weird cases. Uh, but I do think y- you're correct in saying this, this is the time of litigation against tech companies coming forward. I, I w- I have never seen so much activity in so many different areas. So lawyers will always have a job, as always.

Speaker 56:39 Hopefully I'll have one too. [chuckles]

Kara Swisher 56:40 You will.

Speaker 56:41 Yeah.

Kara Swisher 56:41 Anyway, thank you so much.

Speaker 56:43 My pleasure.

Kara Swisher 56:44 Today's show was produced by Nishat Kurwa, Michelle Aloy, Katherine Millsap, Megan Bernie, Madeleine LaPlant-Dubé, and Kalyn Lynch. Special thanks to Dave Shaw, Lyssa Sowep, Eamon Whalen, Jim Mackle, and Manolo Moreno. Our engineers are Fernando Arruda and Riquan, and our theme music is by Trackademics. If you're already following the show, may all your mergers and acquisitions be forever blessed. If not, you're stuck with a $650 million quarterly ticking fee. Thanks for watching. See you on Monday. [upbeat music]