The midst of the pandemic. U. S. Stocks rising today despite no new stimulus. Yet, even shares of google. Alphabet shaken off the threats of antitrust scrutiny. Joining us, abigail doolittle. Why would google shares rise on a day that the Justice Department is filing a suit that could threaten to break google up . Abigail not the response you would expect from Investors Committee u. S. Suing alphabet usingcusing it of monopolylike powers. This is not exactly new. Theres been many shots across the bow. We have had executives from many of these Big Tech Companies testifying before congress for a couple of years now. The fact that google is underperforming on the day. At one point, it did dip briefly lower. You could make the case that it is really priced in. The stock price over the time period when we have seen some of the congressional testimony, it has underperformed some of the other Tech Companies, telling you that there could be some idea that investors are not surprised by this. We had an analyst earlier today saying this has been an overhang of the shares of google. Alphabet, up about 40 . The faang index up about 125 . The overhang has been removed, especially with so many folks saying this lawsuit, if it proceeds, could take many years. Alphabet coming out with a early , brief defense saying that they have a great product. That is why consumers are using their platforms. Know what the actual news is and dont seem too worried. Today the case being made that if google is broken up years down the line, perhaps it is worth more. If you own google now, you are in a good position. Netflix shares down. Talk to us about the numbers. Abigail tale of two stories between netflix and snap. Netflix down sharply, poised to make an even bigger drop as time goes on. Investors not pleased that they missed Third Quarter subscriber estimates. They whisper number closer to five. Fourth quarter guidance, also disappointing, 6 million new subscribers to be added versus the estimate of more than 6. 5 million. It looks like there is some netflix fatigue. The First Quarter was huge. They added nearly 16 million subscribers. Maybe some investors got ahead of themselves with thinking they could put up big quarter after big quarter. As for snap, not so much, up more than 20 , poised to open at a record. Atly active users came in 249 million, beating the estimate also for 19 growth. The potential for a record high for snap. Netflix, it could be a very rough day tomorrow. Emily we will be digging into netflix a little bit later this hour. Turning back to our top story of the day. The u. S. Justice department launching a landmark antitrust suit against alphabets google, accusing it of abusing its monopoly in search. It is considered the most significant action in more than two decades in possibly a century. The companys reaction. We think this case is flawed. We compete vigorously in the marketplace. Our industry, our sector, is marked by rapid innovation and those are really hallmarks of a competitive industry. Emily google has pointed to the ability for folks to download whatever app they want. If that is the case, why pay billions of dollars to apple to be the default, if it is so easy to change the default and find another option . People are using google because they choose to. When you look at being when you look at bing, the number one search term globally is google. It is no different than when you , these areupermarket promotional agreements so that people can continue to reach consumers. Just a huge election is weeks away. But a change in administration change googles fortunes . Biden has not given detail of where he stands on antitrust, but to be fair, you are facing scrutiny from both sides of the aisle. Scrutinized at length, especially in the United States when the federal trade commission investigated all aspects of our business. No matter who is sitting across the table from us, our role is to answer the questions, provide clear evidence and data. Statesyou have 11 other that have signed on to this suit. This is on the back of a house report where a largely Democratic House committee has made an argument for the potential breakup of Big Tech Companies including google. How concerned are you with the broader context and that undermining your defense . There are questions with our role in the American Economy and how we serve American Consumers. Our role in this program in this process, we have to answer them with substance and clarity, and demonstrate why American Consumers choose to use our products. The most popular brands in america today, they are American Technology companies. We always think that we can do better, we have to keep our foot to the floor, innovate faster, keep putting out great products and services that people love. Emily what about the house antitrust report in particular . Thatuch of a concern is given the sentiment from both republicans and democrats in congress . There were actually three reports. One from the staff representing the democratic members of that subcommittee. There were two from republican members. There were a lot of different viewpoints expressed. Fundamentally, we have driven innovation in the American Economy. We are a great benefit to American Consumers who overwhelmingly love our products and services. Advertising in the United States the price has fallen 40 over the last decade largely thanks to innovative formats. Emily what about the littler guys like yelp, tripadvisor, say that googles dominance has made it impossible for them to succeed, as prevented growth that might have happened otherwise. We compete with a lot of businesses. What i see from some sectors, there are a lot of nuances around each of those. What i see is companies arguing and lobbying for less competition between google and other players. We do this type of product, google should do something different. That does not encourage competition. You want Companies Including google to try new things. You want us operating wherever we feel that we can add value, can create a compelling product. Google and others should be there. Not anif google is antitrust threat, what about some of these other Big Companies under scrutiny . Each of those businesses have their own dynamics. I think they can answer for themselves. From where i sit, we compete with all those is this is in different ways. Some compete with us for advertising. Some compete in terms of products and services that consumers are using online. What i can describe across the industry is a series of accelerating innovations that have benefited consumers, benefited businesses large and small, and the wider economy. Emily the potential actions here are quite extreme. A breakup of google, a restructuring of google, google be enforced to spin off certain parts of its business. How is google preparing for the worst Case Scenario . Isi dont think anyone talking about that at this stage. Need to perspective, we demonstrate that the way that we have structured our business, the way we offer products and services, and the way we reach consumers is perfectly normal. This is the way that curios finds itself on supermarket shelves. We have to demonstrate how our business operates and how we compete. Ofly adam cohen, director Economic Policy at google. For more, we are joined by the policy director. You have had time to review the case. You have heard googles response. Better argument, the Justice Department or google . Of course, it will be for the courts to decide, but the case today has a strong argument. This is a huge product and a huge industry, so i am sure there will be a lot of work to be done. But it looks like a strong complaint. Some new filings coming out from google including 8k. They are saying that the Justice Department, state attorneys still probing. We have 11 attorneys general who have signed on. Others could join. Additional states could file. What do you make of that threat, the big picture . Complaint coming out of doj today focuses on search, but there are other aspects of googles business that have antitrust concerns. I think that could be a source of an additional lawsuit from state attorneys general. Or, doj actually has the ability to amend this complaint later. They could expand it. Emily expand it, what would that mean . It is something that we think change inhere is a administration, change in leadership. The concerns the advertising concerns as well as search. A change inu think administration would have a dramatic impact here . It may not be a dramatic departure. It may just be expanding the case, sticking with what doj has come out with today, and adding on. Emily lets talk about the process. Anyked google if there were settlement talks that have happened, if a preemptive settlement was possible. Adam cohen told me, we discussed the complaint, we are reviewing it. What do you think the likelihood of that is, given how painful this was for microsoft in the 1990s . These cases take a long time. Beknow that google will throwing everything they have at this. A longxpect it to be process. Emily so, what is next . I think where we ought to be looking next is really congress. The Judiciary Committee came out with this report, focused on big tech, not just google but also apple, amazon, and facebook. I think that while this antitrust case is working through the court, it will be important to look to congress to see what can happen in the meantime. Emily some of the critics have said that the doj is potentially overreaching and that this will be a very difficult case to prove. Google pushes back, they say their has been no harm to consumers. What do you make of that argument . It is always hard to prove a counterfactual, what might have happened if google had not been engaged in this conduct for 70 years . But i think the doj makes a strong argument that if there would have been competition, they would have been innovation. Google would have been pushed to provide a their product. Or, a competitor might have won out. We did not get to see what happened because of this anticompetitive conduct google was engaged in. Course, there is microsoft, the biggest antitrust action against any company in two decades. But really, it could be the biggest in 100 years. Historicalabout the significance of the government making this move. I think it is important to go as far back as the at t case to look for president here. Here. Look for precedent with at t, the Justice Department was not doing this alone. There was active participation by congress and an Agency Responsible for regulating at t. I think, because this case is so huge, it will be really important for congress and agencies to participate, although we do not yet have an agency that is tasked with digging in deeply on these platforms. Emily this is just the beginning of what is likely a years long process. Great to have your input here on the show today. Will have much more reaction this hour, including the ceo of tripadvisor, just one of many travel companies that argue google is indeed a monopoly. And senator Marsha Blackburn, has pushed congress. Netflix shares plunging after Third Quarter subscribers did not meet estimates. Plateauedber growth or is it plateauing . This is bloomberg. There is no doubt that netflix viewing has surged since the pandemic. Limited travel and out of home entertainment. But, it has shown that it cannot sustain that momentum, at least in the near term. Subscriber growth in the First Quarter missed and the company said the slowdown could get worse. A record yearl be for netflix. Demand att surge in the beginning of the pandemic. What is your take on subscribers missing this quarter . I dont think it is actually too surprising that there was downward pressure in terms of the growth in subscribers. But i think the bright spot that i see is that they are is ing has been low and they have been able to keep that big influx of new subscribers. I thought it was a more positive report than list others are seeing it as. The other concern i had, would they not able to produce enough new original content to withstand the onslaught of competition from disney, peacock, and everybody else. They also said they were getting back to production and would have more content in 2021 than this year. Your assessment of the content pipeline . I have been pretty impressed by what they have managed to produce even with hollywood shut down. I find myself going back to netflix because they do have new stuff. Here is what has been impressive about netflix. Ie been someone who is did not think that their original content could still compete against disney, warner bros. , and some of the others. That library of original content that they have invested in has really helped them sustain themselves. There are still new things that people are discovering that may have been netflix for a year or two but is still new for you. They have invested a lot in International Markets like brazil, india, nigeria, south africa. They have been able to bring a lot of that original content back to the u. S. Market as well. They have really been able to and lack ofe covid production i think better than a lot of people thought. Emily that said, netflixs rivals are doubling down. Disney is reorganizing just to put more power behind its streaming services. Apple has new shows out. Ted lazo has been a runaway success. , 537 documentary on hbo votes. How well insulated is netflix from the competition . Andre i think when it comes to the paid Subscription Services, netflix, because of their head start, massive distribution in terms of they are on every operating system and platform, i think they are actually in a good place. They have not innovated in terms of some of the other revenuegenerating opportunities. Supported tier, with all that content, they could probably roll out 2 billion of business overnight by offering an adsupported tier. Others like google and apple are also diversifying and using their Cloud Services to provide video games. Netflix has not done that. I think that is something that could actually be successful. In terms of their core business, they are in good shape. The bigger concern, how are they going to diversify off of that . Emily so, what is your outlook for the holiday season. This is typically an active quarter. How will it play out . Andre i think, generally speaking, social distancing with the second wave coming, and in general with the winter, even in normal times, you will see more people at home, streaming, buying more devices. So, i believe it is going to be positive, the tide will rise for everybody across the stream and ecosystem both for the Subscription Services and the continued massive growth across ad supported platforms. You mention it with disney shifting their whole business to be centered on streaming, whether it is video or audio, streaming has become the de facto expectation in terms of how people monetize content and entertainment. Emily we will continue to watch headlines out of the netflix call. Swanston, thank you for sharing your analysis with us. Snap shares soaring in extended trading after reporting quarterly Revenue Growth that topped red that topped estimates. Consumers using phones for messaging and entertainment even more in the midst of the pandemic. Snapchat has 249 million daily active users in the quarter, a pandemic surprise. Coming up, u. S. Senator from tennessee Marsha Blackburn will be joining us for continued coverage on the largest tech antitrust action since u. S. Versus microsoft in the 1990s. The u. S. Justice Department Going after google. The senators reaction, next. This is bloomberg. Are you frustrated with your weight and health . Its time for aerotrainer, a more effective total body fitness solution. announcer aerotrainers ergodynamic design and four patented air chambers create maximum muscle activation for better results in less time, all while maintaining safe, correct form and allows for over 20 exercises. Do the aerotrainer super crunch. The prestretch works your abs even harder, engaging the entire core. Then its the back extension, super rock, and lower back traction stretch to take the pressure off your spine and stretch muscles. Planks are the ultimate total body exercise. Build your upper body with pushups. Work your lower body with the aerosquat. The aerotrainer is tested to support over 500 pounds. It inflates and deflates in less than 30 seconds using the electric pump. Head to aerotrainer. Com now. Now its your turn to lose weight, look great, and be healthy. Get off the floor and get on the aerotrainer. Go to aerotrainer. Com, thats aerotrainer. Com. This is bloomberg technology. Im emily chang in san francisco. It may be the most significant antitrust case against a u. S. Company in decades, perhaps a century. The u. S. Justice department announced it is suing alphabets google for antitrust, saying the company abuses power as the Worlds LargestSearch Engine. Joining us now is the senator from tennessee, republican senator Marsha Blackburn. Does it go far enough, senator . Emily this is a very Firm Foundation for the doj because keeping an innovative and competitive marketplace is a necessity. Doing isnow doj is looking at googles isicompetitive practices, it search, search advertising, search via tax, the way they have bundled services and worked with people like apple, lg, motorola, samsung, in order to make google the default system in phones. So i think we go through this process and bear in mind, just like microsofts suit took two decades to settle, you are going to see that this is going to take some time. But i think that we are kind of on to the races, if you will if you will, on looking at how to handle big attack and looking out how to handle googles monopoly, when you are upwards of 90 market share and then you are looking at being an go, and thet plot hf 2 market share. It is time to take this look. I am so pleased doj was going to come down on this. Emily you mentioned a monopoly. The doj floated the possibility of structural remedies. Do you think google needs to be broken up . These are historic republican positions that goes against historic republican positions on big is this. Senator blackburn it does differ, but it is the right conversation. A couple of weeks ago, we subpoenaed ceos of Big Tech Companies to the commerce ttee. That was primarily focused on privacy and section 230. Ar subpoenas were issued in unanimous, bipartisan way, and you are going to see the antitrust issues also become a part of this discussion. And precisely what the remedy is going to be, no one can give you what that remedy will be. We do know that now we can begin to have those discussions and work toward what that remedy ought to be. Microsoft was handled one way, the Bell Companies prior to that were handled in another way. So with big tech, we are going to see where we will travel on this. Emily we are getting special deals we are getting details on special deals google had with apple, google paying apple billions of dollars to make google the default Search Engine on devices. Powerfulou make of two Tech Companies allegedly joining forces to be even more powerful . Right, andckburn when you look at Google Business ctices, theyre bundling dealmakinging, their in the way there were payoffs, this is all going to be part of the deeper dive doj is going to do. And we will see what that brings forward. Look atourse, when you their participation with apple, of course it causes questions. And we should be trying to get some answers to those questions, because it is all about stifling competition. It is about keeping new entrants out of the marketplace. It is about making it very difficult for somebody else to come into that marketplace and compete with you. Mentionedntime, you ceos,poenas of big tech Mark Zuckerberg, twitter ceo jack dorsey. You are on the commerce and the Judiciary Committees. What is the status of the subpoenas in which committee should be leading this testimony . Senator blackburn content moderation comes under the jurisdiction of the commerce committee. Those subpoenas were issued almost three weeks ago. And the hearing is set. The ceos of google, facebook, twitter, agreed to come voluntarily after we voted unanimously to issue the subpoenas. They are coming on the 28th. We are going to begin our hearings that morning and will work through rounds of questions with them, but i think it is going to be a lengthy hearing. There are questions about section 230. There are questions about data mining. This has risen to be an issue that is a pretty hot topic with a lot of women, because they have watched the data mining that all these Tech Companies andplatforms are doing, more of their every day, functional life has moved online through covid. Told her not going to school, people are conducting their and, zooming, webexing, people are beginning to look at the way they are data mining, tracking and following, the way they are listing, prioritizing arech, the way they preference think certain businesses. You and i talked about google and yelp and issues in the past, but people in this country feel they have the right to privacy, and they do. It is in the bill of rights. And when they have a company just without permission, because you are using their service says ok, i have the right to look into the virtual you without permission, this is something people want addressed. They cantind out get two articles because they are censored, that is something people say you have no right to do, you are an information service. Are referencing the New York Post article about joe and hunter biden, which to be fair, has controversial suggestions, using questionable sources at best. I want to know whether you think judiciary or commerce should be leading on this. And what is the latest on the Judiciary Committee efforts to get these ceos in front of them . Senator blackburn the Judiciary Committee will at some point take up a vote to issue the subpoenas. It is not going to be done before election. It is going to have to be done in the lame dock. Lameduck. Applies tohip issue entertainers. Ive got a lot of entertainers in nashville that have had things censored. It is not about one article, it is about a practice that is carried out by content moderators for Big Tech Companies, who exercise their about algorithms that are manipulated to boot out certain content. And if you are going to be in the public be in square, if you are going to be a news service, hiring news editor. But it is time for us to put some of the road in place. Emily all questions you can put to the ceos next week. Tennessee senator Marsha Blackburn, thank you. Good to have you on the program. Coming up, one company claiming it has been scrambling to survive in the dominance of doable. The tripadvisor ceo, stephen kaufer, joins us next. This is bloomberg. Now on the landmark antitrust suit against google. Travel Companies Like expedia and tripadvisor have been struggling, they say, to keep going as google crams it search results with more ads. The Search Engine also has travel deals with hotels, restaurants, other destinations, which tripadvisor says has siphoned off quality traffic from its website. Is the us now with more ceo from tripavdisor, stephen kaufer. Thanks for joining us. You have made complaints about google to governments around the world. Now the you see the suit in the United States, what is your reaction . Stephen im pleased the doj has taken the action. Join thetate ags efforts. At the end of the day, all consumers benefit from a level Playing Field with search. We cant let their total dominance in search hurt innovation across the internet. I think it is great to see the doj recognize that, as consumers, we all benefit from a level Playing Field. Emily bloomberg has reported tripadvisor was cutting hundreds of jobs due to competition with google. You said last year google has gotten more aggressive. How has your business been impacted by Google Search . Impact of Google Search on our business has been meaningful. We are a Strong Company and have been diversifying away from what was initially a Hotel Business to give travelers a full consumer trip, restaurants, attractions, lots of things that make for a great consumer experience. But every time google preferences their own results when a user who starts to plan a that hurts us and every other travel company in the ecosystem. The challenge is, they have been doing it for quite a few years with more activity, not only more ads on the search results page, but inserting more of their own results, taking traffic that starts on google, because they want to plan a trip, and move it over to their own products. And whether users like them or not, it is that selfdealing and selfpreference and that has caused the Playing Field to level emily google makes unlevel. Emily google makes the argument that other websites have soared. What is your response . There aref course, some companies that dont need google or are phenomenal successes on their own. But so much of the work that hasens on the internet and spawned so many Wonderful Companies doing wonderful things, transforming the way we think about information and giving google really the power to become what it has become, in terms of authority on information. You started to go because google is great at servicing up there servicing everything out there on the web. That is a positive and googles favor, but now, as they continue to keep users on google regardless of whether google has a great answer or not, that is not good for the ecosystem. That pulls away traffic from buts like tripadvisor, everybody else in the travel system, shoping shopping ecosystem, lots of categories because google think it has the best answer for you in their ecosystem. Emily give us a snapshot of how much bigger you think tripadvisor could be, more employees you could hire, how many jobs would not have been lost if google, in your view, operated fairly . If we look back to google 15 years ago, there was a set of search results, somebody could type hotels in boston, would see a couple of paid ads on top of the page, and then the couple would move to three or four, then there were some on the right side of the page, then there was a big section in the middle that began with all google, and all those things continually push the organic results for the rest of the web further and further down the page. So users now have to scroll and scroll and on a phone, often have to scroll three or four pages to get to the first result that isnt kind of owned by google or paid for by some company to google. Localn there is travel or or just information if you are information, that its not that it is gone, it is just getting buried further and further and deeper. If you think about what happens when google is unchecked, like they have four ads now, they could have 10. It could be a really difficult time for a consumer to find all the great innovation, great products, great ability for the theiret to answer questions if google remains an unchecked force, given their complete dominance in search. Emily what are some specific changes you would like to see . Would you like to see the company broken up . Would you like to see services spinal off . Spun off . Stephen we combated from the viewpoint of, what will remedy this for consumers . Look like for people who use Search Engines . We are not in the position to know well enough or know what is practical, so this comes to various governmental agencies to be able to find us a good that really helps, in our case travelers, but consumers in general to be able to use the Services Google provides, many quite valuable, but use them on a level Playing Field and keeps people in the ecosystem. I am sure there are many ways to solve that, perhaps none of them perfect, but all of them better than what we face today. The critics of this case say it is going to be difficult to prove. If nothing changes, how concerned are you for tripadvisors business. Will be tripadvisor fine. We have a unique ecosystem. We clearly would be doing much better today if google had not been siphoning traffic that starts on their Search Engine. Search advisor is a topnotch, premium, unbiased source. People have loved us for years because we provide all that great information. And we still do, it is just now much more buried than it used to be. So if google were to let up doing that for us and every company out there, that would be great for travelers, great for consumers to find what they are looking for. Tripadvisor remains a very Strong Company in many different areas, but because of what google has been doing, we lack some of the funds to be able to invest in yet other innovations that we would love to pursue. Emily stephen kaufer, ceo of tripadvisor. Thank you very much for sharing your perspective. We are going to continue to cover this case. Still ahead, tech under scrutiny on all fronts, from the google antitrust case to now a Senate Inquiry on facebook and twitter for alleged censorship of conservative news. This is bloomberg. Washington, d. C. Is a very busy place for Tech Companies these days. Other than the big antitrust lawsuit against google, lawmakers want to hear from facebook and twitter, preparing subpoenas after the platforms spread of ab the controversial New York Post story on democratic president ial candidate joe biden and his son. For more, i want to bring in bloomberg editoral editorial reporter ben brody. Will Mark Zuckerberg and jack dorsey testified . Ben that seems certain. The Committee Said they could agree to testify voluntarily or be subpoenaed. If they dont agree to be testified voluntarily, they are already scheduled to be testifying on privacy and the liability shield under section 230. So no matter what, jack dorsey and Mark Zuckerberg will be testifying once again here in washington, d. C. Twoy so we are expecting major ceo hearings next week. We just spoke to senator Marsha Blackburn, who is on both committees. Is there were republican versus republican turf war going on here . Why are we seeing so many different and uncoordinated actions . Ben it seems like a turf war. Roger wicker, chairman of the commerce committee, told reporters today they have these issues in hand and the Judiciary Committee can do what they want, but they should understand with these issues are. What you are seeing is a ramping up of washington scrutiny not only on the range of issues in section 230, antitrust, privacy, but thet you want, companies are trying to help jill biden on november 3 joe biden on november 3. Emily we have this end now the doj antitrust case against school, a lot going on here, big election coming up. How does this set the stage for 2021, regardless of who is in the white house . Ben exactly, it is an escalation that you see. From think these concerns republicans about bias against conservatives are going to go through the election, it doesnt matter when. We saw that in 2016 with the Cambridge Analytic store that exploded in part because the press believed it might have played a role in the surprise loss to donald trump. I would surprised if that became an issue in 2021, whether trump wins or loses. Either it caused his loss or almost caused his loss. I think you are going to see everybody going against section 230, democrats and republicans, you are going to see privacy coming back and a lot more antitrust laws. There is a lot to do here. Emily ben, you cover tech lobbying in washington. Give us a picture of how the forces have mobilized for these very deeppocketed Tech Companies with huge legal teams, on the back of antitrust scrutiny. Ben no question that it is millions and millions of dollars. We are going to be getting the lobbying numbers from these companies tonight, so we will know how many millions of dollars they spent by tomorrow morning but i have no doubt the lobbyist and legal bills are going to be piling up. For us in brody washington. We will continue to watch your reporting on these issues. Thank you so much. Does it for this addition of bloomberg technology. Bloomberg daybreak australia is up next and will be following this google antitrust suit. Im emily chang in san francisco. This is bloomberg. So youre a small business, or a big one. You were thriving, but then. Oh. Ah. Okay. Plan, pivot. How do you bounce back . You dont, you bounce forward, with serious and reliable internet. Powered by the largest gig Speed Network in america. But is it secure . Sure its secure. And even if the power goes down, your connection doesnt. So how do i do this . You dont do this. We do this, together. Bounce forward, with comcast business. Haidi good morning. Welcome to daybreak australia. We are counting down to the major market opens. Good evening from bloomberg World Headquarters in new york. Stories, the white house raises its offer on a coronavirus deal and Nancy Pelosis hope lent agreement will come this week. The department of justice sued