Locking down its deliveries the keyes are drones to amazon locking down its deliveries . Shares tumbled at the start of the week after news broke these companies could be the target of antitrust probes. Are les case, they the department of justice is mulling an antitrust probe and has restriction over a potential apple pro. Meanwhile probe. Meanwhile, the ftc is looking at whether apple practices harm competition. Google makes up over half of digital ad revenue and their closest competitor amazon has 9 of the market. The digitaldominate ad market but does own up to half of ecommerce. We also learned a potential amazon probe fall under the ftc. The director of the enforcement policy and bloombergs Senior Editor for global tech join us for reaction. What we have is a political reality, not get a legal one. The tech environment is big, complex, and intimidating. So our two antitrust agencies have met to divvy up the playing. Ield, so to speak emily does this mean that they will or that an investigation could be imminent . I am cautiously optimistic that there will be investigations. Ftc and doj do not normally talk about divvying up matters. The process is called clearance and they do not normally have those discussions. Clear, you are optimistic because you are in favor of breaking up the companys orbit or believe there is a case . I think they need to be, at a minimum, investigated. Once all of the conduct is unearthed, that is when you decide the best remedy. Whether it is breaking up or bringing in case. I would not take breaking up were unwinding acquisitions off of the table. But the first step is to investigate. I am optimistic. Emily is there any difference in the way any of these companies are being explored . They have to be, the cases are different. Different strategies and levels of domination in their respective industries. But what we are seeing is a rare political consensus in washington. Not just amongst folks like sally at the open markets institute, but on capitol hill. You have senators like josh holly talking in this a way about how tech is bad. Not a source of innovation, but a source of peril. There are folks on the right who think social Media Companies are biased. Folks on the left worry about how foreign entities have used these companies to manipulate elections. Very much an overarching sense that something needs to be done. We are seeing the ftc and doj react to that. Emily how much of this is a result of what President Trump wants to happen . And how much is it the result of a bipartisan consensus . I think it is more of a result of the mounting pressure around the globe. What we are talking about are matters that europe started investigating 10 years ago. The u. S. Is late to the game. There are jurisdictions around the world who have been investigating these companies. Mountingk it is just pressure from consumers on the left and right side of the spectrum with the political will to enforce antitrust laws. Emily bloombergs brad stone and sally covered with the open markets institute hubbard with the open market institute. What is the difference between the agencys actions and congress . A former assistant attorney general in charge of the antitrust division explains. That process will play out publicly. It is unlikely to have a major impact on what the ftc and doj will be doing if they decide to investigate. Those tend to be highly , on thetial, nonpublic merits. And divorced as much as possible from whatever political debate may be going on. Emily for reaction, we spoke with charlotte from the policy counsel for Public Knowledge, a worked ino that, she the federal trade commission as well as a bloomberg Senior Analyst for antitrust. Procedural, but also indicates an investigation is likely. This is the type of process they are not going to go through if they are not going to open an investigation soon. But it could happen they end up not opening an investigation. Emily jennifer, how are the agencies different . Is the objective ultimately exactly the same . Jennifer ultimately, both would be conducting broad investigations. When i say both, i mean the lawenforcement agencies, the doj and the house judiciary committee. But the difference is the ftc and doj are looking at conduct to understand if these companies have engaged in conduct that goes beyond just aggressive competition and crosses the antitrust line and has harm to the competitive process and consumers. In congress, we look a little bit more broadly. We look at not just conduct, but how our economy has changed with technology and whether or not the antitrust laws can handle policing these companies. And whether legislation is needed, or some sort of changed antitrust laws, to rein in the power of these tech companies. Emily the doj has oversight into an investigation of apple and google while the ftc takes facebook and amazon. Charlotte i am curious about the , role of congress here. Is that just for the public to have these hearings and do this investigation . Or could that lead to policy and regulatory changes . Charlotte i think that is why the congressional process will be crucially important. The Agency Process as bill baer said earlier, is going to be secret. The public is not going to have a lot of insight into what is going on. But i think there is a good chance that there are additional problems caused by these companies that are not antitrust violations, but different types of problems. We do not have an expert regulator for digital platforms. Having a more public process in congress could build a record to have some new legislation to address these problems. Emily jennifer, are any of these four companies a bigger risk than others or at bigger risk of being broken up or being regulated . Jennifer i think it is difficult to say because antitrust investigations are very fact intensive. Really, it depends on the facts and what the conduct is that the federal trade commission and the department of justice finds that they do not like and what the proper remedy is to fix that problem. Usually, the remedies are fairly narrowly tailored. But if, for instance, lets say there is legislation like the type of legislation Elizabeth Warren is talking about where a where we ruled that a company cannot run a marketplace and also be a participant in the marketplace. Then a company like apple or amazon would have a bigger risk because they are companies that run a marketplace and compete on that marketplace. Emily what could the possible penalties be . I mean, i know this will take years to play out. But what are the scenarios at the end of a five or 10 year plus road . Charlotte at the ftc, we like to say remedies, not penalties. The goal is to promote competition. It is often not actually intended to be a penalty. With some remedies, of course, divestitures could be on the table. It may even be significant divestitures like a breakup. It is seen in the courts as a though that is unlikely. It is seen in the courts as a very severe remedy. Another remedy might be interoperability requirements. That is a major way of promoting competition. These markets are characterized by Network Effect. The more people connected to the network, the more valuable it is. If you make that network open up and allow other competitors to interoperate, that can address the Network Effect power and create more competition. Emily that was charlotte of Public Knowledge and bloombergs jennifer. Coming up, apple showed off the next generation of software and features but the announcements were overshadowed by the threat of government scrutiny. And if you like bloomberg news, check us out on the radio and in the u. S. On sirius xm. This is bloomberg. Emily apple unveiled a new era for apps and software at its worldwide developer conference. Here is apples Senior Vice President of Software Engineering talking about the new version of violence of ios. Ios 13 is packed with new capabilities, but we know nothing is more important to users that performance. Than performance. So we worked to make everything faster. Things like unlocking face id, now 30 faster. Emily but on one of its most important days in the year, the tech giant was upstaged by a report of an antitrust rope led by the department of justice probe led by the department of justice. We got reactions. Nothing about it. And it was developers, they are the most enthusiastic fan boys there are. So there was a lot of noise and clapping for just about everything. The typical particularly for dark mode. Emily they said it looks a lot like the bloomberg terminal. There you go. But it was a classic case of apple showing the glitzy kind of things they do and playing some serious catchup. Maps,t things like apple isnt it like, didnt i see that on android like three years ago . They are trying to do some interesting things and recognize some mistakes. They are pulling apart big products. I think they are resetting themselves in a couple different areas. But all in all, a reasonable about. I am a hardware guy. Emily what about the 1000 stand . That is the talk of bloomberg today. Is 6,000 andro then there is this new display 5,499 . 5040 999 but there is not a stand, so im not sure what you want me to do. Emily, do you want to come to my house and hold up the stand . Emily i cost more than 1000. Changeslk about these to the new era for accessing apps and itunes going its own way, essentially. A few highlights, one is ipad ios. You used to have an ios that ran on the ipad and i touch ipod touch. They have chosen to rebranded. For all intents and purposes, they are changing the name and adding new features. To bes great, but it is seen in people will ditching macs and pcs for ipads because of these changes. Emily how significant is this . Mark brings up a great point. Toy make these advancements make the ipad much more computerlike, although missing a mouse tool. Become this interesting gray area you have got between ipads and mac os. On the highend, apple can push mac pros on to those who wanted, it,in the middle want but in the middle, they are creating all of these questions. There is a lot of crossover, which some people say is good, others say that is confusing. , now i hadth ipad os to for five the different oss. Isnt the idea to make it easier for developers . Exactly, thank you for bringing that up. [laughter] it is what they are calling project catalyst, the internal name for years. Years ago when it was called marzipan. Ago, it was called marzipan. The idea is it should mitigate it a little bit. And the thing about the mouse, you can connect a mouse as an accessibility feature. But the thing i want to now, some of these gestures and new features are confusing. I will be up to get the hang of hang ofuys will it, you guys will apple obviously does, but what about people coming to the ipad for the first time . I think it will be difficult to get a hang of all these new gestures. Emily i wonder if it will be a generational behavioral shift. There is some of that. Even the demo, the guy trying to grab it, it did not work once or twice. Apple used to talk but how you would shake your device. You get these weird changes over time in terms of interactions that are efforts to overcome the fact that certain pieces are not quite there. On some devices, you have standard means of interacting with them and other devices. They are trying to figure out other ways to move forward. Generally, apple is quite good thingsng up with these but it is hard to make these changes. Emily they played up privacy, they played up the evolving health offerings. There is a new, things but it is hard to make these changes. Natural, computergenerated series siri. What do you think about this antitrust issue . I was thinking about this earlier, and apple knows they are in the crosshairs because they are a big tech company. And one of the things they say on stage and i have to believe that they are not a company like the others. If you look at the iphone marketshare, it is way less than 50 globally. Looking at the ipad market share, it has come down. Share, it ist technically a flop. Looking at the apple tv, that has low market share. The apple watch has high market share. Where terms of the general antitrust behaviors, apple does not hit a lot of those boxes. Emily even though they are the gatekeeper for all of the apps used on any apple device. That is true, but they make a good argument given that it is they are store their store. They did try to make it more that isopen, coming out with nw developer tools. They could easily say we are going above and beyond any other platform in order to be inclusive. I see why, on the surface, it could be an issue. But i think that apple, on this one, has a good art. Good argument. Up, if amazon gets its way, you may no longer be looking out your window for the delivery man . Instead, you may just be looking up to the sky. This is bloomberg. Emily it was about six years ago when amazon was touting its octocopter, a drone that would bring packages to your doorstep. That has not come to pass, but this week, the ecommerce giant unveiled a new ai drone to be used in deliveries of small goods. Amazon said it was built with components designed to meet faa regulation. In april, alphabet subsidiary wing became the first Drone Company to win faa approval to operate as a Small Airline and is planning its own delivery test. Bloombergs regulation editor, john morgan and tom forte, a Senior Research analyst, spoke to taylor riggs. Tom going back in time when amazon first talked about drone delivery on a Network Television show, our viewpoint was they were trying to basically break the duopoly of fedex and ups, to the extent that we still see the cost of delivery as the achilles heel of amazons business model, to the extent that fedex and ups are able to raise rates every year, even during the great recession. The fact it has taken years to get this far, essentially a beta test for drone delivery, suggests that technological and regulatory hurdles are still quite significant for this rollout. But when you think about its ability to empower oneday delivery, that offsets some of the pressure from fedex and ups. This is an important issue from amazon. Taylor jon, you heard tom talk about regulatory hurdles. We do know they need regulatory faa approval. Any indication of what the timeline for that might be . Jon they have been working behind the scenes. We know the federal Aviation Administration give them permission to do testing. They are still a ways off from coming up with the complete regulatory passage that will govern how the business will be conducted. As often happens in the hightech industries, policymakers let the technology evolve, then set rules for the road. So far, we dont know when that is going to be done, but they are working on it. Taylor tom, talk to me about how this fits in amazon. So often, we talk about their highgrowth profit margins, like Amazon Web Services. How does this drone fit into your overall thesis for the company . Where do you expect it to start to make money . Tom absolutely. To the extent that amazon is able to Deploy Technology to materially improve shipping costs, i think this is a big profitgenerating opportunity for amazon. And if you look at their recent performance, what you are seeing is an increasing mix of thirdparty unit sales on the platform, which have been which is then beneficial to their profits as they get higher margin when someone else is on the platform and they collect a commission, rather than amazon itself. To the extent of lower shipping costs, this could be a boost to profitability. Taylor jon, talk to me more about alphabets wing. Back in april, that was the first to get approval. Amazon seems trying to play catchup. What do we know about how different this is from wing and how alphabet has been leading the stage on this . Jon we have been waiting for amazon to pop up. Alphabet had been more public. We saw the tests last year where they were delivering popsicles and burritos to customers. Amazon, finally, the company we most associate with rapid delivery of Consumer Products finally has rolled out this technology, which is somewhat different. I think the video there reflects alphabets program involved lowering the goods from a hovering drone with a rope and pulley. Amazon is taking a different approach. They are actually going to come to your lawn and land, or within a few feet of the ground. That required more technology. They have included some Artificial Intelligence they say will allow them to spot clothes lines, pets and things, and land safely. Taylor tom, i finally want to ask you, in the last conversation we were talking about the probes and some of the antitrust and breaking up some of these monopolies. This, of course, seems to be amazons foray into helping gain on Pricing Power and insulate themselves from pricing pressures. Is this the right move at the right time . What sort of backlash do they face now . There are some concerns about a monopoly. Tom definitely. In one paper we just published about the convergence of tech and retail, the death of amazon one of the things we talked , about was regulatory risk. Specifically, would the company be required to separate the aws unit from retail . We dont think that would affect the longterm performance of stock. To the extent that i think as long as amazon for example, they recently dropped the practice of requiring thirdparty sellers to offer products at the lowest price point. That was something they may have been caught on antitrust. To the extent that this is about enabling sales on amazon and to the extent that they offer good opportunities for thirdparty sellers on the platform, i dont think this would trip antitrust. Emily that was bloombergs john morgan and tom forte. Coming up, google announces a multibilliondollar deal to buy a Data Analytics firm looker. Is it the time for m a as antitrust scrutiny ramps up in washington . And we are live thing on twitter. Be sure to follow Live Streaming on twitter. Be sure to follow our breaking Global News Network tictoc. This is bloomberg. Emily welcome back to the best of bloomberg technology. I am emily chang. Google announced 2. 6 million expanding and offering to help customers manage data in the cloud. The deal is googles biggest. We have all the details. If i would call thi