Daybreak Holiday: Walmart, Nvidia, OpenAI

Hello everybody, and thank you so much for joining us
for this special edition of Bloomberg Daybreak. US markets are
closed for the President's Day holiday. I'm Nathan Hager. Coming
up this hour. We'll look ahead to a couple of
major lawsuits on the docket. Elon Musk's battle against Open
Ai and the Justice Department's case against Live Nation and
ticket Master. We'll break them down with two of our
litigation analysts from Bloomberg Intelligence, Matthew Shettenhelm on big tech
and Jennifer Ree on Big ticket. Plus, we have a
big earnings report coming up from AI Behemoth and Nvidia
BI analyst man Deep Singh and Kunjohn Sapani will be
along to preview those results. Before that, though, we hear
from the world's biggest big box retailer this week, Walmart,
reports earnings on Thursday. Here to get a set for
that report, our Bloomberg Intelligence senior analyst Jennifer Bartashis who
covers retail staples, and Punam Goyle, who's got things covered
on the e commerce side. Thanks to both of you
for being with us, and you know, coming off the
flat retail sales report for decent number that we saw
recently Jennifer, I'll start with you, how does that affect
what we could see from Walmart when it comes to
the earnings this week.
You know what's interesting is that for Walmart, it doesn't
matter so much what the retail sales do just because
the trends that are in place have really been conducive
to their growth and their business. People are seeking value,
People are seeking, you know, ways to streamline their time
and find convenience, and Walmart just seems to be gaining
share based on their ability to offer that to their customers. So,
regardless of the macro environment, Walmart really seems to be
thriving at the moment.
And put them to bring you into the conversation, We're
seeing a lot of consumers seeking out Walmart's business on
the e commerce side as well. How could that play
out into these earnings?
We think Walmart will continue to do well on the
e commerce side. If Amazon is any reflection on how
the consumer is shopping online, they had great numbers on
the retail side, high single digit sales growth in their
online business. We expect Walmart to be no different. They've
put a lot of investment behind their e commerce unit
and they have been very quickly gaining share. Its over
one hundred billion dollars in GMB today. That's pretty impressive
given how little time they've gotten there. So we think
the e commerce handle for them will play out while
just like it did for Amazon.
You know, it's interesting, Jen, Walmart is seeing competition from
Amazon on multiple fronts, not just on the e commerce side,
but Amazon is kind of altering its footprint in the
grocery business as well. How do you see Walmart weathering
that well?
I think what's interesting is that, you know, when Amazon
announced that they were closing their Amazon Fresh stores and
their Amazon Ghost stores, which was more of a convenience
store format. You know, people kind of set up and
took notice, but it's important to remember there were way
under one hundred of those stores altogether, so it's never
been the majority of Amazon's grocery footprint. Instead, you know,
they have a lot of sales that are what you
would consider grocery category sales that happen through Amazon dot
Com and through their Amazon Fresh and so those are
your your fresh items, as your paper towels, things like that.
Walmart is the biggest grocer in the United States. You know,
they own almost thirty percent of market share, so they're
very well entrenched and because they've been investing in their capabilities.
You know, I think there's room for Amazon to grow,
but we're not expecting any kind of major, you know,
change in who's the leader in grocery over the next
couple of years.
You got to think to put them that Walmart's got
room to grow overall on e commerce as well. Although
Amazon being the behemoth it is, what's the challenge for
Walmart to compete online?
I don't think it's really a challenge anymore because they're
making the right investments. They're investing like just they're investing
in product and expanding their marketplace. You know, a lot
of times people tend to think that if Walmart wins,
Amazon loses, that's not the case. I think both of
them can grow together. There's a lot of share shifts
that are taking place in retail where shopping is just
gradually moving online. We have estimated that twenty five percent
of total retail sales in the US are online today
and they're going to be growing to thirty three percent
in the next few years. So there's plenty of opportunity
for retailers to capture that growing opportunity and among them,
Walmart and Amazon are still probably best position to do so.
And when it comes to the overall business, Jen, is
it all about grocery for Walmart? Is that where the
basis for Walmart's businesses right now? Or is it seeing
the potential for growth across its categories of items that
it sells?
Now, there's definitely growth across all of the categories. You know,
grocery categories do you comprise about half of Walmart's total revenue,
so it is important. But you know, the company does
a great job of of having that broad assortment be
tailored to be appealing to customers. And that's in the
US and that's worldwide. And so you know what we
see is that, you know, grocery is great because it's
a frequency category. You buy groceries frequently. It takes you
to stores, but once you're in the store or once
you're online, placing that order between either the in store experience,
the merchandise selection, or the technology that's used from a
from an interface perspective, it's really helping guide people to
buy more than just their groceries at Walmart, and so
you know, they've had strong, much stronger general merchandise sales
than some of their peers over the last last few
quarters and.
Put them how do you see Walmart continuing to grow
its business on the tech side in terms of developing
its interfaces integrating artificial intelligence into what it does.
I think, just like everyone else today, the integration of
artificial intelligence agentic shopping is key. Walmart's integrated itself into
chat GBT, so it's clearly opening up avenues to broaden
its customer base and get a piece of that agentic
AI shopping driven conversion. We think they're making advancements to
broaden their customer base beyond you know, when you think
about the Walmart customers, it is broad and it is
a customer predominantly that's seeking value. But they're trying to
expand that and they have to some extent, and Jen
could talk about this, have really expanded that through the
Walmart Plus membership. But in using AI and agentic shopping
and just technology robotics automation, we think they are making
progress and they will continue to invest in that front
to move forward in retail because if they don't, quite honestly,
they won't be able to continue to gain share.
I'm speaking with Punum Goyle and Jen Bartascius of Bloomberg Intelligence.
Jen pickop to that point that Punam raised there in
terms of the Walmart Plus business, there has been this
push into more subscriber fed business. How is that paying
off for Walmart?
Yeah, it's it's a it's a great program for Walmart.
When you think about what Walmart has been talking about
and over the past several quarters, they've been bringing in
more higher income households into their ecosystem. Now, part of
that is people seeking value, but the Walmart Plus program,
when they get people engaged with that, that makes people sticky.
And so historically, when the economy has been weak, Walmart
gains people, they gain shoppers, but then as the economy
gets better, some of those customers bleed away. What Walmart
Plus does is it helps keep all of those customers
sticky and in the in the Walmart universe, and through
the offering of convenience of being able to have things
delivered to your house or even into your house and
into your refrigerator directly, or being able to pick things
up at the at the curb side, and all the
their perks and benefits that they offer via that membership program.
It really helps keep those customers you know, engaged, and
it provides a recurring revenue source in terms of membership fee.
So there's there's lots of levels to the win of
having a robust program like Walmart Plus.
And in terms of the value seeking customer getting into
that engagement as well. Poonam, do you see that trend
continuing having some of these more higher middle income consumers
getting driven more into Walmart to seek that value.
Yeah. I don't think that changes much for the lower
end customer. I mean, at the end of the day,
Walmart stands for value, so everyone wants to find things cheaper.
I don't think a higher income consumer would go out
and say I'm willing to pay more unless there's a
service element to it, or there's an aesthetic involved or
a better brand involved. But I think having a broad
array of customers which Walmart is now targeting to expand
that upper end of the funnel, it doesn't hurt them.
And it's an easy way to do that because when
you're on an online platform, the experience is similar to
all versus you know, people would argue in the past
when you walk into a Walmart store, the experience is
very different. Than when you were to walk into a
whole food store, right, But if you're shopping online for
paper towels, it's wherever you're used to going. And that's
what Jen talked about the stickiness of it. Right when
you're a Prime member, you're a Walmart Plus member, because
you're paying for this membership, you want to utilize it.
And once you begin to utilize it and see the
value in it, that's just a natural place that you're
going to go to next.
You know, Jen, this is an interesting time in the
big retail business with a lot of these sort of
businesses that we think of as catering to the lower
end consumer, like Dollar Tree, Dollar General moving into some
of these bigger markets and target continuing to try to
find a direction. How do you see Walmart sort of
navigating some of that perhaps increased competition from the lower
end retailers.
Yeah, it's it's a it's a very good question. You know,
when when you look at the customer that the the
organizations that target the lower end consumers, like your dollar stores,
you know, in terms of store base, those those companies
tend to be located in greater proximity to some of
the you know, to some of those customers. So you know,
it's about it's about trip frequency. So dollar stores are
really favored when people are doing kind of quick fill
in trips in between larger shops. Where Walmart comes into
place is for that larger shop when people are planning,
you know, multiple meals in advance. They're planning, you know,
for a larger event or something like that. And so
you know, as we've seen you know, some uh some
some consolidation happening in the in the dollar store industry.
You know, we saw ninety nine cent stores go out
of business. You know, we saw a party city collapse.
That offers opportunity to ev for everybody, and and Walmart
is included in that mix.
And Jen, just to close this out, I think this
is going to be the first earnings report under Walmart's
new CEO, John Ferner, Right, Uh, what what's the pressure
on him, uh to keep up the momentum that we've
seen under Doug McMillan over the years.
I think that they certainly there's there's going to be
expectations that he continues with the things that have really
benefited Walmart in recent years, which is that willingness to
experiment and and fail. So experiment, adapt what what works,
you know, roll it up quickly. If something doesn't work,
walk away. You know, I think that he's you know,
he's been with Walmart for a while, so you know,
he certainly has the perspective of what the company has
been doing. But I think all eyes will be on whether,
you know, he finds new opportunities to kind of supplement
the ecosystem that Walmart has been building. That said, we're
not expecting any major pivots and strategy in the short
term because the the the this is working quite well
for Walmart at the moment, and they continue to gain
share and they continue to put on new customers.
Really appreciate this as we look ahead to these earnings
from Walmart on Thursday. That's Jen Bartashis and Punam Goyle,
retail analysts for Bloomberg Intelligence. And up next, we're going
to stick with the earnings theme and look at what
to expect from Chip Giant in Vidia. It's twenty minutes
past the hour. I'm Nathan Hager, and this is Bloomberg.
Welcome back to this special edition of Bloomberg Daybreak. US
markets are closed for the President's holiday. I'm Nathan Hager,
and we continue our focus on earnings. Nvidia reports its
latest quarterly numbers next week. From what we can expect
from the chip behemoth, let's bring in Man Deep Saying,
global head of tech research for Bloomberg Intelligence, and BI
senior Semiconductors analyst Kunjohn Sabani. Thanks so much to both
of you for being with us, and many people start
with you because it seems like the bar keeps getting
set higher and higher for Nvidia quarter in and quarter out.
Do you agree with that and how high is the
bar this time?
Well, so, in the last couple of years, what we
have seen is in Vidia's top line growth actually tracks
the hyperscale capex changes. And what we have seen here
today is all these hyperscalers raising their capex expectations for
twenty twenty six and we're talking about another year of
a sixty percent increase in total capex. And so if
that's tracking, you know, in Vidia's top line growth and
it's a it's a good proxy for that, then we
can expect something similar and that's where the estimates keep
getting revised upward. And now you know, consensus is forecasting
almost a sixty percent increase in in Vidio's top line
for twenty twenty six.
My eyebrowser already hurting just thinking about that, Kunjon. To
that point, six hundred and fifty billion dollars over the
next year is the number we keep hearing from the
four hyper scalers in terms of their AI plans. How
do you think that plays out for Nvidia's results, Well.
That should be a definite tailwind. Remember sometime in three
Q calendar three Q last year, Jensen gave out a
five hundred billion dollar This is Nvidia's revenue, not the
hyperscale care PACs, but five hundred billion dollar of a
pipeline of a backlog for both its Blackwell and upcoming
Rubin which will be in second half twenty six through
twenty twenty six. Since then, as Mandeep mentioned, the estimates
for these hyper scalers have gone up in some cases
like Google and Amazon has gone up close to forty
fifty percent, So those a significant portion of that increase
should definitely go in Vida's way. So that should now
raise the estimates even more. Since off of that three
QI billion pipeline.
Number, Mandy, do you see in Vidia keeping up with
the demand that that kind of spending entails.
Yeah.
In fact, I was at CEES this year and then
at Davos as well, and Jensen said demand is really
strong at least ten times you know, during those big events.
So clearly he anticipated this and Nvidia has been preparing
for this kind of step up and demand. The one
caveat here is what we are hearing from companies about
memory prices, and every company that has reported so far
on the hardware side has called out, you know, memory
pricing being a challenge. I think Nvidia, given their scale,
has probably managed it far better than some of the
smaller companies. But there's no doubt that memory is having
an impact on the supply chain this quarter and most
likely for the next couple of quarters at least.
Now give us your view on that, Coon, John, because
to man Deep's point, that is something that we've been
hearing a lot from many companies, even outside the hyperscalers,
that these memory prices are potential crimp to their margins.
Yeah, I mean that is true, and as an industry
they just have to deal with it. But given you know,
in the terms of stack of priority, look and media
is of course going to get the first priority. We
have seen, including Nvidia, but we have seen from the
memory players that they are reprioritizing key markets, which is
the data center, which is the latest and greatest servers,
because that's where they get the most profit and the
most dollar. And Nvidia also has prioritized and has actually
announced that they're going to not ship enough gaming GPUs
because they want to prioritize the memory that goes to
the server GPUs. So we think Nvidia should be okay.
The smaller, much more not sophisticated players and players outside
of the data center will see some impact of taking
allogation away from them or not getting the key allogation,
but Nvidia and hyperscalers should mostly be okay.
Now we know that in Video is an industry leader
in the GPUs, but we hear all this talk as
well about TPUs. How could that be playing out in
the earnings when they report.
Yeah, I think what we saw from Google is one
they expect, you know again fifty percent of their deployments
to go towards their cloud business, and the cloud business
seems to be accelerating. We saw a quarter with forty
eight percent cloud growth, which is far better than the
other hyperscalers and with you know, better margins. So I
think where the TPUs story is really solid for someone
like Google is the fact that one it's vertical stack
integration that gives them a much better you know, token
per what sort of a metric compared to other hyperscalers.
And also, I think in terms of kapex efficiency, Google
probably is the best position when it comes to the hyperscaler.
So it'll be interesting to see, you know, what Microsoft
and Meta end up doing, given Amazon has also talked
about ramping up their Traanium chips their own A six.
So both Amazon and Google are a tailwind for someone
like Broadcom, which Kunjin can talk more about. But clearly
I think Microsoft and Meta are probably more reliant on
Nvidia at this point than the other hyperscalers.
We're speaking with Mandeep Saying, Global head of Tech research
at Bloomberg Intelligence, and BI Senior Semiconductor's analyst Kunjohn Sabani.
Kenjohn Let's pick up off of Mandeep's point about how
Nvidia is weathering the competition and from some of these
other chip players, not just the TPUs but the likes
of Broadcom, AMD, Micron.
Yeah, I mean Look, there is no doubt and we
have a forecast in our latest AI chip Deep Type
that we are published, But there is no doubt that
a six R, which is the likes of a TPU
and a trainium are going to grow fast and to
some degree definitely take share away from in Media. It's
GPU competitor, which is from AMD, is also getting ready
to ship its first server level solution in second half
twenty six. So look, competition is coming from all angles.
Having said that, though you know, and Media is also
not sitting on his heels. They have been trying to
explore different areas and markets. One example is they have
announced they are going to start selling their best in
class ARM based CPU as a stand alone chips, so
entering into a brand new TAM that they didn't have
access to it in the past. And we think, you know,
beyond just server GPUs, they will be making forays into
a lot more other areas of AI, whether it's automotive,
whether it's physical AI. So right now the demand is
so high that despite such high competition that I talked about,
in Media can still continue growing really handsomely, at least
for the next two to three years.
Matthew how do you see Video's growth rejectory at this point,
not just on the chips, but growing into other markets.
Does Video even need to grow into other markets? When
the hyperscalers you're talking about the kind of spending that
they are.
Well, you have to think, you know, one or two
years ahead, because the kind of levels we are seeing
with capex and you know, as I said, we'll see
another year of sixty percent growth. We already had two
years of sixty to seventy percent CAPEX growth. These kind
of growth levels are not sustainable. I mean, there is
no doubt that growth in CAPEX will taper off. And
you know we are already talking about trillion dollars plus
in CAPEX. So from this point on, you know, six
hundred and fifty billion, you will see a deceleration in
capex grud. So the question for Nvidia is if there
is competition coming, do they want to move up the stack,
which they've already done with the release of a foundational
model on the autonomous driving side, the Alpmyle model that
they've released, And that's where you know, they'll have to
pick their spots in terms of what are the areas
where they feel like They've got a lot in terms
of the adjacent capabilities. They've already have a very sizable
networking business. Then that Kunjin can talk about. But to me,
the key is what kind of advantage these foundational models
that are trained on the latest Blackwell architecture can show
versus the A six and how big that gap is,
Because at the end of the day, companies that are
using the Nvidia clusters want to see, you know, whether
it's performance in terms of tokens for what, or you know,
the intelligence layer being better versus some of the other
foundational models that are not trained on Invidia chips and
that sort of distinction is very important to keep, you know,
the gross margins that Nvidia has versus the competition.
I pick up on that, kin John, how do you
see in Nvidia sort of growing into some of that story.
Yeah, I mean, look mentioned about networking, just to just
give a point of reference, This is not an area
Nvidia was playing up until even just two years back. Today,
the revenues from networking are going to run close to
thirty billion figure for the full year. Nvidia was not
even doing thirty billion as a whole company up back
in until twenty twenty three, So that's just to set
an example of that they have been mentioning into new
areas moving up the stack, whether it is hardware, whether
going beyond GPUs into networking and CPUs, or whether going
into software ecosystem, whether it's through NIMS, through models, through
their Omniverus software stack. So they've shown a lot of
success in terms of expanding these businesses from nothing to
billions of dollars today.
Mandi Kunjohn mentioned earlier that Jensen Wang talked about the
Rubin chip getting introduced in the second half of this year.
Do you expect to hear more clarity from Jensen Wang
when it comes to that next generationship in the earnings
next week.
Yeah, earnings as well as they have their GtC event
coming up in March, so clearly, you know, there was
a reason why Jensen pulled forward that announcement of the
new chip to CES just to set expectations that they're
really aggressive about pushing out the new architecture and introduce
that in the second half. And I do expect, you know,
the performance gains to be a big part of how
they continue to show that they are ahead of competition,
including a MD and the A six provider. So, as
I said, in the end, it comes down to you
know how, and Vidia's chips are helping address the power
greed times. For everything that we are dealing with right now,
power has the longest lead time. And if Nvidia can
address that power constraint and maximize you know, the throughput
per unit of power, then they will continue to command
premium pricing, which has been their page all along.
And Kun John, what's the most important question that Jensen
Wong needs to answer in the earnings call next week?
And it will be two questions. One is everyone's going
to try and figure out the shape or increase of
that five hundred billion pipeline that he had mentioned, So
that's going to be most of the analysts.
Goal really appreciate this. Thanks to both of you for
being with us. That's Kun John Sabani and man Deep
Sing of Bloomberg Intelligence. And up next, the World's Richest
Man goes After open A, we'll get an update on
Elon Musk's lawsuit against the maker of chat GPT. It's
thirty seven minutes past the hour. I'm Nathan Hager and
this is Bloomberg. Thank you so much for joining us.
On this special edition of Bloomberg Daybreak. US markets are
closed for the President's Day holiday. I'm Nathan Hager. We
turned out to a couple high profile legal cases. The
world's richest man, Elon Musk, is suing open Ai, a
company he co founded. That trial set to begin in April.
For more, We're joined by Bloomberg Intelligence litigation analyst Matthew Shettenhelm. Matt,
thanks for coming on with us. Remind us first off,
on the background of this case. Why is Elon Musk
suing open Ai.
Yeah, this goes back to Open Eyes founding about ten
years ago, when Elon Musk was one of the principal
contributors to the funding of its startup. And the allegation
that Musk is making in this lawsuit is that when
when open ai was created, it was under the idea
that it would remain a non profit and that it
would be focused on contributing to the good of the world,
not contributing to private profits. And and so the the
basic claim that Musk is making now some ten years
later is that basically he was deceived in contributing what
adds up to about thirty eight million dollars in startup
contributions that open ai and Microsoft basically misrepresented how the
company would operate, and so Musk he threw the whole
kitchen sink at the companies in his complaint. But it's
been narrowed down now to two or three claims that
that basically say one that that that the companies were
fraudulent in in in pursuing now a shift to a
for profit model, and they the companies were unjustly enriched,
and that the companies created a charitable trust and now
they've reached that charitable trust and we're now on track
for a trial on those issues.
Well, Elon Musk is asking for a lot more though
than just his thirty eight million dollars back, right, I mean,
he's seeking tens of billions from these companies.
Yeah, that's That's the really interesting piece here is that
in January Musk made a filing in the case because
it hasn't been clear exactly what would be the remedy,
say Musk wins here it does the court just refocus
the company back to a charitable purpose or is there
monetary risk as well? To open ai and Microsoft and
Must pushed hard on that last piece and made a
filing that said, I'm not just seeking my thirty eight
million dollars back here. Open ai was unjustly enriched and
and owes me in the numbers he put in sixty
five to one hundred and nine billion dollars from open
Ai from Microsoft thirteen billion to twenty five billion dollars
that he's seeking as a remedy here. So that's, you know,
obviously a number that the companies have to take seriously.
I think it's a different question whether the court would
would really consider that as as a realistic remedy or
if that's more of a play here for leverage and
potentially shaping some sort of settlements to threaten numbers on
that scale. Must calculates those through an expert based on
the valuation of open Ai, not on any actual returns
for the company that that that have been unjustly received it,
And I think a court's going to have a real
concern with calculating any sort of damages on valuation as
Must does, so I bring a lot of skepticism to
that number. I think potentially the bigger risk for open
i and Microsoft might be the changes to its model
going forward if the court insists that it needs to
be focused on a charitable purpose. That could be, you know,
substantial changes to the contracts and the model that the
companies are pursuing now, and Microsoft's made a substantial investment
in open Ai. Open Ai might be exploring an IPO.
Potential disruption there, to me is probably the bigger risk
than these gigantic numbers that Musk is throwing around.
So how are you thinking this is going to potentially
play out?
Here?
Is a settlement? What you're thinking is going to be
the most likely outcome? And what would a settlement potentially
look like?
Yeah, so you know, so we're headed towards a trial
in April twenty seventh. A jury trial and ury ty
are inherently risky, and you you have potentially big numbers here.
You know, settlements are are are always a real possibility.
At the same time, I think open Ai and Microsoft
think they have pretty strong legal arguments that this case
never should have even reached this point, that it should
never even be going to a jury. The judge has
repeatedly refused to stop the case they reject. She rejected
the motion for dismissal, the motion for summary judgment. I
think the companies might want to try you know, to
appeal this and and to challenge those rulings. But the
problem for them is they can't do it before this
goes to the jury. So it's a tough call to
see how this plays out. There's a chance the companies say, look,
you know, let's roll the dice with the jury and
we can always appeal it afterwards, especially if the jury
isn't asked to go to to remedy, it's just to
go to to liability.
So we'll see.
It's really hard to say what a settlement looks like here.
Given you the unprecedented nature of this suit, it's hard
to see a concrete framework. I'm skeptical that those big
dollar amounts come into play in any sort of settlement.
But you know, you have big personalities here, obviously with
Elon Musk and Sam Altman, who don't get along very well,
and so to try to envision in an exact way
that they would structure a settlement, it's too early to say.
Thanks for this, Matt, great having you on with us.
That's Bloomberg Intelligence litigation analyst Matthew Shettenhelm. Another case in
the National Spotlight is set for next month. The Justice
Departments antitrust lawsuit against Live Nation and Ticketmaster. For more
on this, we're joined by Bloomberg Intelligence senior litigation analyst
Jennifer ree. Jen give us the background on this one.
Is this just about how much we're paying for tickets
to go to concerts and things?
Well, that's part of it. I mean, the allegations are
that those fees that get tacked onto tickets for consorts
that we all know so well are a result of
Live Nation just essentially having too much dominance in control
sort of across the entire ecosystem for large concerts. You know,
it's in promotions, it manages artists, it owns venues, and
it owns ticket Master, which it acquired in twenty ten.
And what's been alleged here by the Department of Justice
and a large group of states, by the way, forty
of them have joined this case, is that the company
has kind of engaged in this long laundry list of
exclusionary conduct intended to maintain its monopoly positions in a
couple different markets. You know, under anti trust laws, it's
not really good enough just to have a monopoly position.
But if you're in a monopoly position, meaning like maybe
seventy percent or more market share in a market, if
you engage in conduct intended to exclude your competitors and
to maintain that position in kind of in an unfair way,
that's where you get across the anti trust lines. And
so that's what they're accusing Live Nation of here.
So based on your analysis, what's the thinking about whether
that type of behavior has been displayed by Live Nation
and Ticketmaster.
Well, based on what I've seen so far, the facts
that are in the complaint and whatever they've allowed us
to see publicly because quite a lot is redacted, it
looks like the Department of Justice has some really good
evidence and I believe has a strong case here. This
will go before a jury, and so it would be
a jury that would decide on liability. A judge would
decide on remedy, but a jury would look at what
the evidence the Department of Justice puts in front of it.
But Nathan, there is some possibility that this case would
not get there because there is a possibility that the
company could settle with the Department of Justice before they
get to that trial.
Okay, what has you think in that.
Well, this is mostly coming from news reports and from
a pattern that we're beginning to see at the Department
of Justice. You know, it has a division called the
Antitrust Division, and that is staffed with those people who
are anti trust experts. They are anti trust lawyers, economists,
They understand that area and the law, but they are
overseen by the Attorney General's Office, who aren't necessarily attorneys
with anti trust experience, but can override the decisions of
the division. And we have what has been alleged, because
I have no firsthand knowledge, but what has been reported
is that some very well connected Republican lobbyists, or I
should say sort of in the MAGA side of the
Republican Party lobbyists have successfully been able to go over
the heads of the Anti trust Division lawyers and procure
settlements for their clients against the will of the anti
trust experts at the DOJ. And there is a suggestion
that Live Nation is trying to that strategy here too,
that they've hired quite a few people that are very
influential with the Trump administration. For instance, Kelly an Conway
is one. They put Richard Grinnell, who is a Trump confidant,
on the board of and who is running the Kennedy Center,
they put him on their board, and apparently, according to
news reports, they have lobbyists roaming the halls of the
Department of Justice on a pretty consistent basis. So they're
working hard, I think, to get to a settlement. And
we have seen this tactic has success in the past,
namely with respect to Hewlett Packard in its attempt to
acquire Juniper that was first challenged by the DOJ Anti
Trust lawyers, and also with respect to a deal between
Compass and Anywhere Real Estate where the DOJ Anti Trust
Division was discouraged from opening an in depth investigation and
the deal was allowed to clear without much of a
deep look into it.
Well, do you have a sense of what kind of
settlement would satisfy the Justice Department?
So I think you know. Live Nation has been operating
under a DOJ consent order for years, since twenty ten.
That basically means an agreement, you know, a legal agreement
that they'll behave and their business in a certain way.
They had to enter that order in order to acquire
ticket Master. That was the agreement, and there have been
investigations since, analegations and a finding by the DOJ that
Live Nation did not comply with the terms of that
consent order, and it had a lot of elements to it,
but in particular, it wasn't supposed to strong arm venues
into using Ticketmaster as its ticketing agent, and it was
in fact doing that, So that consent order was kind
of bolstered and extended in twenty nineteen during Trump's first administration,
it just expired. So one of the things obviously that
the DJ could do is just go back to that
consent order bolster its terms further, since apparently Live Nation
hasn't really complied with those terms to begin with, and
extend that, let's say for another ten years. These would
be things like you cannot enter long term exclusive agreements
with venues you don't own. For Ticketmaster to be the
exclusive agent, you know, you have to allow other ticketing
agents to come in there and vuy for that for
that position for certain concerts. That obviously stop strong arming
venues and artists. And one of the allegations here is
that artists cannot play in the amphitheaters owned by Live
Nation unless they agreed to have Live Nation promote their tour.
So there would be something like, you know, you cannot
engage in that kind of conduct. You have to let
artists use your amphitheaters, but be free to pick their
own promoter. I think terms like that could possibly be
in a consent order that would allow for a settlement here.
All right, well we'll see how things go. Understand, this
is going to be hitting the courts rather quickly. That's
Jen Bartash is a senior litigation analyst for Bloomberg Intelligence.
Thanks as well to Bloomberg Intelligence as Matthew schttenhelm Man,
Deep Singh, Kun, John Sabani, Jen Bartashes, and Hunum Goyle.
Thanks to you as well for being with us on
this President Day holiday. I'm Nathan Hager. Stay with us.
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