This is bloomberg technology. Coming up, the doj is hitting at t hard. Details on the lawsuit that could block at ts 85 billion takeover of time warner. Er speeds up its driverless push, striking a deal with volvo. Details ahead. Plus, more dealmaking in the chip industry. What the 6 billion acquisition means in its continuing consolidation. Lets start with the lead. The u. S. Justice department is suing to block at ts 85. 4 billion takeover of time warner. This is a major blow to the carrier to create a media and telecommunications empire. At ts chief counsel said he is confident the court will reject the claims and the company is withng a press conference the ceo is expected to speak. We will bring you the headlines, but first ed hammond just listened in on the doj call and joins with the ceo is expected to speak. Also with us is cory johnson and bob odonnell with technalysis research. Us. Ed, you have been listening in on the call. What is the Justice Departments rationale . Ed they have come out swinging for this deal. They said it is legal, harmful to consumers. The rationale is yes, it is a vertical merger which traditionally you see those deals slide through. They think it concentrates too much power in the hands of one company and it gives at t too much clout to determine which competitors get which content. Prioritizing its own stuff through time warner. It is really interesting and almost unheard of kind of take for the department of justice to come out what looks like a very pure vertical merger. Emily cory, in the weeks leading up to the position at the Justice Department, it seemed like everything was moving forward and suddenly things have changed which begs the question is this politically motivated . Does this have to do with the president s dislike of cnn . Cory there has been some reporting saying that this did come from the staff. That the suggestion was really about market concentration. The lawsuit will try to bring up whatever and including going into what the president has said both on twitter and perhaps in private to look at how that may have influenced the deal. But, this is a pretty tough suit. The suggested that the concentration of power is interesting to see from this current fcc. What is you. If this is in fact considered a consolidation of power, what do we think about the Big Tech Companies . There is a lot more power and influence in those companies. If i am one of them, im more nervous because the Regulatory Environment suggests, and the Legal Environment suggests they could be going after large companies. Emily ed, the you get the sense that could have a broader Ripple Effect or this is very specific to this particular deal . Ed it will have a broader Ripple Effect. There is no way this does not have, at least in the immediate affects onof exxo m a. This is a case of what we constitute power to be. You have the traditional of power only in concentrated markets. This is a question of absolute power. If the doj goes through with it, you will see lots of people who would have done mergers similar to this in terms of integrating companies, they have to think twice. You will see people really pullback from some of the bigger, potentially contentious deals. And then you throw in the unpredictability of trump. Is veryy at t trump vocal that he does not like the deal and does not like cnn. Cnn is one of the main assets that the department of justice apparently asked at t to the vest from. Emily the ceo of at t has already said spinning off cnn is not an option, but there is an opportunity to negotiate. Could that be part of the negotiation . Cory it looks like the negotiation ended today or a few days ago and the suggestion is cnn might get spun off best they might have looked at that before today but now they are looking to go to court. Just Behavioral Changes that at t might have promised as we have seen in earlier mergers. It is important to understand how cnn works within all of the cable empires. Time warner is able if a carrier wants to carry cnn, they will be told they can carry cnn if you take at t and the other offerings. Time warner is able to sell many Cable Networks by having the crown jewel of cnn. It is not just a standalone business. On all why they have cnn these other carriers and it is great source of revenue for time warner. As a result, you have time warner really recognizing the need to keep that as part of their business and at t wanting to keep it. Emily we are getting headlines out of the Justice Department. An official saying the lawsuit has nothing to do with President Trump, influenced by President Trump or anyone else in the white house. Cory that does not mean it will not come up in the trial. Ed of course, they are going to say that. Bob it is absolutely the party line. Wedo have to think about have to think about how people think about and consume media and content these days. All of that is changing, therefore the rules are changing. I think that is what we have to think about, the potential implications of what is going on. Emily an at ttime warner merger would pose a level of competitive harm not seen in decades. Ed, this is what a Justice Department official is saying. What is next . How does this process play out . Ed it is not sound like sentiment language. They will obviously go to court on this one. It seems very unlikely they will find some resolution before and. At t genuinely believes they had a winnable case. They believe there was political interference. They actually set immediately when the Justice Department came out this afternoon, at t put out a very aggressive statement saying the lawsuit is a radical departure from decades of antitrust precedent. I think this is the doj overreaching and they will obviously go to court. I think we touched upon this this will have a Chilling Effect on deals in the near term. Emily in 2011 when at t dropped its proposed bid for tmobile, we covered that. Could we see something similar happening . Cory Companies Want to keep getting bigger, eliminate competition, consumers have less choice. We are always going to see deals like this, but what we have seen is the world is clear. Whatever guidance they are from themight accept fcc, it seems like the companies are not getting a clear view of these things in advance. Im sure at t is furious what is going on with the department of justice and the bankers that told him this deal could go through. Emily what do you expect the consequences to be if the deal does not go through . Ed i like corys point, blame the bankers. Cory the bankers dont think so. Ed i likeed look across at whs happening to fox. A number of companies trying to buy access from fox. There is still a lot of potential acquirements. Its entirely possible you could see other suitors try to buy either or. If they go to court and this thing gets blocked, its really does not bode well for people attempting these big contentious mergers. Emily all right, we will be following this throughout the show. We will be listening to the live webcast at the start of the bottom of the hour in new york where at ts Ceo Randall Stephenson is expected to speak. Cory johnson, bob odonnell is sticking with me from technalysis research. Coming up, consolidation in the chip industry continues. Marvels 6 billion plan. The latest on what qualcomm and breas investors want to see from broadcom. You can check us out on bloomberg tech tv. This is bloomberg. Emily a big takeover in the chipmaking business. Marvell technology has agreed to buy cavium for 6 billion in cash and stock. Marvell specializes in chips that control hard disk drives, a market no longer growing. Cavium makes network processors. Qualcomm investors say they could be open to weigh broadcom deal, but for a higher price. Broadcomsjected acquisition offer last week. Anand who focuses on the Semi Conductor industry joins me along with bob odonnell. Anand, what do you make of qualcomms response . Anand it is logical to try to extract more dollars out of the deal but if you step back and look at the big picture, we think the combination makes sense. This places adjacent parts of the cell phone together and the ceo of broadcom might be able to settle disputes with apple which has been the primary thorn in qualcomms side. That adds a tremendous amount of value to qualcomm and broadcom, if it were to be acquired. Emily what about the price on offer . Anand as so far as is it possible that the ceo offers five dollars more or 10 more to get the deal done, yes. Perspective, he is actually pretty well leveraged to try to make this deal happen. At the end of the day, the 80 a share that people are angling for is also a psychological high price. And he has historically not cowed to those higher price demands usually. A little bit of a barter transaction as to whether the deal gets done at that price. Emily there has been a ton of consolidation in the chip industry. Take a look at the chart in the bloomberg. It shows you just how chip sales have been rising at its fastest pace since 2010 globally, yet more consolidation, bob, than ever. Fewer players. Bob the issue is it is very hard to compete if you are a smaller specialized player. You are seeking a conglomeration of different technologies being could together in these companies. Think about what intel has done. Pus,have gone from c now competing on other things. The companies recognize they have to have a combination of different components because whether it is automotive, computer, mobile phone all of these areas require multiple types of technology. One thing i will throw out two things on the qualcommbroadcom deal there is a concern from a monopolistic perspective. You have to figure out what they are going to do because there is too much control consolidated. The other thing is culturally, broadcom and qualcomm are different types of companies. There is a concern with a have an impact in terms of talent loss and things like that if this deal goes through because there has been discussion about that. Anand that is a great point. Unlike other general consolidations, even largescale this is not intel the difference is the ceo is in charge. Emily someone said to me he gets what he wants generally. Anand he has a very clear idea of what he wants and a clear idea of what he wants to keep. More importantly, what he wants to divest. We think it is roughly 7 billion business that can be funded pretty quickly. The other part of it is its from left field, but somehow put a motor on qpl, the licensing portion of the business, could that be sold off . That could clear a whole host of problems from a regulatory perspective. Emily how does the caviummarvell deal fit in . Bob it seems pretty straightforward. I think there is a nice combination of technology. Two relatively smaller players coming together. What is interesting about that there is this general idea of edge computing. The idea of Cloud Computing coming down to the edge. Cavium is now talking about arm servers. This combination gives them the capability to create very interesting products, components for products. I think that could be a big deal. Anand interestingly enough, the main competitor to both marvell and cavium is broadcom. Emily broadcom will be everybodys competitor given how Many Companies what are the consequences of that . Anand you have to be, in semis, ome. Ig oral g go h you cannot afford to be a small player and think you can go anywhere. You have to have manufacturing capacity, product and distribution. You cannot afford to be a small player and think you can go you cannot do that if you are a small company. Bob the only thing i thought of when i was thinking about this is what samsung said we want qualcomm . Because samsung does raw components they do screens, memory and they could do radios. Im not saying anything like that will everyou cannot do thaa happen, but when you think about ways this world could go, that would not be the strangest deal ever done. Emily interesting thought. Bob, you are sticking with me. Anand, great to have you here in San Francisco today. Still ahead, alibaba goes shopping, picking up a slice of chinas top hyper market chain. We will look at a deal worth nearly 3 billion. Interactive tv function, you can find it on tv on bloomberg. If you missed the interview, you can go back to it, send our producers a message and play along with the charts you see on the air. Check it on tv. This is bloomberg. Emily big news for tencent. They have become the First Chinese company to be valued at more than 500 million. Three months after a top 400 million for the first time ever. Tencent joins apple, microsoft, amazon and facebook for the only companies valued at more than 500 billion. Another giant on the news, alibaba making another bet on brickandmortar retail. They have agreed to take a 2. 9 billion stake on the countrys biggest operator of walmart style hypermarkets, 36 of sun art retail. Joining us now is selina wang and bob odonnell. What is the motivation and how does it fit into alibabas overall bet on offline . Selina this gives alibaba access to 400 of these hypermarkets along china. This is just a string of deals they have done in offline. They are in grocery and Department Stores. Them access consumers in lower, smaller cities that were not familiar with regular shopping on alibaba before. The big longterm them access cs in lower strategy is they want to use their colossal amount of data, ecommerce, combined it with the Virtual World with the offline world to make shopping better. This gives them a lead with what walmart has been doing with jd in china. Alibaba also has a significant stake in this hypermarket world. Emily taking a look at the bloomberg, another chart. You can see how Revenue Growth at sun art is slowing down. The hope is this would reverse that trend. Bob, any coincidence, you think about them announcing it during the big week for u. S. Retailers and amazon especially . Bob obviously not, but we have to be very careful about comparing what happens in china and in the u. S. We talked about this before. You are certain things that will fly in china that will not fly in the u. S. Being rethought, rebuilt all over the world and people are experimenting. I think it is fair to say this is probably more experiment that anything else because sales have been declining. Point about getting to those lower tier cities is important because we tend to focus on big cities, but the real mass Growth Opportunity is going to be in those lower tier cities. Important because we tend to focus on bigif they havn those places, that is a great way to step them up into this whole new vision of retail. About talk to us, selina, the experiences they are try to storesin the physical that they do have as an enticement to get shoppers to get out and go shopping. Selina part of it is an experiment. These supermarkets where it is a cashless experience. They combined it with their ali pay mobile app. It is a very expensive experiment, they have invested billions and billions. They see it as more of an experiment, but not a direct comparison with what amazon is try to do with whole foods. Emily exactly. It is not unheard of this happens in the u. S. Selina at the same time, the offline experience in china is woefully worse than it is in the u. S. In china, these Offline Stores often have terrible inventory, management. There is a lot further that alibaba can take these stores than what amazon can potentially do with whole foods. Emily where do you see this going . Bob i think we are going to see companies figure out a mechanism to share the experience even more. Im not sure tha how that is going to go but my gut feeling is people will pull it back a little bit of buying everything online. There is recognition about something about retail that makes sense, especially for certain kinds of items. It is figuring out that balance. What is that right balance between offline andim not su . What are the ways i can get people to think about different kinds of product categories . One big thing is what is the range of products . In china, everything is in the same store. We dont have quite we have some of that in the u. S. But not as much. I think the release of experimentation around types of merchandise. Emily we will talk about that more later in the show. A smaller percentage of people are expected to turn out online for black friday. Whselina wang, thank you so muc. Bob is sticking with me. Coming up, uber goes into high gear with autonomous driving. We will have more details on their order for more cars from volvo. This is bloomberg. You are watching bloomberg technology. Heres a check of your first word news. U. S. Secretary of state Rex Tillerson says President Trumps decision to return north korea to the list of countries designated as state sponsors of terrorism is part of the effort to discourage countries from doing business with the rogue regime. Speaking at todays white house briefing, he indicated the u. S. Will continue to work with china in dealing with pyongyang. We still hope for diplomacy. The timing of this is just one of those concluding the process. There is a very specific designation process that we have to do to be able to meet the criteria to make such a designation. We want to ensure we have fully met all of those requirements. Iran,th korea would join sudan and syria on the list of state sponsors of terrorism. Buzzfeed is reporting at a private dinner with oracle ceo, National Security adviser h. R. Mcmaster mocked President Trumps intelligence. Sources tell buzzfeed benefit july dinner, mcmaster dismissed the president as an idiot and dope with the intelligence of a kindergartner. Oracle and the Trump Administration denied the clai ms. Violence happened in kenya following the Supreme Court decision to uphold the president s reelection. At leastalls for calm, two protesters were killed in confrontations with police. Nearly 100 people have died in the