2017 has extraordinary brought it into eight very exclusive club. That is the Fifth Company worth and access of 500 billion, alongside apple, googles parent alphabet, microsoft and face book. It also means it has beaten alibaba to the milestone. News, 24 hours a day, powered by more than 2700 journalists in more than 120 countries, this is bloomberg. Lets take a look at the markets closed, aboutust 4 10 of a percentage down. Japan, we are seeing gains all across the region. Emily 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. Uber speeds up its driverless push, striking a deal with volvo. Details ahead. Plus, more dealmaking in the chip industry. What marvells 6 billion acquisition of this Company Means in its continuing consolidation. Lets start with the lead. Our developing story 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 government to go claims and the company is holding a press conference with the ceo is expected to speak. We will bring you the headlines, as they come in, but first, our Bloomberg News reporter ed hammond just listened in on the doj call and joins us. Also with us, our editor at large cory johnson and bob , odonnell with Technalysis Research president. Ed, you have been listening in on the call. What is the Justice Departments rationale here . 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 would see those deals flight through, but they are saying that it just concentrate too much power in the hands of one company and it , it gives at t too much clout to determine which competitors get which content. Prioritizing its own stuff, through time warner. So it is a really interesting, and almost unheard of kind of case for the department of justice to come out against, what looks like a very pure vertical merger. Emily cory, in the weeks leading up to the head of the Justice Department taking over 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 about this, Jesse Eisenberg at propublic or one of them saying that this did come from the staff. That the suggestion was really about market concentration. Now 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. And to kind of throw some money at this thing. But this is a pretty stuff that is pretty tough suit. The suggested that the concentration of power is interesting to see from this current fcc. Emily bob, what is your read here . Bob if this is in fact considered a consolidation of power, what do we think about the Big Tech Companies . Google, facebook, arguably there is a lot more power and influence in those companies, so if i am one of them, all of a sudden i am more nervous because the Regulatory Environment for just and the Legal Environment suggests, they could be going after Large Companies with influence. 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. Absolutely, there is no way that this does not have at least in the immediate term, some Chilling Effect on dictated m as. This is a case of what we constitute power to be. On bigticket m as. You have the traditional of power only in concentrated markets. This is a question of absolute power. If the doj goes through with it, takes this to court and succeeds in their case you will see lots , of people who would have done mergers similar to this in terms of integrating companies, they have to think twice. I think youre going to see people really pulled back from a some of the bigger, potentially more contentious deals. And then you throw in the unpredictability of trump. Whether or not it was politically influenced, we do not know yet, obviously at t thinks that it was trump is very vocal that he does not like the deal and does not like cnn. And guess what, cnn is one of the main assets that the department of justice apparently asked at t to divest from. Emily the ceo of at t has already said spinning off cnn is not an option, but there is an opportunity to negotiate. That they want cnn. Could that be part of the negotiation . Cory it looks like the negotiation ended today or a few days ago probably, when the news of this came out. The suggestion that cnn might get spun off best they might have looked at that before today but now they are looking to go to court. We do not know really what was offered or not offered before, or just the Behavioral Changes that at t might have promised as we have seen in earlier mergers. But it is important also to understand how the and and works within all of the cable empires at time warner. Time warner is able to insist that if a cable carrier somewhere once a carry cnn, there are told that they can have it if they take at t, cbs and all of our 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 there. Which is where they have cnn on all these other carriers and it is great source of revenue for time warner. And 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 as part of the time warner business to read 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. Emily right. Ed of course, they are going to say that. Bob it is absolutely the party line. We do have to think about we have to think about how people think about and consume media and content these days. The party line . At t . [laughter] bob we have to think about how people think about and consume media. 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 here. Emily an at ttime warner merger would pose a level of competitive harm not seen in decades. Ok, ed, this is what a Justice Department official as saying, what is next . How does this process play out from here . Ed it is not sound like sentiment language. They will obviously go to court does it . They will obviously go to court on this one. It seems very unlikely they will find some resolution before and. Before hand. They hadrally believes a winnable case. They believe there was political interference. They actually set immediately best 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. So they feel that this is the doj essentially overreaching, and they honestly will go to court and hope to win the case. I think what we touched upon a moment ago this will have a , Chilling Effect on deals in the near term. Emily cory, in when at t 2011 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. Ultimately we are always going , to see deals like this, but what we have seen here is the world is very clear to this companies whatever guidance they , are getting about what the doj might accept, or what the fcc might except 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 . Ed i like corys point, blame the bankers. Cory the bankers dont think so. [laughter] ed look across at what is happening to fox. A number of companies trying to buy assets from fox. There is still a lot of potential its entirely possible you could see other suitors try to buy either or. Theye deal falls apart, will come and try to buy it or part of time warner. 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 of course, 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. And hammond, our reporter in new york, cory johnson, editor at large and bob odonnell, sticking with me from Tech Analysis Research. Coming up, consolidation in the chip industry continues. Marvells 6 billion plan. The latest on what qualcomm investors want to see from broadcom. You can check us out on bloomberg tech tv. This is bloomberg. We are Live Streaming on twitter. Weekdays at 5 p. M. In new york, 2 p. M. In San Francisco. 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. Speaking of deals in chipmaking qualcomm investors say they , could be open to weigh broadcom deal, but for a higher price. You may remember that qualcomm had rejected broad comes when hundred five alien dollar acquisition offer last week. Anand who focuses on the Semi Conductor industry joins me along with bob odonnell. Our guest host of the hour, president of Tech Analysis Research. Anon, first of all 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. And also to 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. From a deal debt 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. Over the last five years. The ceo has historically not cowed to those higher price demands, usually. It might be a little bit of a transaction here, 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. Mean, the issue is it is very hard to compete out there if you are a small or specialized layer. You are seeing a conglomeration of different Technologies Team put together, think about what intel did. They did a change from cpu use another are competing in the mountains and 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. And that is going to be important. One thing also two things i want her out there on the broadcom deal. There is obviously concerned from a monopolistic perspective about wifi and bluetooth, and you have to figure out what they are going to do, there is too much control consolidated there. 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 consolidations, the difference is the ceo, who is in charge. Emily someone said to me he gets what he wants generally. [laughter] anand he has a very clear idea of what he wants and a clear idea of what he wants to keep. And more importantly, what he wants to divest. Wifi business does not overlap, and we think it is a roughly 7 billion business. The other part of it is that he this idea from far left field, that if you were to somehow put the licensing portion of the business for qualcomm, could that be sold off . Hostcould clear a hole of problems for my 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, go big or go home. You cannot afford to be a small player and think you can go anywhere. As bob said government you have to have manufacturing capacity, product and distribution. 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 . That is what i will throw from left field. Because samsung does raw components they do screens, memory and they could do radios. You know . Certainly, they have the menu, i am not saying anything like that could happen but when , you think about ways this world could go, that would not be the strangest deal ever done. Emily interesting thought. Bob odonnell, our analyst, you are sticking with us, and anand, great to have you here in San Francisco today. Thank you for stopping by. 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. And a feature i want to bring to your attention our interactive , tv function, you can find it on tv on bloomberg. You can watch us live. 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. This is for bloomberg subscribers only. 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 billion. Three months after they topped 400 billion 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. Chens largest ecommerce company, has 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 bloomberg techss 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 about 400 of these hypermarkets along china. This is just a string of deals they have done in offline. They are now in grocery and Department Stores and electronic stores, and this helps them access consumers in lower, smaller cities that were not familiar with regular shopping on alibaba before. Amount of data, ecommerce, the big longterm 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. Make the Consumer Experience better as well as streamline the inventory supply management. This also gives alibaba a lead with what walmart has been doing with jd in china. They have been trying to turn around the business there, and now alibaba also has a significant stake in this hypermarket world. Emily taking a look at the bloomberg, another chart. G 4955, you can see just how Revenue Growth at sun art is slowing down. So the hope is that 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. Retail is 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. The are some challenges there, and i think that selinas point about getting to those lower tier cities is incredibly important because we tend to focus on big cities, but the real mass Growth Opportunity is going to be in those lower tier cities. And if in fact they have strong presence in those places, that is a great way to