On with Kara Swisher - Big Companies Are Scared of These Lawyers

Episode Date: August 17, 2023

Kara and Nayeema are back with a fresh episode, and this time they’re tackling the DOJ’s antitrust efforts. Our guests are Jonathan Kanter, Assistant Attorney General for the DOJ's Antitrust Division, and Principal Deputy AAG Doha Mekki. Alongside the FTC, this duo has helped craft new draft merger guidelines that put Amazon, Apple, Google, Meta and every other big company, from supermarket chains to airlines, on notice. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Claude Sonnet can generate code, help with writing, and reason through hard problems better than any model before. You can discover how Claude can transform your business at anthropic.com slash Claude. Do you feel like your leads never lead anywhere? And you're making content that no one sees? And it takes forever to build a campaign? Well, that's why we built HubSpot. It's an AI-powered customer platform that builds campaigns for you, tells you which leads are worth knowing,

and makes writing blogs, creating videos, and posting on social a breeze. So now, it's easier than ever to be a marketer. Get started at HubSpot.com slash marketers. Hi, everyone from New York Magazine and the Vox Media Podcast Network. This is the Terminator, and we're back. Just kidding. This is On with Kara Swisher, and I'm Kara Swisher. And I'm is The Terminator, and we're back. Just kidding. This is On with Kara Swisher, and I'm Kara Swisher. And I'm Naima Raza, and we are back.

I never went anywhere. I was still working. What do you mean? I was still working on Pivot. I was still working on Pivot. I've done like 90 Pivots since you've been gone. Okay, Kara. You get the note.

I was off the grid in Montana. I know. I know. I haven't looked at those pictures yet because I know they'll upset me. Why will they upset you? Look at them now. Because fashion in the wilderness is not. What do you mean fashion in the wilderness?

Like you were showing off fashionable clothes in the wilderness. I literally have the same clothes for the wilderness since I was 17. You know, some people use bear spray. I use fabulous fashion to keep my eyes open. I had never been to camp. You'd been to outdoors, outward bound before. I went to outward bound. I was a camp counselor. I'm a very outdoorsy gal. I know all about surviving in the wilderness.

Yeah, well, you gave me no tips. I gave you no tips. I'm not going to, no. But what I went to was very interesting because I made a fire. I drove side by side. But the most interesting thing I did was actually clean up the land in preparation for these controlled burns. Because it was a nonprofit called Safewoods, started by a friend of mine. And although I know intellectually these issues with wildfires, and we're seeing one in Maui right now, that over the last century we haven't done many controlled burns.

And therefore there's so much fuel on the forest ground that causes these wild megafires. I didn't know until I saw it. I went and actually, there's these twigs and branches all over the floor. And we were maybe 15 people working for a long time, and we barely made a dent in an acre of land. Nature is big. Nature is big, and it is having its way with us. Unfortunately, the tragedy in Maui is really significant and it actually, due to lots of reasons and a lot of mistakes on the part of the government, but a lot of this is what happened, along with a drought and climate change and all kinds of factors brought into play, and then not warning the people there enough. And it's also scary when these fires happen in an island, there's nowhere to go, right? Yeah, they went in the water. The death toll just keeps climbing up.

A lot of people went in the water, and that's happened before when there's a lava flow, but these are volcanic islands, but this is just a terrible. We should do a show on it. We should really do a show on it. We will do a show on it. But today we have a couple guests with us to discuss something else, antitrust. Yeah, couldn't be more different. But it's a really important issue. It's an issue I've been following a long time.

Actually, my very early days covering tech, I covered the Microsoft antitrust trial for the Washington Post. It's something I've been really familiar with. In the 90s. Yeah, in the 90s. And, you know, something I've been banging on about with tech is how very little activity the government has done from a legislative point of view, but also from a Justice Department point of view, is they've allowed mergers to go through, they've allowed activity to happen, and these companies have gotten enormous and powerful in ways that are just

astonishing that they've been allowed to get this big. And Biden ran on that in a lot of ways. I mean, a lot of what Biden ran on was this kind of let's fight back big business. He named what people started calling the antitrust defector, Lena Kahn, the FTC commissioner who we've had on the show, Tim Wu, the former antitrust advisor to Biden who we'd had on the show when he was exiting the White House, and then Jonathan Cantor, the assistant attorney general at DOJ for antitrust. And he is our guest today, along with Doha Mechie, who's the principal deputy assistant attorney general. Doha is just one of these amazing government officials. I met her, I think, she's been in a couple administrations quite a while ago. And I just feel like she's one of these,

when the, right now, the attacks on the Justice Department are reprehensible. There are people in the Justice Department that are trying really hard to fight the good fight, are really great public officials. And I wanted to show just how incredibly smart and fair they are. And she's the perfect example of that to me. Right. And I just can't stand this language around the justice system. Yeah. And to be clear, the language around the DOJ is this language that's largely emanating

from Donald Trump and the various indictments. And the Republican Party. And the Republican Party in defense of him. But it's not specific to the anti-trust division. It's about the DOJ broadly becoming this, what they're saying, a politicized institution. It bleeds into it. It bleeds into it as if they're, you know, the tech companies are using this too, that they're meddling, that they're this, that they're that, that they've got it out for

them. You know, Lena Kahn's been under constant attack that she's got. Yeah, a very personalized attack. Yep. And I think Cantor less so, but still, this idea that they're enemies or that it's personal is just not true. It's just not true. And there is that bleeding, which Donald Trump has been so effective at, the draining of the swamp from day one, is cutting the knees of government across the board in various ways and with various stakeholders. And we're seeing that here.

the board in various ways and with various stakeholders, and we're seeing that here. Now, one of the things Cantor and Mechie have been on the forefront of, along with the FTC, Lena Kahn, and other commissioners, is new draft merger guidelines. They released some back in July. These are draft, and they're in this kind of review and notice and comment kind of period. They won't be implemented until they're passed in September. And there's a set of 13 of them. Yeah. I mean, I'm not a lawyer. I'm not going to go into them in detail. But they're really focusing in on changing the idea of what antitrust is because it's been focused on consumer prices. But they're really focused on digital platforms, which is why I'm interested in talking to these people and that we have to interpret things not just as a vertical or horizontal merger,

but that vertical mergers, which are seen as easier to get through versus horizontal mergers, are just as dangerous. But these guidelines, these 13 draft guidelines, are principles-based. If you read them, they're pretty, you know, they are actually quite non-controversial in many cases. They say things like, mergers should not eliminate substantial competitions between firms. Mergers should not increase the risk of coordination. They should not entrench or extend a dominant position. Those are pretty, you know, okay, great. They also open the door for more scrutiny when a merger involves a multi-sided platform, so a two-sided platform like social media. The agency examines competition between the platforms on the platform to displace the platform. So,

scrutiny that would get ahead of a lot of the social media. Yeah, I think it's been hard to deal with social media because there isn't a damage to prices. There aren't prices, right? They're giving away free stuff. And so, I think the most significant one is number nine. When a merger is part of a series of multiple acquisitions, the agencies may examine the whole series. Yes. Historically, the history of antitrust policy has been, okay, look at the impact on prices. And I think Lena Kahn was one of the reasons she was so pivotal. She said, we have to broaden the conversation beyond prices. And this really does that. And we saw this back when DOJ, our guest today, sought to block the merger between Penguin Random House and Simon & Schuster. And they were actually successful in that deal. And the argument that was made in that case was, hey, it's bad for writers. Forget book prices. It's bad for writers.

And it's tapped into the sentiment right now in the country where people are frustrated. I think the pandemic has made people think about, wait, how do we pay people? What was essential work? And how is labor treated? And what's the gig economy? What's the future of work as well? And Matt Stoller, who is a Substack writer who writes, I think it's called Big, he was saying that back in 2010, when we saw the last kind of fulsome set of merger guidelines, there were 32 comments on them, all from lobbyists. And these, there's been a year of kind of notice period, and they've

been asking for input and comments. And there are 5,000 comments in the last year that they received. And already, since July, when these new merger guidelines were put up, we've seen about 600 comments. It's building up. We'll see. Matt Stiller, by the way, is a fellow at the Open Marks Institute. So he has an interest in getting more stringent antitrust laws passed. And that ultimately really is where it has to go, even though what's happening here is Jonathan and Dohar are trying to use what's here, the tools they have. They need more tools. They need more tools from Congress. And part of what we focused on the show is the Hollywood Guild. We've had a lot of shows on Hollywood. And someone asked me the other day, like, why are you talking about Hollywood so much on the show?

And I think it's really the fight that the guilds are fighting is on the forefront of so many of these issues. It is about the bigness of Hollywood, the bigness of these studios, a lot of mergers and acquisitions that have happened over many decades, pretty unscrutinized, the future of labor, the future of of ai a lot of these topics that are it's kind of a microcosm for it is part of the economy it is it's also an argument i have made that it's about tech actually everything is about these tech companies taking over entertainment and the real enemies are tech and and i don't mean that in like oh they're enemies is that they will dominate everything and that needs to have a fresh look at what domination is and what even if you sent can benefit by getting a

free dating service or a free app or something like that you're not benefiting in lots of ways yeah well we'll see what happens the um paramount jester agreed to sell simon schuster to kkr a private equity firm unclear if that's going to be any better for writers but you are actually wrapped by simon schuster i am when it was owned by Paramount. I signed a deal with Paramount, and now it's going to be owned. I don't think the deal's done yet. I have no idea. I wasn't thrilled with it.

But yes, the book is coming out. It's called Burn Book. The cover art came out. Yes, yes. It's a picture of me with fire, sunglasses. And the aviators. Yeah. Who are you burning?

Everybody. Everyone goes down. Well, I love seeing the flames and the aviators. People. Who are you burning? Everybody. Everyone goes down. Well, I love seeing the flames and the aviators. People can go check out the book. We'll be back in a minute with our guests, Doha Mekhi and Jonathan Cantor. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see?

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and posting on social a breeze. So now, it's easier than ever to be a marketer. Get started at HubSpot.com slash marketers. Jonathan Doha, thanks for joining me. Let's start with the fact that the Biden administration has set the table, that it was making an ambitious push on ant. Let's start with the fact that the Biden administration has set the table, that it was making an ambitious push on antitrust, especially with the hiring of you, Jonathan, plus Lena Kahn and Tim Wu. He's left. Lena is mired in partisan battles and has had several high-profile losses.

You've done a lot better, most recently with the Simon & Schuster win, although you've had some losses too. I'd like each of you, starting with you, Jonathan, to assess how your efforts have gone so far. Yeah, so first of all, thanks for having us. We're delighted to be here. I guess I'll start by saying that I think we are on track. We are doing what we intended to do, set out to do. And so we are thinking about antitrust as a law enforcement exercise, first and foremost. And so we're going back to first principles, looking at what the law says, exactly how Congress wrote it, exactly how courts have interpreted it, and then bringing cases,

the right cases for the right reasons. And that means we're looking to protect competition, the competitive process, the way it actually exists, not the way it might present on a blackboard or in a textbook. And so that means saying, does competition benefit workers? Well, yes, it does. Does competition benefit authors? Yes, it does. Does competition benefit air travelers with better prices and better service and more legroom? Well, of course it does. And so those are the dimensions of competition that we're setting out to protect. I'd like to be a little more specific in that you had the Simon & Schuster case. You won that case. They got rid of the merger. and it's incorrect, that antitrust only protects consumer prices. That's not true. That's not why Congress wrote the law. They wrote the law to protect workers, content creators, in this case, authors. And so we brought a case not based on higher book prices, but we brought a case based on the fact that less competition for professional authors will mean less opportunity for an author to

take an advance and pay her health insurance and higher research assistance, professional authors, professional journalists. And so we want to make sure that competition benefits those stakeholders as well. And we brought that case, and we won. And we won not based on the theory that book prices were going to go up, although they might as a result of the deal. But we won solely based on the fact that authors would suffer from less competition. And that's a really important principle. Because as we think about antitrust over the last 10 years, we've looked at

what does it do to workers? What does it do to content creators? What does it do to student athletes? These are real effects on real people. And so by establishing or reinforcing that principle in the Penguin Random House Simon and Schuster merger, not only did we secure a really important victory from a presidential perspective, we explained decisively to the world that we're going to bring antitrust cases not just to protect consumer prices, which we will do, but also to protect workers and people who create for a living. Doha, talk a little bit about that. Is that hard to get people's brain out of the pricing? Because that's where it's stuck. It's pretty much stuck there for a long time.

You know, certainly we've had our successes in court, right? Judge Pan, who now sits on the DC Circuit, wrote a beautiful lengthy opinion noting the different ways that competition can present itself in that particular case about the competition for author advances, right? And so we feel good that we can investigate appropriately and we can tell good stories and go to court where appropriate and do a good job of presenting facts and evidence, even in cases that might require some abstraction. So, John, when you think about that, it's not just people's brains, it's judges' brains, essentially. How hard is it to shift them towards that, given the history?

So, we have a burden, and it's up to us to satisfy that burden, meaning that we have to explain to court why it matters. And so another example of that is we had a successful merger challenge against the American Airlines JetBlue joint venture, which we characterize effectively as a merger. And they went to court and talked about the lack of price effects in the interim. We convinced the court, and we won that case by saying, listen, these two entities compete with each other, and they compete for routes, and competition is important, and it's good. And my goodness, people don't like the quality of their air travel, and why should we suffer from less competition?

And that was persuasive to the court. But there are other things that we need to do. And part of that's changing the conversation to make sure that we explain, not just to judges, but to the public, why this stuff matters. Explain why they weren't positioning it as a merger. Companies are often trying to skirt oversight by effectively telling a different story, correct, Doha? Well, I think that companies make the best arguments that they can, right? Once they decide to engage in a transaction or merge, I think they're often committed to defending those mergers. And I think AA JetBlue is an example of two companies making

the arguments they can, but I think we're really encouraged that our district court judge saw through it and saw that this was essentially a de facto merger and that the harms that would flow from this thing that they structured nominally as a joint venture are just as bad as a full-blown merger. It's easy in airlines, I think, since people hate them. But when you lost in U.S. Sugar, for example, since that's a Finnish case, why do you think that was? Because you were arguing a similar thing, I think. John?

Yeah, it's actually a really interesting case study. So we brought that case using, in many respects, the architecture, the blueprint from the old guard. So we, for example, defined a market using something that was in our previous earlier merger guidelines, a kind of industry-specific test called the hypothetical monopolist test, something that antitrust lawyers pretty much to use your tool. We're going to rely on a case called Brown-Chu that comes from the 60s. And that said, we're going to use what we call practical indicia. So what does that mean? It means we're going to basically say who competes with whom. And that's the more appropriate way to find a market. We appealed it. And guess what? The appeals court disagreed with us and agreed with the lower court that the practical indicia, the market reality was the way to approach it, not using a very stylized test. And so one of the learnings from that case is we have to start with,

to Doha's point, asking a question, and we're doing this in our new merger guidelines, how does competition in this market present itself? And does this merger lessen that competition? And then be open-minded to understand that different industries will have different characteristics and competition will present differently from industry to industry. So let's talk, you just mentioned new merger guidelines. These are draft merger guidelines that you just updated along with the FTC together on mergers. There are 13 new guidelines, which will go through a 60-day comment period and potential

revisions before being finalized. Doha, tell me what you think the most consequential guidelines are and why. I know you'll say you love all your guideline children, but talk about what you think's important. Yeah, so I think to appreciate these draft merger guidelines, you need a little bit of history. The first thing the public should know is that we have had, in some form or another, should know is that we have had in some form or another merger guidelines since 1968. Yes. And I think what's interesting about these guidelines and what we're really proud of is that these guidelines for the first time go back to first principles, which is to say

the law, right? Antitrust enforcement is a practice and law enforcement. And so the guidelines are structured intentionally to focus on the case law that applies to mergers. It doesn't really make big distinctions between horizontal and vertical. It just assesses the mergers. I think one thing that Jonathan has been really a visionary about is helping people understand that horizontal and vertical are distinctions that exist in like a smokestack industry. Explain that for the non-lawyer. Explain that for regular people.

So anyone who's been practicing any trust law knows that there are horizontal mergers, which is to say mergers between actual or potential competitors, right? People who make more or less the same thing or offer the same product or service. Right. So Penguin and Random House, that would be Penguin. Exactly. They both publish books. And then there's this notion of verticality. And it essentially says, or the doctrine essentially goes that sometimes you can

have mergers of compliments, or you can have mergers of companies that are in the same supply chain. So a buyer and a customer merging, right? So an example of that might be AT&T Time Warner. merging, right? So an example of that might be AT&T Time Warner, right? Or Comcast Time Warner. And so, again, these are old world distinctions, right? In a world where you have mergers like Facebook, Instagram, right? Or, you know, other kinds like in technology platform cases, you see this often where there isn't a traditional horizontal relationship or a vertical supply chain relationship. And this is a Jonathanism that we've all adopted. Sometimes competition looks not horizontal or vertical, but it kind of looks like a gemstone. And I think it's in the public's interest for us to understand mergers for what they are and to try to understand why a company would engage in a transaction and understand what they see as the benefit and what they see as potential ways to shortcut competition if that's a problem in the merger.

Which tech companies have done. Jonathan, how much of it is it driven by the need to reign in tech in particular? One of the real innovations in our guidelines is the fact that there are 13. And so previously, everything was, you know, fitting square pegs into round holes. And, you know, is it a merger between two direct competitors? And is it a merger between two supplier and a retailer or distributor? But as Doha was saying eloquently, competition doesn't always present itself that neatly, and we need to equip ourselves for lots of different scenarios.

And that, I think, dovetails nicely with your question about tech and tech platforms. Everything is tech now. Everything is a platform. The network effects of data, the accumulation of information about consumers or suppliers, AI is going to transform the way business works. It's going to mean that the bigger you are, the more data you have, the more likely it

is a market can tip. Those are market realities. And just being completely neutral, we have to start with the question is, okay, if that's the business model, where's the threat going to come from? Is it going to be a direct competitor? Sometimes. Right. But is it more likely to be something that disintermediates? You're trying to redefine what it is because it is, what is it? Res loquitur, something, whatever.

Res ipsi, yeah. Thing is what it is. Is that right? Am I saying that right? Yes. The thing speaks for itself. Yes, the thing speaks for itself. So, I didn't go to law school, as you can see. So, but the reception for the merger guy runs, you said there's, quote, a lot of hysteria and perhaps overblown. So, explain it to me specifically what the hysteria is and why is it overblown? Yes. So, I will say that comment was meant for a very certain small segment of our insular class here in Washington, D.C., folks who are resisting any change to the previous merger guidelines, people who say that there's a cookie cutter and we should apply it.

The reception broadly has been extremely positive. And so people are like, oh, thank goodness, we finally are breaking free from these narrow conventions. And finally, we can look out for physicians and nurses and creators and workers and consumers who want the benefit of competition. But the hysteria from lawmakers or lawyers? No, a lot of it's the insular antitrust legal and economics community larry summers has called it a war on business for example hysterical um i'll let you interpret um whether that's hysteria or not i think it's more nothing it's a let's come on it's yes it's hysteria it's it's and i would you know welcome actually specific specific criticisms from Larry because we haven't heard any to the extent that he's had an opportunity to read them.

Antitrust is a law. Congress wrote a law. They said we care about competition. And then the Supreme Court has interpreted that law. We're a law enforcement agency, and we enforce the law as written by Congress and interpreted by courts. That's not a war on anybody. If Larry or anyone else doesn't like the antitrust laws, then they're welcome to go to Congress and ask for a change. But until then, we have a job which is to enforce those laws. One of his full quotes is,

these guidelines by moving away from an emphasis on lower prices for consumers to broader abstractions are a substantial risk. Well, I guess I would ask Larry whether he likes extra legroom in his airline or cares about privacy and data and being tracked and in all the other dimensions of competition or whether he thinks the people who work in their various industries deserve pay raises and benefits. These are all the things that flow from a competitive economy. Doha, the New York Times dealbook described it as a roadmap for judges, and it's a helpful references to case law. According to one analysis, the average year of those cases is 1975

when weighted by citations. So why should judges start referring to older cases over newer ones? And are there examples where judges ignore decades of rulings in an area and start looking backwards to older precedents for guidance? And why refer to much older cases? Why is that important? So I love this question because it assumes that judges weren't already looking to those precedents. That sugar case that we lost that we were just talking about, that judge cited Brownshue. The defendants cited Brownshue in their own defense of their murder.

And the year of that was? Brownshoe was in 1967. Help me, Jonathan. Early 1960s. 1964, yeah. So this is a very early Supreme Court case. And yet, judges and courts and defendants and the agencies rely on these cases all the time. It's been a long time since a Section 7, which is the statute that we

use to challenge mergers, case has gone to the Supreme Court, right? So I think the last one was California American Stores. And before that, what? What's the case before that? The 70s. And so these cases, I think, are still good law. And there's no other area of law where we sort of dispense with older cases and Supreme Court precedent. I think, as you were just alluding to, the Supreme Court, you know, we took the opportunity to read all of the Court of Appeals cases that interpret Section 7. And just recently in 2017, the D.C. Circuit, which is a powerful, influential appellate court, took the opportunity to say that we can't dispose of older precedents, right, or replace our judgment for this law that is on the books, right? Like there's this concept of stare decisis in the United States, and judges cannot depart from good accepted Supreme Court precedent, just because some advocates would

rather that the law not be in the state that it's in. But the rulings did move away. Why did the politics of judges that they're not paying attention to economics as they currently are? I think that in places where some people have argued that judges are doing something different than they were in the 60s or 70s, I think those were based on fact specific applications of the law, right, and not an actual departure by the courts. And so the thing we are trying to harness in these guidelines is good propositions of law that we stand behind. Okay. Now, Jonathan, it seems like the culture is right for Bidenomics, given the frustration of workers in the economy right now. Even guild strikes are benefiting from that. You just referenced workers' rights and money. Are you betting on that cultural momentum that people want a shift from just

consumer pricing where Larry Summers seems to be living? Yeah. So part of our process has been generating comments from the public. And we did that when we wrote these merger guidelines, for example, beforehand. And now we have a public comment. And a lot of the comments we're hearing are not just from consumers who want lower prices or entrepreneurs who want avenues to compete. are not just from consumers who want lower prices or entrepreneurs who want avenues to compete. We're hearing quite a bit from people who work for a living who are concerned about the harm that flows from lack of competition. And so we're listening and we're confronted with a lot of concerns and questions about the impact on workers. And we think it's a- But is this a momentum for you where people are thinking about that? Obviously,

there's a very prominent strike in Hollywood. It's not a lot of people, but it's a prominent strike. There was just the UPS one. There's a bunch of them going on. When I think about this moment, I think the world woke up, right? And I trust lived in this very insular bubble, mostly in Washington and New York for 30 years with very little attention from the public. And then folks woke up probably in the last five or 10 years, the broader public, and said, wait a second, how come there's no competition? How come there are no opportunities to start businesses? How come workers can't move from one company to the other at their will or don't have choice or benefits are being squeezed?

People are frustrated. And they are understanding that competition matters. And they're asking, why hasn't there been more antitrust enforcement? Why isn't there more competition? Why isn't the economy working better for them? So I think that's all part of this moment. And we're here and hoping to try to make sure that antitrust law is enforced in a way. But it helps you. It helps you.

Yeah. I mean, it helps us in explaining something that often was presented as being esoteric and technocratic in a way that actually resonates with the public. So, can I just add to that beautiful framing that Jonathan just offered? So, I'm reminded someone smarter than me once said that the public, the Americans, look to antitrust when we are uncertain about the future. And we've taken a lot of time to explain why we think antitrust should be participatory. And I'm often moved by the fact that, you know, your great, great grandparents understood the value of competition, right? When Senator Sherman is legislating, he's describing why monopoly is bad. And he says, it's a quote, monopoly commands the price of labor without fear of strikes,

for in its field, it leaves no competitors, right? So these old guys at the end of the 19th century understood that monopoly in all of its forms has myriad harms that flow to many different kinds of people. I'll point out, you taught history before going to law school, correct? And you taught your students about the Gilded Age. Absolutely. Are today's captains of industry, which would be tech people, the equivalent of 19th century robber barons? You know, I don't know if they're the equivalent, but that's certainly the framing that we have. And look, I think that there are ways in which today's monopolies could be more dangerous than the old ones, right? A monopoly that affects the news that you consume, right? The content that you view, the books that are going to be published.

I mean, this is the nexus between antitrust and anti-monopoly work and the vindication of our democratic ideals. And so to the extent it seems like there is public support, I think it is very real. And we should be thinking about this moment, not just that people woke up. I think that did happen, but we had bookended crises, right? There was the financial crisis where we saw a two-tiered recovery for a lot of Americans. Some empirical work to suggest that there might have been wealth transfers from working class people to the richest Americans. And then of course, the pandemic brought about a massive buy-side disruption, right? And also showed tech companies to be integral to everything. And it also showed that our supply chains are woefully ill-equipped to deal with crises that

may hasten over time, right? So just-in-time shipping, factories that are located in China, ports that are themselves dominated by the companies that own shipping lines, right? I mean, all of those things contribute to our inability to get essential goods. It is incredibly dangerous. And just to go back to your tech point, look, some of these companies, I think we have said, are more powerful than sovereigns, right? When you control, like, access to information, that is an incredible power, and we should be just as suspicious of that as we are, you know, totalitarian and authoritarian forms of government. Okay. Let's talk a little bit about, we're going to get to sports more specifically at the end, but one of the issues, obviously, is Trump has been saying the DOJ is biased, corrupt,

part of the deep state. Today, there's a lot has been saying the DOJ is biased, corrupt, part of the deep state. Today, there's a lot of Republicans saying the same thing. He's obviously focused on his own indictments and saving his own skin. But half of Republicans and Republican-leaning independents view the DOJ unfavorably now. Jonathan, does that affect the perception of the antitrust division? So it's hard for me to comment on how others perceive us. I will say I've been pleased and welcoming of engagement from folks across the political continuum. So there are many conservatives who believe that the concentration of corporate power is just as

dangerous as concentration of government power. And so we live in a very narrow area, perhaps, where party lines don't necessarily dictate ideological viewpoints on antitrust. And so we try to engage with everybody on all sides and focus on enforcing the law the way it's written. But I do think there's an interesting recognition of antitrust enforcement as, again, across the political continuum, and that we can't have a competitive free economy, we can't have capitalism without competition. We'll be back in a minute. Support for this show comes from Constant Contact. You know what's not easy?

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slash enterprise to learn more. Grammarly. Enterprise ready AI. Jonathan, you reportedly declared that you weren't part of the chicken shit club. That sounds tough. But given that the FTC has lost multiple high-profile antitrust cases recently, including Microsoft and Medi, your two agencies, they have a shared mission when it comes to antitrust and mergers. How did those losses at the FTC affect your antitrust strategy? at the FTC affect your antitrust strategy? And I know there's the defense of the idea that even bringing cases is helpful, even if you lose. But that zero for four comment in a recent hearing

with Lena Kahn, the FTC head from a GOP legislator, was designed to say that you're a bunch of losers. So we have a fantastic relationship with our colleagues at the FTC, including Chair Kahn, who's someone I've known for a long time and have great admiration for. And I trust that they are bringing cases on the merits for the right reasons. I want to be very clear about this. We bring our cases to win. And we play to win. And so, if we bring a case, it's because we believe we are right on the facts and the law and that it's in the public interest. And so, that's how we decide which cases to bring, and that's how we bring them.

Ultimately, we have to have faith in our judicial system. We have to bring cases to courts and convince courts. And if we don't, we have to go back and understand why something worked or didn't work, and then make sure we're internalizing that. May I stop you? Does it affect you when these things happen? It looks like Microsoft has momentum. It looks like Meta has momentum. You're obviously dealing with others. We're focused on our cases on an individual basis. So I don't think we, we're mindful of precedents. We're mindful of how courts are viewing facts and, and under the law. And so of course we take note, but, but ultimately we have to look how to present each case on its own. Individually. Now, I wouldn't be saying the DOJ has lost four consecutive labor market cases. And the last one, the judge didn't even let the

case go to jury. Does that hurt you? Why not change the strategy or is the strategy to keep going to see if you can jam the door open a bit? So I think that's been in our criminal enforcement against wage fixing and no poach agreements. Look, in all but the last case, we had, actually, even in the last case that didn't go to the jury, we, again, were very gratified to have decisions on motions to dismiss that vindicated the law. Judges are not having a hard time explaining that when you price fix or allocate markets, but it affects workers, that that is no different than other kinds of antitrust crimes. You know, we have learned a lot from our cases that we have lost, just as we learn from our wins, and we are internalizing that learning,

and we are improving our trial strategies. I will note that it is not unusual in the grand scheme of antitrust enforcement or white-collar enforcement, right? We are mindful that our colleagues at the FTC lost something like eight or nine hospital merger cases in a row before they had perfected that strategy and started winning those cases rather consecutively. Even our colleagues in the criminal division, right, there was concern about security spoofing, and they lost a number of those cases and eventually got that trial strategy right. And so again, to go to Jonathan's point, the most important thing we can do is to investigate the facts, to apply those facts to the law, and consistent with department policy, including the justice manual, proceed to charge our cases when we believe there is meaningful evidence that a crime has been committed. So it's kind of the Captain America strategy, I can keep getting up all day kind of thing, as long as you knock me down. But let's talk about the tech industry,

which has not been knocked down in any way and has gotten more powerful over time. I know you have strict limits on what you can talk about, so we'll keep it broad. But Jonathan, you compared big tech to standard oil not long ago. Do you still think that way? You know, the antitrust laws go back to the, you know,

world where we had, you know, Standard Oils and the world and Big Trusts and Railroad Trusts. Oil was tech, right? It was the right thing. Yeah, exactly. These are the necessities of life. And you have these extremely powerful companies with tentacles in so many different parts of our markets. And it's become a really powerful way to talk about concerns around monopoly. And it's something the public understands. It's something entrepreneurs understand, entrepreneurs who want to build businesses that are competitive. So yeah, if we've ever, I think we're confronting a moment now that is on par with over 100 years ago when we confronted the standard oils of the world. And we need an

antitrust regime that's capable of addressing those market realities. Now, there are differences, right? Obviously, data, people say, is the new oil. But it's not that simple, right? Data is used for network effects and machine learning and large language models. And data and AI are going to be powering our healthcare and our energy and our power grid, our agricultural system. And so those are fundamental changes. And those changes can usher in opportunities for competition. dominant moats and are protected because of network effects, they're protected because of access to data, then we have limits on how much competition we can sustain in our markets. And so we have to think about those market realities when deploying. Jonathan, you said you're dealing with chronic underfunding and that your division has hundreds of fewer staffers than it did 40 years ago.

This is a complaint that Lena Kahn has, many others. What's the impact of this? The merger of filing fee modernization act is supposed to help with the underfunding. That really trips off your tongue. I want to know if it's having its intended effect, though obviously it's still early going. Yeah, it's still early. So I think it's too soon to say, but it's an essential lifeline. As you point out, Kara, we have over 200 fewer people today than we did in 1979,

which is an astonishing number if you think about it, because how much of our economy has grown and how complex and expensive antitrust cases have become, we are smaller, we are underfunded. And the importance of not only building a technical staff that has lawyers, economists, but also have technologists and healthcare experts and agriculture experts is something that we need to do to keep pace, to make sure that we can evaluate algorithmic decisions to the extent that they are relevant to understanding competitive effects. All of these are things that we need to do to modernize, and we can't do that without appropriate funding. You have a big case coming up against Google. You have said they have a monopoly on the online search business, but a judge recently threw out some of the claims. Take a stick back and tell us how significant this case is. Yeah, so a very significant case, the first major monopolization case coming out of the Department of Justice since US v. Microsoft. I'll note that the court in that case, in the summary judgment motion, upheld almost all of

the claims brought by the Department of Justice. And so we're excited to present that case to the court in September. And how significant is it from your perspective? Huge. Because, again, the last major section, litigated section, a monopolization case out of the DOJ was filed in 1998. As important as Microsoft? Yes. Okay. Doha, there's also a potential DOJ antitrust case against Apple over its App Store.

Going back to how understaffed you are compared to 40 years ago, roughly, how many DOJ staff members would work on a case like that? And how many people would Apple have at its disposal? So I won't talk about specific investigations or companies. I will say that broadly speaking. Rumored investigation. Broadly speaking, it is normal to have any number of people working on a case. Sometimes we just have one or two people working on the case until it's time to make a decision. Sometimes we'll have 10 people, right? It just depends on the needs of the case. But the one thing that is clear is that when we

have deep-pocketed, formidable potential defendants, we are almost always outgunned in terms of money and resources. That said, I'm really proud of our staff and their ability to go toe-to-toe with companies that have endless pockets. I think United States versus Google, the search case, and the other United States versus Google, the ad tech case, are great examples. But no news on the Apple case yet? I'm not talking about any investigations or companies today. Okay. All right.

Meta recently launched threads to great success, or maybe not. Who knows? We'll see. Jonathan, generally speaking, when an existing tech giant launches a CapWeCap product that challenges the reigning incumbent in a separate business lane, is that good or bad competition, even if we don't like Elon Musk in any way? That's just me. We like competition from all points. And so we want there to be opportunities to compete, whether it's a business, a large entity in an adjacent market entering, or a small business

with an innovative and disruptive product. So we're agnostic as to where that competition comes from. And would you see what Meta is doing right now with threads is in that lane? Just generally speaking, yeah, that's more competition. More competition is good, even if it comes from a larger entity. Right, but what we don't want is a world where the only way to compete is

to be massive. And so we want we like to think about it as opportunities to compete. No matter where it comes from. No matter where it comes from. no matter where it comes from, even if it's a copycat killer kind of thing. Depends on the facts. Okay. I don't see a case happening there.

In other words, Doha, how does generative AI affect the tech landscape when it comes to antitrust? How are you looking at this? I think the new horizon, I would make a couple of points. It assumes that AI is like just its own self-contained product and not an extension of products and services that have existed for a long time and

that are already markets that are good and consolidated. And so there is a well-funded machine, it seems, to make AI kind of seem like this new thing. But all of the inputs for AI actually have existed for a long time. And so we're mindful, because we're litigating this case going to trial next month, of the longstanding search monopoly. And so we are very lucid to the fact that if you have already indexed and crawled most of the web, right, you already have a very, very big data set on which you can build large language models. I think new frontiers and new horizons, you know, the Writers Guild and SAG-AFTRA, like those strikes, like they are fighting those battles on the front lines. Because if you are worried about content creation and,

you know, a vibrant marketplace of ideas, then you are worried about companies that have so much power that they can scrape, take, use, and make future use of your ideas and your brilliance and your writing and your work. And that is a reality that we are going to have to confront. So the concept is, is these are not scrappy startups. These are big companies taking advantage of advantages they had and moving in. It's not unsimilar to Microsoft going into the browser business. Is that the comparison? Yeah, I think it's just leveraging or extension of existing monopoly power in many cases, right? And so it is not surprising to me that some of the companies that have a leg up in

the space are very invested in making it seem, for example, that a chat GPT or generative AI is somehow in competition with search when the reality we know is that it is just an extension of search. Of extension of their search. Go ahead, Jonathan. Yeah, no, if having a massive platform and, you know, historically large volumes of data are table stakes to enter competition for the next big thing, then we have a problem. And so I think we're concerned about a world where lack of competition in one market will become the high watermark for what's possible in the next market. Right. And that's- And I think-

Go ahead. And I think that's a market reality that we're understanding better now. And so that's why enforcing the law now not only help restore harms from the past, but it'll help open up avenues for competition in the future. Otherwise, yeah. Are you worried about OpenAI's advance here? This is something the FTC is looking at. For privacy reasons, all kinds of issues. There's all kinds of issues in this thing, copyright, et cetera, et cetera. Right. Again, we want to focus on opportunities. And so if we had a world where you had seven or eight search companies, you might have a lot more competition for generative AI. And I think we need to understand

how that view of the world or that market reality not only translate in markets like search or advertising, but also translates in healthcare and energy and agriculture. Sure. Are you worried about open AI, Doha? care and energy and agriculture. Sure. Are you worried about open AI, Doha? Again, I won't comment on open AI specifically. I think that generative AI is a potentially course-changing technology, and I think it's worthy of study. As you note, I will be curious, not just as an antitrust lawyer and an antitrust enforcer, but I wonder if our copyright regime will keep pace with some of the changes that we expect to see from generative AI. I wonder whether our labor laws are up to

snuff. I've observed for a very long time that federal and state labor law has not done an adequate job of protecting workers. And so I think this is going to force the issue in important ways. And so I worry as a citizen, I worry about privacy issues and all the sort of other areas, substantive areas of law that I think are going to be pressure tested by this new technology. And I'll be curious to see sort of the conversation that happens between industry and government. Okay, last question on tech. Elizabeth Warren and Lindsey Graham, an unlikely duo, want to create a new federal agency to help regulate the tech industry, even though it has bipartisan sponsors. We all know it's a long shot. Will that weaken the FTC and thus

Washington, or will it reinforce it? Good or bad idea, each of you. Doha, you start. It's too soon to say whether it's a good or bad idea. I think it is good to see Congress trying to address a nascent threat. I think that the DOJ and the FTC in the interim are going to have to do the work of policing this industry. Again, I worry about things like regulatory capture. There's a lot of details that need to be filled in to make sure that this will not become a regulatory structure, like if approved, or actually like promulgated. Again, that gets abused by industry, which is a real concern in a lot of government agencies. Jonathan?

Yeah, we're going to use the tools that Congress gives us. We came out with a full-throated endorsement in the last Congress of legislation to improve antitrust enforcement and tech. And so we're obviously watching this space carefully, and we've explained why perfecting or expanding our toolkit is important. So you'd prefer new laws? You'd prefer an update to the antitrust laws, which didn't go through the last... Well, we endorse those changes, but we don't have the luxury of waiting or making those

decisions. Ultimately, that's Congress's job, and we just do what we can with the tools we have. There are a lot of things that bother me and don't bother me at the same time. Ultimately, we're going to keep our head down and focus on doing the work. Yeah, they need to update the rules. All right, I want to wrap up. I know you have just a few minutes. I couldn't care less about sports, just so you know, but the business themselves are

huge, fascinating, and ripe for antitrust lawsuits. And they even say it out loud. The PGA and the Saudi backs live golf league have merged, and the PGA president, Jay Monahan, has said they're, quote, taking a competitor off the board. It seems like most of the sports leagues have coordination. Some would say collusion between supposedly competing team owners. Doha, why haven't sports leagues gotten more scrutiny? Is it because people like sports or it feels like one of the last great monopolies?

You know, there are times it's a fascinating question. there are times, it's a fascinating question. There are times when Congress has actually stepped in to give certain governing bodies and leagues immunities. I think that there has been enforcement on the margins, right? So Supreme Court cases like American Needle have gone to things like whether a league can engage in anti-competitive activity for things like printing hats among teams. But I think we are confronted more recently without commenting on specific, you know, entities or matters with competition writ large, right? Why is there one league or one governing body or one entity that is responsible for the enjoyment of sports, which we know is a massive, profitable industry, not just because of, you know, things like

going to games, but the multimedia rights, right? The media rights are huge in these entities. And so, again, I'm really excited about these issues because I think it's a great vehicle for people to understand why there should be competition among sports. Several years ago, I worked on a speech with Jonathan's predecessor where we laid out different ways that there's been innovation from startup leagues. There are certain camera angles, for example, that the NFL uses that it got from the XFL, for example. And again, these are these things on the margins.

But the more Americans have opportunities to confront competition issues in sports, I think that is ultimately good for the antitrust enterprise because it's a pathway to understanding why we should have competition in so many other important sectors of the economy. Is there an investigation in the works right now? I cannot comment on investigations. Okay, last question. Jonathan, you came to Washington with a background in corporate law, defending mergers from companies like Cigna and Microsoft's purchase of LinkedIn and also Skype. Will you commit to staying out of the private sector antitrust law

when your time at DOJ is up? Same with you, Doha. Great question. So I took this job, I committed to not thinking about what I do next. And so I want to make sure that I do this job without any regard for what I do after. So I stopped myself from even answering that question when I ask it to myself to make sure that whatever we do here is done for the right reasons and without any thought about what comes next for me. Okay, but you're going back, that means, correct? No, I didn't say that. All I said is I refuse to engage in that thought exercise. All right, I'm going to try Doha. Doha, you get the last word. Is that a problem, this revolving door? I mean, it's a revolving door everywhere. It's not just limited to law.

Sure. I think it can be. There are certainly notable examples. But look, I think I've been infused with the Jonathan Cantor philosophy of not thinking about what comes next. Personally, it's a huge point of privilege to get to do this job, to get to support Jonathan. And you and I have talked about this in other contexts, but this is almost nine years for me at the Justice Department. It's my third

administration, and I started off as a trial attorney. And so to get to do the principal deputy job is really extraordinary, and it's really a huge personal privilege. And so my commitment is to be the kind of public official that this institution deserves, that Jonathan deserves, that the public deserves. And that's the only thing I'm focused on right now. All right. Okay, we'll leave it at that. Thank you so much. I'll be really interested to see where these cases go as we move forward. Thank you, Cara. So now something interesting happened here. We finished the interview, and then Jonathan said, basically kind of gave us a glimmer of what his answer actually was about going back to the private sector or not.

And I said, well, you should say that. Yeah. Why don't you say that on tape? And so we came back and asked him the question again. By the time I came to DOJ, I had left the defense bar and was only doing work supporting enforcement. And I have a hard time imagining a world where I would ever go back and do defense work. I think I am pretty clearly on the side of enforcement and I would anticipate that that's where I spend the rest of my career.

Okay. The money's good though. The money's good. That's what I heard. I'm focused on doing our job here. All right. All right. You heard it here first.

Jonathan Cantor is not going back to the private sector ever again. Yeah. It's not unlike making jobs at tech companies. I can't do it. The money is great. It would have been great, but I just can't. I was surprised he didn't say it the first time around

because it doesn't hurt him to say that. Well, I know, but he doesn't want to look like he's like, fuck those guys. Because he's got to deal with the defense attorneys. I don't think he has disrespect for them. I think he just can't do it himself. All this does is tie his hands a little bit. What do you think each of these individuals' future is?

I think Jonathan will continue probably. He could be attorney general, certainly. He could be a judge. He's someone you hear from a lot, but Doha was a newer name to hear from on our show. Yes. I have met her many times and I've been so impressed every time. We've had, you know, I had lunch with her once and I was so, she's so smart. And as a lawyer, she's so creative and interesting. I personally, I think she could be attorney general myself. That's people's, people have talked about her a lot in that regard in terms of- She's young. I think she's my age. Yes. She's an up and coming lawyer in Washington. And I think she's my age. power. They have a real feeling for, in this case, companies running over consumers,

companies running over competition. I love that Jonathan kept saying one thing, legroom, legroom. But it's good. They're storytellers. That's how they need to tell it. They need to tell stories. We're getting you main cabin. Main cabin select. But that works. Let's tell you, why are sports prices so high? Why are you getting shitty seats? Yeah. Why do I have to pay? I already paid for a seat. Why do I have to pay for the nine inches extra? I think that's a critical job of lawyers. Jonathan is very diplomatic. He says things like, we love our colleagues at the FTC. We're excited to present that case to the court. So diplomatic. One moment wasn't

diplomatic was him discussing Larry Summers. No, he didn't mind us running him over and then backing up and running over him again. Larry Summers has an opinion on everything. He's been on our show, obviously. He's an expert. I think my favorite one was if he had, essentially, he didn't read it. He didn't read. If he had read it, I think he said something like that. Something like that. But I think Larry said something like that. Something like that. But I think Larry Summers is basically making an argument that this is a slippery slope. Look, if you look at the merger guidelines, there are things like if you don't like one of a series of acquisitions, we can look at the whole series of acquisitions. Sure.

It is. It's not a slippery slope. It's an expansion of government power. And Larry Summers probably doesn't like that, unless it's his government power, and then he loves it. He has a point. He has a point. No, he totally, I mean, I think it's an interesting debate, and I would actually welcome them having it. They should come on our show and have this debate. In this case, government hasn't intervened at all. Yes. So that's the point. And I loved Doha's answer to that question about the history of the cases and

the critique that, look, the average precedent of these cases is actually going back in time, and I think that's something she used the term stare decisis. You know, Kara, I don't know if you know, I audited a lot of law school classes. Okay, thank you. I'm not going to go into it. But what she was getting at there is this broad argument that's happening, this debate between originalists in the law and those who are looking at stare decisis and precedent more. So what do the framers want? What has the case law led us to? Developed over time. Yeah. And I think the Doho is kind of infusing one as part of the other. The relevant case law isn't just the last X years, not last 30 years. It's all of the precedent and case law. We have to be a little more nuanced in that. It's not one or the other. The same thing, vertical versus horizontal mergers. It has to be more creative in the way things have developed and i think um the capturing of the

originalist argument is a good thing for progressives to do it's like talking it's like liberals talking about patriotism and not book banning like now it's the republicans that are book banning now it's republicans that are against freedom like I've advised a lot of activists, I'm like, start talking about freedom. Say freedom over and over again, and take it from them. I come at it from a different perspective, less about the politics, but more about like, good answers come out of tension and creative tension. And so actually, Larry Summers and Jonathan Cantor disagreeing about this, or the tension between stare decisis and originalism will get us to a better answer as a country.

Yeah, absolutely. Open AI. That was an interesting moment, right? Yeah. This conversation about generative AI. It is Sam Altman, open AI are facing some scrutiny from the FTC. I really like Doha's answer here, which is, oh, you know, I don't know. But I also think about copyright, labor.

Labor. She's trying to make a point that it's more, that they can pretend it's new, but it isn't. It's the same old game. And I think that was, that's why she's such a great mind in that, right? She sees the patterns. And I think that was, I think that's an important thing to point out. Well, but from a competition perspective, you can make the argument that OpenAI is good, because it gives Microsoft and their tragic Bing product. But why Microsoft? Why not just OpenAI by itself? Yeah, but why? We're going to give a leg up to a trillion-dollar company? Great. Exactly. And that therein is the

problem. A lot of the competition, the conversation around competition we have right now, I mean, some of these guidelines talk about new entrants, but they're all duopolies or whatever, triopolies. Exactly. More Microsoft. I feel so bad for them. They're just struggling to make it in this world. But it is a question. How do we get new, fresh competition and new entrance into this? And it seems like overall my takeaway from this conversation is here we have a generation of new leaders in government who are finally catching up and getting ahead of technology after it's been allowed to run rampant. Yep.

And they are outgunned and outmanned. So we'll see how they do. We'll see how they do. All right. Want to read us out, Cara? Yep. Today's show was produced by Naima Raza, Christian Castro-Rossell, Megan Cunane, and Megan Burney. Special thanks to Kate Gallagher, Rick Kwan engineered this episode.

And our theme music is by Trackademics. If you're already following the show, you get extra leg room. If not, it's a middle seat next to Larry Summers. Actually, he probably always flies first class, if not private. Go wherever you listen to podcasts, search for On with Kara Swisher and hit follow.

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