The Daily Show: Ears Edition - Lina Khan Explains the Federal Trade Commission

Episode Date: May 1, 2024

Lina Khan, Chair of the Federal Trade Commission, walks Jon Stewart through the government agency's role in enforcing antitrust and consumer protection laws and its current lawsuits against Amazon and Facebook.See omnystudio.com/listener for privacy information.

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wherever you get your podcast. You're listening to Comedy Central. The Daily Show is taking a break this week, but don't worry, we handpick some of our favorite episode highlights from the archives just for you. We'll be back with brand new episodes next week. In the meantime, enjoy today's episode. My guest tonight runs one of the main government agencies responsible for enforcing antitrust and protecting consumers in America. Please welcome to the program, Federal Trade Commission Chair Lena Kahn. Hello.

It's lovely to see you. Uh, you run the federal trade commission. That's right. It's lovely to see you. Uh, you run the federal trade commission. That's lovely to see you. You run the Federal Trade Commission. That's right. The whole shebang. And you are in charge of, it's protecting Americans from monopolistic company

practices, but also dealing with pricing and things like that, protecting consumers. That's right. I mean, the short of it is we want to make sure that the American public is not getting bullied or coerced in the marketplace or tricked. And so we enforce the nation's antitrust and consumer protection laws. And how is that? Well, please. Now I just want to make it right. You were not bullied or tricked into applauding.

No? You were not bullied or tricked into applauding, no? I don't want to be accused of monopolistic. How much pressure do these companies exert on the Federal Trade Commission? In other words, how much do they fight whatever regulation you're trying to put into place to keep them from becoming monopolies or from these types of business practices? Well, look, monopolies are not fans of enforcing the anti-monopoly laws, and so that type of pushback is baked in.

But we have a fantastic team. We're a small agency, but we're mighty, and we play to our strengths, being entrepreneurial, being strategic, and getting real wins for the American people. What are the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies the companies th. th. th. th. th. th. th. th. th. th. thi. thi. theaughea. Wea. Wea. Weaugha. Wea. Wea. Wea. We're, thoes. We're, tha. We're, tha. We're, tha. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. Wea. I I. I. I. I. I. Ia. Ia. Ia. Ia. Ia. And, t. And, t. And, ta. And, ta. And, ta. And, ta. And, ta. And, ta. And, ta. And, ta. And, t real wins for the American people. What are the companies, so these are separate things. Monopoles, the way I always viewed it was, oh, that's only one company. But don't we have oligopolis in this country? Aren't there industries, consolidation has made it? For instance, the entertainment industry is controlled by like six companies. Is that considered not a monopoly, but a problem? Yeah, look, we've really focused on how are companies behaving.

Are they behaving in ways that suggest they can harm their customers, harm their suppliers, harm their workers, and get away with it? And that type of too big to care type approach is really what ends up signaling that a company has monopoly power because they can start mistreating you but they know you're stuck. And what would be the metrics of that? Like how would you judge that? Because I know you've sued Amazon.

That's right. And that's is a monopoly, that they've maintained that monopoly through illegal practices. And look, there are a variety of ways that you can show a company is a monopoly and has monopoly power. One is you can try to figure out what's the exact boundary of the market, what's the market share. But again, the most direct way is to look at how is the company behaving. And as we lay out in our complaint, Amazon is that that that that that that that that that that that that that th th th, th, th, th, th, th th th th th th th that that that that that that that that that that they's they's that they've that they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've they've their their their their their their their their their their their their their their their the an theanananananananananananananananan. they an they an they share, but again, the most direct way is to look at how is the company behaving. And as we lay out in our complaint, Amazon is now able to get away with harming its customers. So just to give you a few examples, over the last few years, they've littered their search results

page with junk ads, ads that internally executives realize are irrelevant and unhelpful to consumers, but they can just do it and it melts them, you know, billions of dollars and money. They've also been steadily hiking the fees that small businesses have to pay to sell through Amazon. And so now some small businesses have to pay one out of every two dollars to Amazon. It's basically a 50% monopoly tax. And so those are just some of the behaviors that we point to to note that this company has monopoly power. Is there anything in the company's leader that also suggests that? Like for instance, if you were to go from being like sort of a nerdy dude

who sold books out of a garage into let's's say, a jacked Lex Luther type. Does that also suggest either monopolistic practices or some type of injections? You know, we haven't tried to make those arguments in court, but it would be interesting to see how a judge would respond. I think quite favoravers. How many lawyers do you, like for instance, so what are you up against? So you've got government lawyers, I'm assuming you've got a pretty good cadre of, but like let's say you're going after Amazon, how many lawyers are they have? I mean, if they have monopoly money, they can buy as many lawyers as they want. I mean, the FTC is around 1, 12, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, th, thi, thi, thi, thi, thi, thi, thi, thi, thi, thi, thi, thi, th. money, they can buy as many lawyers as they want. I mean, the FTC is around 1,200 employees.

But when we're going up against some of these monopolistic companies, they can outmatch us, outgun us, sometimes one to 10 to 10, sometimes one to 10, just if you're looking at lawyers, if you're adding paralegals and support tapes. If you're just looking at lawyers, they can. Yeah, I mean, we have lawsuits against a whole bunch of big companies. And just in terms of sheer resources that they can pour into the litigation, we're pretty outguns, but not outmatched, right?

And this is where it comes to playing to your strengths, being entrepreneurial. So this isn't about just getting a fine. This isn't about going after Amazon and saying, so because this is is is is is SEC does. The SEC, I think, is overmatched as a government agency. You don't have to comment out that, but just nod your head. Um, utterly overmatched. So they go after groups, and then they can't really prove it in court, so then they're like, how about this?

You give us a cut of your profit, and we'll all all all all all all all all all all all all all all all all all all all all, How do you handle that with Amazon? It's not just about a fine. That's right. I think we've seen, look, over the last couple of decades, we've seen how businesses can treat fines just as a cost of doing business. And we need to make sure that we're actually deterring illegal behavior. And so that can mean naming individual executives, we in our, some of our lawsuits. Oh, snap! You just did not go there. I like that. So, have you had success with this? We have had success with this.

I mean, we had a lawsuit against Martin Screlli a couple of years ago. Uh, uh, uh, uh, Oh, suddenly it turned into a pro wrestling match here. What's going on? And he went to jail. He went to jail. Do you have to refer things to the DOJ, or do you have an enforcement arm?

So you're right. We don't have criminal authority. But the remedy we were able to get against Martin Screlli was to effectively ban him from doing business in the pharmaceutical industry. Right. Now, I imagine that the practice that he did in the pharmaceutical industry, which was taking a life-saving drug and like jacking the price up by, I don't know how many thousands of percent. I mean, he did something crazy, right?

How do you keep that as a normal practice in the pharmaceutical industry? I mean, they're, uh, are they colluding as a group to to keep to keep toee, toe, toe, toe, toe, toe, toe, toe, to, to, to, to, to, their, their, their, their, their, their, their, toe, thi, thi, thi, their, their, thi, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, their, thi.e, thi.e, toe, toe, they colluding as a group to keep prices high? Why are we having so much trouble with them and prescription drug prices? I mean, look, there are a whole set of reasons why, for too many Americans, drugs are unaffordable, right? I mean, I hear weekly, monthly, about American families who are having to ration life-saving drugs. Absolutely. And shortages of those drugs. Shortages of those drugs and there can be all sort of tricks and monopolistic behavior that is leading to that. Just to give you one example, inhalers. They've been around for decades. Sure. But they still

cost hundreds of dollars. So our staff took a close look and we realized the sum of the patents that had been listed for these inhalers were improper. They were bogus. And so we sent hundreds of warning letters around these patents, and in the last few weeks, we've seen companies delist these patents, and three out of the four major manufacturers have now said, within a couple of months, they're going to cap how much Americans pay to just $35. So is this, is there games, like, so you being entrepreneurial, is their game,

we're going to see how far we can push this and get away with it and do these different things, in the hopes that we don't run up against an entrepreneurial or crafty FTC. Are they waiting you out? Look, it's possible, but that's why you need to think about tactics that are going to be around deterrence. And so one big area of focus for us is understanding, what is the root cause of these problems? Let's understand who is the mafia boss here rather than just going after the foot soldiers. Right. And I think you'd probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably probably there there there there there there the the the their their their boss here rather than just going after the foot soldiers. Right. And I think you probably, there's probably a biblical sin in there that's probably the root cause of the whole thing, but I want to talk about the tech companies because

they are the new oligarchs, it would seem. They are the companies that, and you see this especially in Europe, where they are fined considerable amounts of money for monopolistic practices or Apple just had to pay an enormous fine. Microsoft has always been, you know, found guilty of certain monopolistic practices when it comes along. How do you handle enforcement for these new, incredibly consolidated and enormous oligarchies? So we have a lawsuit against Amazon. We have another one against Facebook.

What is the one against Facebook? So that one was filed before I arrived at the agency, but basically it alleges that Facebook, when it was watching the transition from desktop to mobile, it realized it really couldn't survive in mobile, and so it ended up and buying out Instagram and WhatsApp and the lawsuit alleges that those acquisitions were anti-competitive, that they violated the antitrust laws. Right. That instead of competing organically, Facebook instead bought its way to maintaining its monopoly. Now why is that considered a lot of this?

Wouldn't they say, well that's a sign of our success. We're so successful, we have extra money, and with that extra money, we make bets on certain companies and we turn those into successes. So look, one key tenet of the anti-monopoly laws is that you can't go out and buy one of your biggest competitors. The whole... Oh, you're not allowed to do that, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, in, that, in, that, that. You're not allowed to do that in fact. Can I tell you something crazy? So I had put in an offer for last week tonight. I had come out. Now it wasn't, and I'm going to tell you something. And because it's Oliver, I offered to him in Dubloons. Is that what British people use? Finding great candidates to hire can be like trying to find a needle in a haystack.

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Listen on the IHart Radio app, Apple podcasts, or wherever you listen to podcasts. John Stewart here, unbelievably exciting news. My new podcast, The Weekly Show. We're going to be talking about the election, economics, ingredient to bread ratio on sandwiches. Listen to the weekly show withthen of whether or not they are cornering the market. They used to call it cornering the market. But couldn't you say like Apple, Microsoft, they are kind of working together to corner markets, no?

So look, we're investigating to understand whether some of the investments and partnerships that they're entering into right now in the AI space may, in fact, be giving them undue influence or giving them special privileges. If we get any hint that there is actual collusion happening in the marketplace, we take that extraordinarily seriously and won't hesitate to take action. One trend that we're especially concerned about is the way that algorithms may be facilitating

price fixing. And so if you have a whole bunch of competitors in a market, be at hotels, be at casinos, and they all decide they're going to outsource their pricing decision to the same algorithm, they may in effect be fixing their prices, even if they're not, you know, getting in a back room and making secret deals. That would be like, if a hotel says, oh, you can get us on Expedia, or you can get us on kayak, or you can get us on, but all of those companies are using the same algorithm? Would that mean that it flattens those prices, and you are not getting the competitive advantage that you might get from those 10 to 15 apps that are searching for the cheapest hotel rooms? Is that the idea?

That's right. You may collectively see inflated prices because all of these companies are using the same algorithm. They're inputting the same data, and that algorithm is an effect allowing them to collectively raise their prices, so Americans are having to pay more. And it's not just paying more. I mean, you could look at a company like Walmart, where you would say, OK, they came into areas

and they dominated all the competition. They didn't buy up the mom and pop shops. But because they had access to cheap labor and overseas goods and those types of things, they could undersell them and put them all out of their.............. their. their. their. their. their. their. their. their. their. their. their. their. their. their. their. their. their. their. their. their. their their. their. they they they they they they their their their their. their their their their their their their their their their their their their. their their their their their their their. their. their. their. their. their. their. their. their. their their. toe. toe. toememea. toea. toea. toea. toea. toea. toea. toea. toea. toea. toea. toea. toea. toe moment, they might not raise their prices, but boy could they, and boy could they exert their influence on supply chains, and boy could they depress wages and make sure that people, even if they're working long hours, still have to have social assistance. Is that something that you could go after? Look, monopolies harm Americans in a whole bunch of ways. You're absolutely right, that it's not just higher prices. It can be lower wages.

It can be suppliers getting muscled out of the market or seeing their own payments drop. It can also be shortages. I mean, we've seen over the last few years. Baby formula. the IV bags. Aderal. Aderal. Basic forms. I see the audience has no use for baby formula.

But has an interesting predilection. What do you do in that instance? So look, we want to understand, are there dominant players here that are using their muscle to coerce in ways that's contributing to shorag. So look, want to understand are there dominant players here that are using their muscle to coerce in ways that's contributing to shortages. We've also seen historically when you concentrate production, that concentrates risk. And so a single disaster, a single contamination, a single shock can lead

the entire supply to be wiped out. I mean, the short of it is, don't put all your eggs in one basket. And then you guys are the ones that have to separate the eggs. It's curious to me that the government wouldn't have other methods of working with these corporations to ask them to curb their excesses in exchange for what they get, which is the stability of the American system. So look, we have a whole bunch of policies in laws in place that are actually designed to ensure our markets are more competitive and not as subject to these massive shuts.

Exactly. That's the balance. But 40 years ago, under President Reagan, we've radically veered off course and undertook a much more hands-off approach, and now we're living with the consequences of those decisions. Is industry more consolidated today? I mean, my gut would tell me it is more consolidated. You have larger companies that swallow up in the pursuit of growth, swallow up and consolidate. It feels that way to me. Do you have the metrics that suggest that that's actually the case?

On the whole, yes. I mean, you always want to do a market-by-market analysis, but if you look at airlines, if you look at telecom, if you look at meat packers, if you look at huge parts of our economy, across the board, you've seen huge waves of mergers. Less competitive. So you go from dozens of companies just to a very small number. And again, that hurts Americans and American communities in all sorts of ways and even leads to, for example, planes falling apart in the sky.

Wait, what? What? I was thought that was all just DEI. Are you telling me? This gets us to our final point. So now they're saying this new algorithm, this new kind of machine learning model called AI, that's going to transform every aspect of American life in the American economies.

It's already being consolidated. Apple has bought 30 AI models. Microsoft has probably bought. They all buy AI startups and put them behind their paywall, and they're already having an arms race to see who will be either the monopoly or this will be in oligobly. I got to tell you, I wanted to have you on a podcast and Apple asked us not to do it, to have you.

They literally said, please don't talk to her. Having nothing to do with what you do for a living. I think to her. Having nothing to do with what you do for a living. I think they just... I didn't think they cared for you is what happened. They wouldn't, they didn't, they wouldn't let us do even that dumb thing we just did in the first act on AI. Like, what is that sensitivity? Why are they so afraid to even have these conversations out in the public sphere? I think it just shows one of the dangers of what happens when you concentrate so much power and so much decision-making

in a small number of companies. I mean, going back all the way to the founding, there was a recognition that in the same way that you need the Constitution to create checks and balances in our political sphere, you also the theeee the the the the the the the the the the the the the the the the the thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi thi the just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just just thus thus to to to thus to to to to to to to to to to you need the Constitution to create checks and balances in our political sphere, you also needed the antitrust and anti-monopoly laws to safeguard against concentration of economic power because you don't want an autocrat of trade in the same way that you don't want a monarch. But then it took them, I mean, it wasn't until the Sherman Act in what, 1890 something? I mean, when did they first decide? Was it the beginning of industrialization when they finally decided like oh we

should probably put a halt to this? That's right. You'd initially had some state-level laws but the first federal antitrust law was the 1890 Sherman Act and it was absolutely a response to the Industrial Revolution and a lot of the power that that had concentrated. Can we just hold on for one second? Can you take the camera real quick? I want to take a single real quick if I can. I don't know which one. Let me take this one. I've nailed that Sherman thing, didn't I? Oh, oh, come on. I came out of no way. I think I might have learned that in like ninth grade. Stuck.

Has that been updated since 1890? So we had some follow-on laws in 1914, another follow-on in the 1950s. And then since then it's been a bit more sparse. So for the most part, our lawsuits are still based on those laws going back a century. What would you posit, what would you put forth to control this new AI technology that is looming? And I'm not talking about censorship. I'm not talking about government deciding you can't say that or you can't print that. I'm talking about in terms of business practices, these few companies controlling the entire mechanism. Look, the first thing we need to do is be clear-eyed that there's no AI exemption from the laws on the books. We see

sometimes businesses try to dazzle enforcers by saying, oh these technologies are so new, they're so different, let's just take a hands-off approach. And that's basically what ended up happening with Web 2.0, and now we're reeling from the consequences. And so we need to make sure all of these. What was the quick? Web 2.0 is? You know, the rise of social media. And you know, in the early 2000s,

the initial set of companies that ended up innovating. thii. And so, and the the the the the the the the the the the the the the the the the the the thi, and thi, and, and, and, and, and, and, and, and, and, and, and, and, and, thoing tho, tho, tho, tho, thi, thi, thi, tho, tho, tho, thi, thi, thi, th. th. th. th. th. th. th. We th. We, th, th, th, th, th. We, th. We, th. We, th. We, th. We. We. We. We. We. We. We'll thi, thi, thi, thi, thi. We're. Wea, thin. Wea, thin. We're, thin. We're, tooooooooooooooo toe. Wea. Wea. We're toe. that are premised on endlessly surveilling people. And so... And hoovering up data and creating algorithms that are clearly harmful, not just to children, but to political discourse. And there's, it's pretty wild how they're able to do that. And they, every now and again, they get called in front of Congress, and Mark Zuckerberg, you know, Doe-eyed goes like,

like, like and subscribe. You know, I don't know. But it, are you, are you optimistic that we will be able to catch up to this in time before something truly catastrophic happens through AI. Well look, there's no inevitable outcome here. We are the decision makers, and so we need to use the policy tools and levers that we have to make sure that these technologies are proceeding on a trajectory that benefit Americans and we're not subjected to all of the risks and harms.

Right. Would you stay forever? Because it's incredibly impressive what you do. Thank you so much. FTC chair, Lena Pond. Explore more shows from the Daily Show podcast universe by searching the Daily Show, wherever you get your podcasts. Watch the Daily Show week nights at 11 1110 Central on Comedy Central and stream full episodes

anytime on Fairmount Plus. This has been a Comedy Central podcast. John Stewart here. Unbelievably exciting news. My new podcast, the weekly show, the weekly show, the weekly show, we're going to be talking about the election, economics, ingredient to bread ratio on sandwiches. Listen to the weekly show with John Stewart, wherever you get your podcast.