Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud
Speaker 1: and on Bloomberg dot com slash podcasts. Facebook just inked
Speaker 1: a record five billion dollars settlement with the Federal Trade
Speaker 1: Commission over privacy violations, but the FTC is apparently not
Speaker 1: done with the social networking giant. The agency is now
Speaker 1: investigating with their Facebook violated antitrust laws. Joining me is
Speaker 1: leading antitrust expert Harry First, Professor at n y U
Speaker 1: Law School. Harry, isn't it at all unusual to have
Speaker 1: the FTC concluding one investigation on a company and then
Speaker 1: starting another, Well, it's not necessarily unusual, and they're two
Speaker 1: actually very separate cases. The settlements that they just reached
Speaker 1: was for violating a twenty twelve order Facebook agreed to
Speaker 1: with the FTC, and there was an order that revolved
Speaker 1: around privacy issues, not around competition issues. So they're really
Speaker 1: actually quite separate. If if we had two separate agencies,
Speaker 1: one for privacy, one for competition, and then you'd have
Speaker 1: a different name on the door, so I don't find
Speaker 1: anything unexpected actually in the FTC finishing one and also
Speaker 1: doing another, so two agencies. That brings up my next question.
Speaker 1: How does this FTC investigation fit in with the Justice
Speaker 1: Department's Antitrust Division escalating it's scrutiny into tech giants like
Speaker 1: Facebook and Google. Well, that is a wonderful question, which
Speaker 1: it may be that people at the FTC are asking
Speaker 1: it as well. Uh, and I don't know how they've
Speaker 1: resolved it. I find this actually surprising and a little troubling. Originally,
Speaker 1: there have been reports that Federal Trade Commission and the
Speaker 1: Justice Department any Trust Division, both of which have jurisdiction
Speaker 1: and legally they can actually investigate the same party. They
Speaker 1: can actually bring cases separately against the same party for
Speaker 1: the same behavior, but they haven't done that. So they
Speaker 1: try to coordinate efforts, which is sensible. And originally it
Speaker 1: looked like they were dividing up the big tech four,
Speaker 1: where the FTC would have jurisdiction over Facebook and Amazon
Speaker 1: and the Justice Department over Google and Apple. But now
Speaker 1: it looks like something has happened, and I don't quite
Speaker 1: know what, but the Justice Department's press release, which in
Speaker 1: itself is an unusual thing to do in any trust cases,
Speaker 1: to say, oh, guess what we are investigating. Usually, if
Speaker 1: you're investigating, you start investigating, you don't issue a press release.
Speaker 1: So why did they do it? And it does appear
Speaker 1: that they're going to investigate all four of these companies?
Speaker 1: So this creates a risk between the two agencies, which
Speaker 1: frankly has been going on now currently for a little while.
Speaker 1: How much pressure is there on the antitrust enforces to
Speaker 1: bring cases against the tech companies, not only because you
Speaker 1: have President Trump who has expressed an interest in that,
Speaker 1: but also you have so many people calling for their breakup.
Speaker 1: So there are two levels to this. One is the
Speaker 1: very interesting policy level that there seems to be a
Speaker 1: concern across the political spectrum with the power that these
Speaker 1: four companies now seem to be exercising. They are ubiquitous
Speaker 1: in our lives, and generally we we expect some controls
Speaker 1: on very big companies. It's either the government of controls
Speaker 1: or the markets, and neither's doing it. So on a
Speaker 1: policy level, this is I think a good development, maybe
Speaker 1: a little surprising. The federal government has an investigated monopolies
Speaker 1: for two decades since the Microsoft case. Really, so in
Speaker 1: that sense it's a good thing. The other part of
Speaker 1: it is what are the politics for the Justice Department,
Speaker 1: and that it's a little hard to pull apart and
Speaker 1: perhaps not all that good and related more to political
Speaker 1: vendetta than to any trust policy. I don't know that
Speaker 1: for sure, but I read the tweets as you do
Speaker 1: and as everyone does, and it is a little concerning.
Speaker 1: And it seems to me that any trust people have
Speaker 1: avoided that and tried to keep this as a matter
Speaker 1: of law. But I worry with this most recent announcement
Speaker 1: by General Barr that that line is fading on these
Speaker 1: very big companies. They're also big. What would make the
Speaker 1: difference between bringing a case and not bringing a case
Speaker 1: against one of them? Well, they really do have to
Speaker 1: investigate and find out exactly how these companies are put
Speaker 1: together in what they've done. So these investigations take time,
Speaker 1: and with big companies like this, have to look into
Speaker 1: a lot and they want to see whether they've engaged
Speaker 1: in behavior basically that's excluded their competitors and or raised
Speaker 1: price to consumers. So that's what they'll be looking for.
Speaker 1: Should take time, and they've got to work this into
Speaker 1: a good legal theory. Let's turn for a moment to
Speaker 1: the news of the day, because something seems to be
Speaker 1: happening in anti trust all the time lately, isn't it's
Speaker 1: certainly the in area now, So you're teaching the right
Speaker 1: all my students, Right. The Justice Department has approved T
Speaker 1: Mobile's acquisition of Sprint. It's a deal that's going to
Speaker 1: reshape the wireless industry. It combines the number three and
Speaker 1: the number four wireless carriers in the country was rejected
Speaker 1: under the Obama administration. Do the remedies the Justice Department
Speaker 1: has put in place take care of antitrust concerns? Well,
Speaker 1: this is going to be a key question going forward,
Speaker 1: although maybe not the only question. It's always difficult to
Speaker 1: create a new competitor out of some other company, and
Speaker 1: that seems to be what the Justice Department is trying
Speaker 1: to do. Um We see it often in merger cases,
Speaker 1: and most of the time this fails. So I think
Speaker 1: people are going to be looking skeptically at exactly what's
Speaker 1: been created. Four to three merger is generally your instinct
Speaker 1: is that's really a lot less competition. So are you
Speaker 1: really going to create a four firm industry now by
Speaker 1: throwing some assets at a different company and hoping it
Speaker 1: will work. So I think there's gonna be some skepticism
Speaker 1: about whether this deal is really effective in maintaining competition
Speaker 1: in this industry. There's a lawsuit by a group of
Speaker 1: states that say the deal should be blocked. Is that
Speaker 1: a big obstacle? Still, it is a legal obstacle. Yes,
Speaker 1: that's litigation, which my understanding is will continue. And again
Speaker 1: this is another example of tension in the relationship between
Speaker 1: the Justice Department and other anti trust enforcers. First, it's
Speaker 1: the FTC. This case, it's the states. These states are
Speaker 1: pretty serious about this case, actually put a lot of
Speaker 1: work into it, and I think they'll seriously examine whether
Speaker 1: this is a genuine remedy or whether still we would
Speaker 1: predict that competition may be lessened in the future. And
Speaker 1: that's the question the law requires courts to answer. That's
Speaker 1: Harry First, a professor at n y U Law School.
Speaker 1: Thanks for listening to the Bloomberg Law Podcast. You can
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Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brasso,
Speaker 1: This is Bloomberg,