WEBVTT - New FTC Troubles for Facebook After Record Fine

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<v Speaker 1>Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every

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<v Speaker 1>day we bring you insight and analysis into the most

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<v Speaker 1>important legal news of the day. You can find more

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<v Speaker 1>episodes of the Bloomberg Law Podcast on Apple podcast, SoundCloud

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<v Speaker 1>and on Bloomberg dot com slash podcasts. Facebook just inked

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<v Speaker 1>a record five billion dollars settlement with the Federal Trade

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<v Speaker 1>Commission over privacy violations, but the FTC is apparently not

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<v Speaker 1>done with the social networking giant. The agency is now

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<v Speaker 1>investigating with their Facebook violated antitrust laws. Joining me is

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<v Speaker 1>leading antitrust expert Harry First, Professor at n y U

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<v Speaker 1>Law School. Harry, isn't it at all unusual to have

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<v Speaker 1>the FTC concluding one investigation on a company and then

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<v Speaker 1>starting another, Well, it's not necessarily unusual, and they're two

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<v Speaker 1>actually very separate cases. The settlements that they just reached

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<v Speaker 1>was for violating a twenty twelve order Facebook agreed to

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<v Speaker 1>with the FTC, and there was an order that revolved

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<v Speaker 1>around privacy issues, not around competition issues. So they're really

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<v Speaker 1>actually quite separate. If if we had two separate agencies,

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<v Speaker 1>one for privacy, one for competition, and then you'd have

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<v Speaker 1>a different name on the door, so I don't find

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<v Speaker 1>anything unexpected actually in the FTC finishing one and also

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<v Speaker 1>doing another, so two agencies. That brings up my next question.

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<v Speaker 1>How does this FTC investigation fit in with the Justice

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<v Speaker 1>Department's Antitrust Division escalating it's scrutiny into tech giants like

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<v Speaker 1>Facebook and Google. Well, that is a wonderful question, which

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<v Speaker 1>it may be that people at the FTC are asking

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<v Speaker 1>it as well. Uh, and I don't know how they've

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<v Speaker 1>resolved it. I find this actually surprising and a little troubling. Originally,

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<v Speaker 1>there have been reports that Federal Trade Commission and the

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<v Speaker 1>Justice Department any Trust Division, both of which have jurisdiction

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<v Speaker 1>and legally they can actually investigate the same party. They

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<v Speaker 1>can actually bring cases separately against the same party for

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<v Speaker 1>the same behavior, but they haven't done that. So they

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<v Speaker 1>try to coordinate efforts, which is sensible. And originally it

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<v Speaker 1>looked like they were dividing up the big tech four,

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<v Speaker 1>where the FTC would have jurisdiction over Facebook and Amazon

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<v Speaker 1>and the Justice Department over Google and Apple. But now

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<v Speaker 1>it looks like something has happened, and I don't quite

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<v Speaker 1>know what, but the Justice Department's press release, which in

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<v Speaker 1>itself is an unusual thing to do in any trust cases,

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<v Speaker 1>to say, oh, guess what we are investigating. Usually, if

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<v Speaker 1>you're investigating, you start investigating, you don't issue a press release.

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<v Speaker 1>So why did they do it? And it does appear

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<v Speaker 1>that they're going to investigate all four of these companies?

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<v Speaker 1>So this creates a risk between the two agencies, which

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<v Speaker 1>frankly has been going on now currently for a little while.

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<v Speaker 1>How much pressure is there on the antitrust enforces to

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<v Speaker 1>bring cases against the tech companies, not only because you

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<v Speaker 1>have President Trump who has expressed an interest in that,

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<v Speaker 1>but also you have so many people calling for their breakup.

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<v Speaker 1>So there are two levels to this. One is the

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<v Speaker 1>very interesting policy level that there seems to be a

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<v Speaker 1>concern across the political spectrum with the power that these

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<v Speaker 1>four companies now seem to be exercising. They are ubiquitous

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<v Speaker 1>in our lives, and generally we we expect some controls

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<v Speaker 1>on very big companies. It's either the government of controls

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<v Speaker 1>or the markets, and neither's doing it. So on a

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<v Speaker 1>policy level, this is I think a good development, maybe

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<v Speaker 1>a little surprising. The federal government has an investigated monopolies

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<v Speaker 1>for two decades since the Microsoft case. Really, so in

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<v Speaker 1>that sense it's a good thing. The other part of

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<v Speaker 1>it is what are the politics for the Justice Department,

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<v Speaker 1>and that it's a little hard to pull apart and

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<v Speaker 1>perhaps not all that good and related more to political

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<v Speaker 1>vendetta than to any trust policy. I don't know that

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<v Speaker 1>for sure, but I read the tweets as you do

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<v Speaker 1>and as everyone does, and it is a little concerning.

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<v Speaker 1>And it seems to me that any trust people have

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<v Speaker 1>avoided that and tried to keep this as a matter

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<v Speaker 1>of law. But I worry with this most recent announcement

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<v Speaker 1>by General Barr that that line is fading on these

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<v Speaker 1>very big companies. They're also big. What would make the

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<v Speaker 1>difference between bringing a case and not bringing a case

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<v Speaker 1>against one of them? Well, they really do have to

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<v Speaker 1>investigate and find out exactly how these companies are put

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<v Speaker 1>together in what they've done. So these investigations take time,

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<v Speaker 1>and with big companies like this, have to look into

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<v Speaker 1>a lot and they want to see whether they've engaged

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<v Speaker 1>in behavior basically that's excluded their competitors and or raised

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<v Speaker 1>price to consumers. So that's what they'll be looking for.

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<v Speaker 1>Should take time, and they've got to work this into

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<v Speaker 1>a good legal theory. Let's turn for a moment to

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<v Speaker 1>the news of the day, because something seems to be

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<v Speaker 1>happening in anti trust all the time lately, isn't it's

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<v Speaker 1>certainly the in area now, So you're teaching the right

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<v Speaker 1>all my students, Right. The Justice Department has approved T

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<v Speaker 1>Mobile's acquisition of Sprint. It's a deal that's going to

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<v Speaker 1>reshape the wireless industry. It combines the number three and

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<v Speaker 1>the number four wireless carriers in the country was rejected

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<v Speaker 1>under the Obama administration. Do the remedies the Justice Department

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<v Speaker 1>has put in place take care of antitrust concerns? Well,

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<v Speaker 1>this is going to be a key question going forward,

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<v Speaker 1>although maybe not the only question. It's always difficult to

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<v Speaker 1>create a new competitor out of some other company, and

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<v Speaker 1>that seems to be what the Justice Department is trying

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<v Speaker 1>to do. Um We see it often in merger cases,

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<v Speaker 1>and most of the time this fails. So I think

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<v Speaker 1>people are going to be looking skeptically at exactly what's

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<v Speaker 1>been created. Four to three merger is generally your instinct

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<v Speaker 1>is that's really a lot less competition. So are you

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<v Speaker 1>really going to create a four firm industry now by

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<v Speaker 1>throwing some assets at a different company and hoping it

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<v Speaker 1>will work. So I think there's gonna be some skepticism

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<v Speaker 1>about whether this deal is really effective in maintaining competition

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<v Speaker 1>in this industry. There's a lawsuit by a group of

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<v Speaker 1>states that say the deal should be blocked. Is that

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<v Speaker 1>a big obstacle? Still, it is a legal obstacle. Yes,

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<v Speaker 1>that's litigation, which my understanding is will continue. And again

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<v Speaker 1>this is another example of tension in the relationship between

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<v Speaker 1>the Justice Department and other anti trust enforcers. First, it's

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<v Speaker 1>the FTC. This case, it's the states. These states are

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<v Speaker 1>pretty serious about this case, actually put a lot of

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<v Speaker 1>work into it, and I think they'll seriously examine whether

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<v Speaker 1>this is a genuine remedy or whether still we would

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<v Speaker 1>predict that competition may be lessened in the future. And

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<v Speaker 1>that's the question the law requires courts to answer. That's

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<v Speaker 1>Harry First, a professor at n y U Law School.

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<v Speaker 1>Thanks for listening to the Bloomberg Law Podcast. You can

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<v Speaker 1>subscribe and listen to the show on Apple Podcasts, SoundCloud,

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<v Speaker 1>and on Bloomberg dot com slash podcast. I'm June Brasso,

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<v Speaker 1>This is Bloomberg,