WEBVTT - FTC Chair Lina Khan Talks Antitrust, TikTok

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>With four days left now in the Biden administration, the

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<v Speaker 2>transition is in full swing, but they are still working

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<v Speaker 2>at the FTC. Case in point, filing suit today against

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<v Speaker 2>one of the largest ag equipment companies in the world,

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<v Speaker 2>alleging Deer In Company restricted the ability of customers to

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<v Speaker 2>make repairs. Joining us now for an important conversation on

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<v Speaker 2>this and a lot more, including her four years at

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<v Speaker 2>the helm of the agency is FTC Chair Lena Khan.

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<v Speaker 2>Wonderful to see you in person.

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<v Speaker 3>Thanks for coming in, Thanks for having me.

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<v Speaker 2>An important action today that you're rolling out here, and

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<v Speaker 2>some of your critics are calling this partisan ship in

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<v Speaker 2>terms of its timing, why is it happening now?

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<v Speaker 4>Well, Look, the FTC has been focused these last few

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<v Speaker 4>years in making sure that Americans can enjoy the right

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<v Speaker 4>to repair. I've met with farmers numerous times over the

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<v Speaker 4>last few years, and one of the biggest pain points

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<v Speaker 4>they share is that they're no longer able to easily

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<v Speaker 4>repair their own equipment or even be able to take

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<v Speaker 4>their tractors and combines to independent repair shops, and instead

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<v Speaker 4>they've been steered into Deer's network of authorized dealers, which

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<v Speaker 4>practically means they're paying more, and especially for farmers that

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<v Speaker 4>live in rural areas, it means they sometimes have to

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<v Speaker 4>drive hours to even get to the nearest dealer. Practically,

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<v Speaker 4>we all know that farming is a very time sensitive business,

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<v Speaker 4>and so we've even had farmers that have lost their

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<v Speaker 4>crop faced ruinous delays, and so we think there's real

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<v Speaker 4>harm here. There's a law violation, and we want to

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<v Speaker 4>make sure farmers can enjoy the right to repair well.

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<v Speaker 5>And you and two other commissioners did vote to bring

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<v Speaker 5>this claim forward. Yet the two Republican commissioners did not,

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<v Speaker 5>including the man who will be FTC chair, just stays

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<v Speaker 5>from now, is it your expectation that Andrew Ferguson is

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<v Speaker 5>actually going to see this through or was it just

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<v Speaker 5>brought today to make a point knowing that that may

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<v Speaker 5>not happen under new leadership under the FTC.

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<v Speaker 4>Well, look, I can't speak to what any new leadership

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<v Speaker 4>will do, but this did have the support of the

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<v Speaker 4>majority of the commission. This follows a multi year investigation,

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<v Speaker 4>and I always think it's important that we act with

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<v Speaker 4>urgency and swiftly, and if there is real harm, we

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<v Speaker 4>shouldn't let politics get in the way of delivering real

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<v Speaker 4>relief to farmers.

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<v Speaker 2>You've got a lot of things on the works right

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<v Speaker 2>now that you're going to be leaving behind, including court

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<v Speaker 2>actions against Facebook, I believe in the spring Amazon next year.

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<v Speaker 2>Will we expect those to continue?

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<v Speaker 4>Well, Look, we are set to go to trial against

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<v Speaker 4>Facebook this spring, set to go to trial against Amazon

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<v Speaker 4>in fall of twenty twenty six. Those actions are only

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<v Speaker 4>going to trial because the FTC was victorious along the way,

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<v Speaker 4>defeating motions to dismiss, and so we are on strong

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<v Speaker 4>grounds and I fully expect that we'll be able to

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<v Speaker 4>see these trials go forward. Of course, whenever there's a

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<v Speaker 4>new administration, defendants may want to see if they can

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<v Speaker 4>come in and get a cheap settlement, but I hope

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<v Speaker 4>we wouldn't see that here.

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<v Speaker 5>Well, and from people we've talked to who've just observed

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<v Speaker 5>the FTC from the outside, the suggestion has been that

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<v Speaker 5>your leader ship and Andrew Ferguson's leadership when it comes

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<v Speaker 5>to big tech specifically, may not be that different. Do

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<v Speaker 5>you see that as an area in which you've been

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<v Speaker 5>most aligned in your time serving together on the Commission.

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<v Speaker 4>Well, look, there's no doubt that there is strong bipartisan

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<v Speaker 4>concern about the economic power of large technology companies and

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<v Speaker 4>how that can undermine fair competition, undermine people's free speech rights.

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<v Speaker 4>And so we'll of course have to see what the

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<v Speaker 4>next administration does, but it's certainly been an area of

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<v Speaker 4>strong bipartisan concern during my tenure.

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<v Speaker 2>Social media has created a whole new realm of possibility here,

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<v Speaker 2>and we're considering the potential for a sale or a

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<v Speaker 2>divestment of TikTok right now. Even Elon Musk has been

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<v Speaker 2>floated as a potential buyer. He's got a pretty large

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<v Speaker 2>presence on social media. Are you concerned about consolidation as

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<v Speaker 2>a result of divestment of TikTok if it happens.

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<v Speaker 4>Well, look, as you know, there is a TikTok specific

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<v Speaker 4>build that we just heard an argument at the court around,

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<v Speaker 4>so you.

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<v Speaker 3>Know, this is a very live issue.

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<v Speaker 4>Of course, we have seen these antitrust lawsuits filed in

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<v Speaker 4>part because we've seen a lot of illegal monopolization in

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<v Speaker 4>these markets, and so of course we wouldn't just want

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<v Speaker 4>to forget or ignore all the lessons of those harms

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<v Speaker 4>and repeat those mistakes.

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<v Speaker 3>But we'll have to see what happens.

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<v Speaker 5>Well, and considering that you really had your claim to

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<v Speaker 5>flame flame fame as an academic looking at Amazon specifically

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<v Speaker 5>from an academic landscape, when you look at large tech

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<v Speaker 5>companies like this, can you see a world in which

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<v Speaker 5>it wouldn't be anti competitive for a big tech company

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<v Speaker 5>to absorb a company that has one hundred and seventy

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<v Speaker 5>million users in the US and a valuation our analyst

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<v Speaker 5>suggests could be north of forty billion dollars without it

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<v Speaker 5>raising antitrust concerns.

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<v Speaker 4>Well, look, all of these questions and investigations are highly

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<v Speaker 4>fact specifics. You'd want to look at all sides, but

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<v Speaker 4>at a high level, if you have a firm that

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<v Speaker 4>is dominant in one market that's going out and b

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<v Speaker 4>buying a rival or another company in that same market

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<v Speaker 4>by ordinary standards, that often raises at least initial concerns.

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<v Speaker 2>You've talked about how extreme a concentration of economic power

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<v Speaker 2>can have great political influence. You could correct me if

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<v Speaker 2>I'm not getting the words perfectly right there. You've talked

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<v Speaker 2>about this as potentially the beginning of another Gilded Age.

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<v Speaker 2>Elon Musk is reportedly taking an office in the White

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<v Speaker 2>House complex in the old executive office building, even as

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<v Speaker 2>one of the most prolific government contractors out there. Is

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<v Speaker 2>this the kind of example you're talking about, and should

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<v Speaker 2>that be in the purfew with the FTC?

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<v Speaker 4>Well, look, the FTC's mandate is squarely looking at commerce

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<v Speaker 4>in our economic realm, and so we're very focused on

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<v Speaker 4>the specific facts. Do we see monopolization, do we see

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<v Speaker 4>mergers that are illegal, rather than waiting into kind of

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<v Speaker 4>big picture political questions. But it's certainly true that for

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<v Speaker 4>the lawmakers who passed the antitrust laws over one hundred

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<v Speaker 4>years ago, one of the animating concerns was the way

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<v Speaker 4>in which concentrated economic power can be translated into political power.

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<v Speaker 2>We're not seeing it now.

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<v Speaker 4>Well, look, certainly we've seen, you know, time and time again,

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<v Speaker 4>including you know, over the last few years, efforts by

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<v Speaker 4>dominant companies to use political sway.

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<v Speaker 5>Well, when we consider companies and their behavior and what

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<v Speaker 5>they might be gearing up to do in the coming years,

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<v Speaker 5>we have bank earnings today, including some big investment banks

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<v Speaker 5>like Goldman Sachs talking about what they see is going.

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<v Speaker 3>To be a better deal environment.

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<v Speaker 5>It actually echoed what the CFO of Goldman, Dennis Coleman

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<v Speaker 5>had to say last month about the new direction the

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<v Speaker 5>FTC specifically could be taking in this upcoming administration.

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<v Speaker 1>Let's listen with Fergen's nominee. There could be a new

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<v Speaker 1>direction at the FTC. Obviously as a as a sitting

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<v Speaker 1>commissioner dissented with the current leadership on a number of cases,

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<v Speaker 1>and so we could see a more favorable environment heading

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<v Speaker 1>into twenty twenty five that could act spur more by

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<v Speaker 1>way of CEO confidence and in turn unlocking more investment,

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<v Speaker 1>more activity, and provide a more favorable strategic backdrop.

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<v Speaker 5>People are kind of expecting chair con it seems what

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<v Speaker 5>could be a tidal wave of m and A. Do

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<v Speaker 5>you think it's actually that simple.

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<v Speaker 4>Well, look, we certainly heard over the last few years

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<v Speaker 4>directly from deal makers, directly from anti trust lawyers who

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<v Speaker 4>acknowledge that several years ago they wouldn't even think about

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<v Speaker 4>anti trust risk when initially putting together some of these deals,

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<v Speaker 4>but under the Biden administration they had to think very

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<v Speaker 4>early about whether a certain merger would pose legal risk.

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<v Speaker 4>And as a law enforcer, of course, that type of

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<v Speaker 4>deterrence is good for the public. It leads to more

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<v Speaker 4>efficient outcomes and so I would hope that we wouldn't

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<v Speaker 4>see a backsliding, a return to an environment where flagrantly

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<v Speaker 4>illegal deals are being proposed and deal makers are thinking, well,

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<v Speaker 4>maybe we can get this one through even though it

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<v Speaker 4>violates the law. So we'll have to wait and see.

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<v Speaker 4>We have had several merger lawsuits filed with unanimous support

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<v Speaker 4>at the Commission, and so we'll have to wait.

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<v Speaker 3>And see what happens.

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<v Speaker 2>Well, it may not be flagrantly illegal, but we keep

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<v Speaker 2>hearing about the pipeline, the backlog, animal spirits. How do

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<v Speaker 2>you envision the next one hundred days looking.

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<v Speaker 3>In that realm?

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<v Speaker 4>Well, look, we'll have to see, you know, what actually

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<v Speaker 4>ends up being proposed. One interesting fact that we've seen

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<v Speaker 4>in some of the data is instances in which firms,

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<v Speaker 4>especially large technology firms, have known that they can't just

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<v Speaker 4>go out.

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<v Speaker 3>And buy their rivals.

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<v Speaker 4>We've actually seen them have to invest, invest more in

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<v Speaker 4>innovation and actually try to organically expand and improve their

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<v Speaker 4>business rather than just go.

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<v Speaker 3>Out and snuff competition.

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<v Speaker 4>So I think we want to see markets where firms

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<v Speaker 4>are fairly competing and being incentivized to really compete on

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<v Speaker 4>the merits rather than just buy out their rivals.

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<v Speaker 5>And if we were to look at this kind of

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<v Speaker 5>on an industry by industry basis. Obviously we've talked about

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<v Speaker 5>agriculture already in this conversation about technology, But is there

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<v Speaker 5>an industry in which you see the potential for potentially

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<v Speaker 5>aggressive consolidation that you maybe not during your tenure had

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<v Speaker 5>a chance to address that gives you concern going forward?

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<v Speaker 4>Well, look when we put out a request for comment

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<v Speaker 4>from the public about our new merger guidelines and ask

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<v Speaker 4>people where have there been waves of consolidation that you're

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<v Speaker 4>worried about.

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<v Speaker 3>We've really heard it across the board.

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<v Speaker 4>I mean, healthcare came up over and over again, including

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<v Speaker 4>from healthcare workers, including from patients and patient advocates. We've

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<v Speaker 4>heard a lot of concern about consolidation in media. We've

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<v Speaker 4>personally had to file several lawsuits against big hospital mergers

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<v Speaker 4>that we know result in higher costs and worse quality.

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<v Speaker 4>So you know, my approach was to focus on the

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<v Speaker 4>markets that can have a huge impact on people's day

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<v Speaker 4>to day lives, and healthcare really sort to the top

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<v Speaker 4>of the list.

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<v Speaker 3>While I was at the home.

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<v Speaker 4>The FTC took a particularly assertive approach to farmer mergers,

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<v Speaker 4>making sure that we were not just looking strictly at

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<v Speaker 4>what is the overlap today, but understanding more from a

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<v Speaker 4>business perspective, could this deal undermine even potential competition and

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<v Speaker 4>make things worse for Americans over.

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<v Speaker 3>The long term.

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<v Speaker 2>We talk about technology as this big, squishy thing, but

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<v Speaker 2>specifically when it comes to AI, we're seeing technology advance

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<v Speaker 2>so quickly that we're having trouble keeping up with it.

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<v Speaker 2>If you were staying in this job, or to the

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<v Speaker 2>extent that you'll be in this space in your next role,

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<v Speaker 2>how concerned are you about the way AI is actually

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<v Speaker 2>changing the rules?

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<v Speaker 4>Well, the FTC has been very focused on understanding across

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<v Speaker 4>the stack, where are areas where there may be bottlenecks

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<v Speaker 4>or choke points that some of the incumbents might be

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<v Speaker 4>able to exploit in ways that undermine competition. And so

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<v Speaker 4>we've been going later by hi layer, looking at the chips,

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<v Speaker 4>looking at the cloud, looking at some of the models.

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<v Speaker 4>We have an active inquiry examining the active investments and

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<v Speaker 4>partnerships between some of the hyperscalers, big cloud computing providers

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<v Speaker 4>and some of the newer AI firms to try to

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<v Speaker 4>understand is this undermining competition. I think historically we've seen

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<v Speaker 4>that these moments of technological inflection points are ones where

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<v Speaker 4>enforcers have to be extraordinarily vigilant because there's huge opportunity

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<v Speaker 4>here for real competition, real innovation, real growth.

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<v Speaker 3>But those are also.

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<v Speaker 4>The moments where the incumbent monopolists can panic because they

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<v Speaker 4>can imagine themselves becoming overtaken or disintermediated. And so those

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<v Speaker 4>are just some of the concerns we have to keep

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<v Speaker 4>in mind.

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<v Speaker 5>All Right, we'll leave it on that note. Chair con

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<v Speaker 5>thank you so much for joining us here on Balance

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<v Speaker 5>of Power. That is the outgoing chair of the FTC

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<v Speaker 5>Lenacon