Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: With four days left now in the Biden administration, the
Speaker 2: transition is in full swing, but they are still working
Speaker 2: at the FTC. Case in point, filing suit today against
Speaker 2: one of the largest ag equipment companies in the world,
Speaker 2: alleging Deer In Company restricted the ability of customers to
Speaker 2: make repairs. Joining us now for an important conversation on
Speaker 2: this and a lot more, including her four years at
Speaker 2: the helm of the agency is FTC Chair Lena Khan.
Speaker 2: Wonderful to see you in person.
Speaker 3: Thanks for coming in, Thanks for having me.
Speaker 2: An important action today that you're rolling out here, and
Speaker 2: some of your critics are calling this partisan ship in
Speaker 2: terms of its timing, why is it happening now?
Speaker 4: Well, Look, the FTC has been focused these last few
Speaker 4: years in making sure that Americans can enjoy the right
Speaker 4: to repair. I've met with farmers numerous times over the
Speaker 4: last few years, and one of the biggest pain points
Speaker 4: they share is that they're no longer able to easily
Speaker 4: repair their own equipment or even be able to take
Speaker 4: their tractors and combines to independent repair shops, and instead
Speaker 4: they've been steered into Deer's network of authorized dealers, which
Speaker 4: practically means they're paying more, and especially for farmers that
Speaker 4: live in rural areas, it means they sometimes have to
Speaker 4: drive hours to even get to the nearest dealer. Practically,
Speaker 4: we all know that farming is a very time sensitive business,
Speaker 4: and so we've even had farmers that have lost their
Speaker 4: crop faced ruinous delays, and so we think there's real
Speaker 4: harm here. There's a law violation, and we want to
Speaker 4: make sure farmers can enjoy the right to repair well.
Speaker 5: And you and two other commissioners did vote to bring
Speaker 5: this claim forward. Yet the two Republican commissioners did not,
Speaker 5: including the man who will be FTC chair, just stays
Speaker 5: from now, is it your expectation that Andrew Ferguson is
Speaker 5: actually going to see this through or was it just
Speaker 5: brought today to make a point knowing that that may
Speaker 5: not happen under new leadership under the FTC.
Speaker 4: Well, look, I can't speak to what any new leadership
Speaker 4: will do, but this did have the support of the
Speaker 4: majority of the commission. This follows a multi year investigation,
Speaker 4: and I always think it's important that we act with
Speaker 4: urgency and swiftly, and if there is real harm, we
Speaker 4: shouldn't let politics get in the way of delivering real
Speaker 4: relief to farmers.
Speaker 2: You've got a lot of things on the works right
Speaker 2: now that you're going to be leaving behind, including court
Speaker 2: actions against Facebook, I believe in the spring Amazon next year.
Speaker 2: Will we expect those to continue?
Speaker 4: Well, Look, we are set to go to trial against
Speaker 4: Facebook this spring, set to go to trial against Amazon
Speaker 4: in fall of twenty twenty six. Those actions are only
Speaker 4: going to trial because the FTC was victorious along the way,
Speaker 4: defeating motions to dismiss, and so we are on strong
Speaker 4: grounds and I fully expect that we'll be able to
Speaker 4: see these trials go forward. Of course, whenever there's a
Speaker 4: new administration, defendants may want to see if they can
Speaker 4: come in and get a cheap settlement, but I hope
Speaker 4: we wouldn't see that here.
Speaker 5: Well, and from people we've talked to who've just observed
Speaker 5: the FTC from the outside, the suggestion has been that
Speaker 5: your leader ship and Andrew Ferguson's leadership when it comes
Speaker 5: to big tech specifically, may not be that different. Do
Speaker 5: you see that as an area in which you've been
Speaker 5: most aligned in your time serving together on the Commission.
Speaker 4: Well, look, there's no doubt that there is strong bipartisan
Speaker 4: concern about the economic power of large technology companies and
Speaker 4: how that can undermine fair competition, undermine people's free speech rights.
Speaker 4: And so we'll of course have to see what the
Speaker 4: next administration does, but it's certainly been an area of
Speaker 4: strong bipartisan concern during my tenure.
Speaker 2: Social media has created a whole new realm of possibility here,
Speaker 2: and we're considering the potential for a sale or a
Speaker 2: divestment of TikTok right now. Even Elon Musk has been
Speaker 2: floated as a potential buyer. He's got a pretty large
Speaker 2: presence on social media. Are you concerned about consolidation as
Speaker 2: a result of divestment of TikTok if it happens.
Speaker 4: Well, look, as you know, there is a TikTok specific
Speaker 4: build that we just heard an argument at the court around,
Speaker 4: so you.
Speaker 3: Know, this is a very live issue.
Speaker 4: Of course, we have seen these antitrust lawsuits filed in
Speaker 4: part because we've seen a lot of illegal monopolization in
Speaker 4: these markets, and so of course we wouldn't just want
Speaker 4: to forget or ignore all the lessons of those harms
Speaker 4: and repeat those mistakes.
Speaker 3: But we'll have to see what happens.
Speaker 5: Well, and considering that you really had your claim to
Speaker 5: flame flame fame as an academic looking at Amazon specifically
Speaker 5: from an academic landscape, when you look at large tech
Speaker 5: companies like this, can you see a world in which
Speaker 5: it wouldn't be anti competitive for a big tech company
Speaker 5: to absorb a company that has one hundred and seventy
Speaker 5: million users in the US and a valuation our analyst
Speaker 5: suggests could be north of forty billion dollars without it
Speaker 5: raising antitrust concerns.
Speaker 4: Well, look, all of these questions and investigations are highly
Speaker 4: fact specifics. You'd want to look at all sides, but
Speaker 4: at a high level, if you have a firm that
Speaker 4: is dominant in one market that's going out and b
Speaker 4: buying a rival or another company in that same market
Speaker 4: by ordinary standards, that often raises at least initial concerns.
Speaker 2: You've talked about how extreme a concentration of economic power
Speaker 2: can have great political influence. You could correct me if
Speaker 2: I'm not getting the words perfectly right there. You've talked
Speaker 2: about this as potentially the beginning of another Gilded Age.
Speaker 2: Elon Musk is reportedly taking an office in the White
Speaker 2: House complex in the old executive office building, even as
Speaker 2: one of the most prolific government contractors out there. Is
Speaker 2: this the kind of example you're talking about, and should
Speaker 2: that be in the purfew with the FTC?
Speaker 4: Well, look, the FTC's mandate is squarely looking at commerce
Speaker 4: in our economic realm, and so we're very focused on
Speaker 4: the specific facts. Do we see monopolization, do we see
Speaker 4: mergers that are illegal, rather than waiting into kind of
Speaker 4: big picture political questions. But it's certainly true that for
Speaker 4: the lawmakers who passed the antitrust laws over one hundred
Speaker 4: years ago, one of the animating concerns was the way
Speaker 4: in which concentrated economic power can be translated into political power.
Speaker 2: We're not seeing it now.
Speaker 4: Well, look, certainly we've seen, you know, time and time again,
Speaker 4: including you know, over the last few years, efforts by
Speaker 4: dominant companies to use political sway.
Speaker 5: Well, when we consider companies and their behavior and what
Speaker 5: they might be gearing up to do in the coming years,
Speaker 5: we have bank earnings today, including some big investment banks
Speaker 5: like Goldman Sachs talking about what they see is going.
Speaker 3: To be a better deal environment.
Speaker 5: It actually echoed what the CFO of Goldman, Dennis Coleman
Speaker 5: had to say last month about the new direction the
Speaker 5: FTC specifically could be taking in this upcoming administration.
Speaker 1: Let's listen with Fergen's nominee. There could be a new
Speaker 1: direction at the FTC. Obviously as a as a sitting
Speaker 1: commissioner dissented with the current leadership on a number of cases,
Speaker 1: and so we could see a more favorable environment heading
Speaker 1: into twenty twenty five that could act spur more by
Speaker 1: way of CEO confidence and in turn unlocking more investment,
Speaker 1: more activity, and provide a more favorable strategic backdrop.
Speaker 5: People are kind of expecting chair con it seems what
Speaker 5: could be a tidal wave of m and A. Do
Speaker 5: you think it's actually that simple.
Speaker 4: Well, look, we certainly heard over the last few years
Speaker 4: directly from deal makers, directly from anti trust lawyers who
Speaker 4: acknowledge that several years ago they wouldn't even think about
Speaker 4: anti trust risk when initially putting together some of these deals,
Speaker 4: but under the Biden administration they had to think very
Speaker 4: early about whether a certain merger would pose legal risk.
Speaker 4: And as a law enforcer, of course, that type of
Speaker 4: deterrence is good for the public. It leads to more
Speaker 4: efficient outcomes and so I would hope that we wouldn't
Speaker 4: see a backsliding, a return to an environment where flagrantly
Speaker 4: illegal deals are being proposed and deal makers are thinking, well,
Speaker 4: maybe we can get this one through even though it
Speaker 4: violates the law. So we'll have to wait and see.
Speaker 4: We have had several merger lawsuits filed with unanimous support
Speaker 4: at the Commission, and so we'll have to wait.
Speaker 3: And see what happens.
Speaker 2: Well, it may not be flagrantly illegal, but we keep
Speaker 2: hearing about the pipeline, the backlog, animal spirits. How do
Speaker 2: you envision the next one hundred days looking.
Speaker 3: In that realm?
Speaker 4: Well, look, we'll have to see, you know, what actually
Speaker 4: ends up being proposed. One interesting fact that we've seen
Speaker 4: in some of the data is instances in which firms,
Speaker 4: especially large technology firms, have known that they can't just
Speaker 4: go out.
Speaker 3: And buy their rivals.
Speaker 4: We've actually seen them have to invest, invest more in
Speaker 4: innovation and actually try to organically expand and improve their
Speaker 4: business rather than just go.
Speaker 3: Out and snuff competition.
Speaker 4: So I think we want to see markets where firms
Speaker 4: are fairly competing and being incentivized to really compete on
Speaker 4: the merits rather than just buy out their rivals.
Speaker 5: And if we were to look at this kind of
Speaker 5: on an industry by industry basis. Obviously we've talked about
Speaker 5: agriculture already in this conversation about technology, But is there
Speaker 5: an industry in which you see the potential for potentially
Speaker 5: aggressive consolidation that you maybe not during your tenure had
Speaker 5: a chance to address that gives you concern going forward?
Speaker 4: Well, look when we put out a request for comment
Speaker 4: from the public about our new merger guidelines and ask
Speaker 4: people where have there been waves of consolidation that you're
Speaker 4: worried about.
Speaker 3: We've really heard it across the board.
Speaker 4: I mean, healthcare came up over and over again, including
Speaker 4: from healthcare workers, including from patients and patient advocates. We've
Speaker 4: heard a lot of concern about consolidation in media. We've
Speaker 4: personally had to file several lawsuits against big hospital mergers
Speaker 4: that we know result in higher costs and worse quality.
Speaker 4: So you know, my approach was to focus on the
Speaker 4: markets that can have a huge impact on people's day
Speaker 4: to day lives, and healthcare really sort to the top
Speaker 4: of the list.
Speaker 3: While I was at the home.
Speaker 4: The FTC took a particularly assertive approach to farmer mergers,
Speaker 4: making sure that we were not just looking strictly at
Speaker 4: what is the overlap today, but understanding more from a
Speaker 4: business perspective, could this deal undermine even potential competition and
Speaker 4: make things worse for Americans over.
Speaker 3: The long term.
Speaker 2: We talk about technology as this big, squishy thing, but
Speaker 2: specifically when it comes to AI, we're seeing technology advance
Speaker 2: so quickly that we're having trouble keeping up with it.
Speaker 2: If you were staying in this job, or to the
Speaker 2: extent that you'll be in this space in your next role,
Speaker 2: how concerned are you about the way AI is actually
Speaker 2: changing the rules?
Speaker 4: Well, the FTC has been very focused on understanding across
Speaker 4: the stack, where are areas where there may be bottlenecks
Speaker 4: or choke points that some of the incumbents might be
Speaker 4: able to exploit in ways that undermine competition. And so
Speaker 4: we've been going later by hi layer, looking at the chips,
Speaker 4: looking at the cloud, looking at some of the models.
Speaker 4: We have an active inquiry examining the active investments and
Speaker 4: partnerships between some of the hyperscalers, big cloud computing providers
Speaker 4: and some of the newer AI firms to try to
Speaker 4: understand is this undermining competition. I think historically we've seen
Speaker 4: that these moments of technological inflection points are ones where
Speaker 4: enforcers have to be extraordinarily vigilant because there's huge opportunity
Speaker 4: here for real competition, real innovation, real growth.
Speaker 3: But those are also.
Speaker 4: The moments where the incumbent monopolists can panic because they
Speaker 4: can imagine themselves becoming overtaken or disintermediated. And so those
Speaker 4: are just some of the concerns we have to keep
Speaker 4: in mind.
Speaker 5: All Right, we'll leave it on that note. Chair con
Speaker 5: thank you so much for joining us here on Balance
Speaker 5: of Power. That is the outgoing chair of the FTC
Speaker 5: Lenacon