WEBVTT - The FTC’s Evolving Approach to Assessing M&A 0:00:06.120 --> 0:00:09.039 Hello, and welcome to the Votes in Verdicts podcast hosted 0:00:09.039 --> 0:00:12.720 by Bloomberg Intelligence, the investment research platform of Bloomberg LP. 0:00:13.520 --> 0:00:16.119 In this podcast series, we talk about the intersection of 0:00:16.160 --> 0:00:19.639 business policy and law. My name is Jennifer Ree and 0:00:19.680 --> 0:00:23.360 I'm a senior analyst with Bloomberg Intelligence covering United States 0:00:23.440 --> 0:00:27.680 anti trust litigation and policy. So this isn't the first 0:00:27.760 --> 0:00:30.360 of the Votes in Verdicts podcast series, but it is 0:00:30.400 --> 0:00:32.600 the first focus on anti trust issues. So I'm going 0:00:32.680 --> 0:00:35.680 to call it the inaugural anti trust episode. And I'm 0:00:35.720 --> 0:00:39.239 really excited because I'm joined by Bill Alsayed, who not 0:00:39.360 --> 0:00:42.680 only has a really impressive career and wide variety of 0:00:42.760 --> 0:00:46.159 anti trust experience, but it is also a good friend. Currently, 0:00:46.200 --> 0:00:48.920 Bill All is the Senior Competition Fellow for Tech Freedom, 0:00:49.280 --> 0:00:52.839 which is a nonprofit, nonpartisan technology think tank launched in 0:00:52.880 --> 0:00:56.400 twenty twenty one that focuses on issues of internet freedom 0:00:56.440 --> 0:01:00.400 and technological progress. But before joining tech Freedom, Bill All 0:01:00.400 --> 0:01:02.200 was with the Federal Trade Commission, where he was the 0:01:02.240 --> 0:01:05.440 director of the Office of Policy Planning. That was during 0:01:05.440 --> 0:01:09.160 the Trump administration while the chairman was Joe Simons, and 0:01:09.200 --> 0:01:11.720 it was Bill All's second stint at the FTC, after 0:01:11.760 --> 0:01:14.800 having been an attorney advisor for Chairman Tim Murris from 0:01:14.880 --> 0:01:16.759 two thousand and one to two thousand and four. Now, 0:01:16.800 --> 0:01:19.199 on top of all that, he's also a practice law 0:01:19.680 --> 0:01:22.319 and is an adjunct professor for anti trust at George 0:01:22.360 --> 0:01:25.920 Mason University's Law School. Bill All, that is really impressive 0:01:25.959 --> 0:01:28.280 and it's a lot, and I really appreciate you being here. 0:01:28.319 --> 0:01:29.000 Thanks so much. 0:01:29.120 --> 0:01:32.560 Oh, I'm excited ecstatic here. 0:01:33.160 --> 0:01:35.240 Well, we'll have fun and I'm enough to try to 0:01:35.280 --> 0:01:38.199 slow down how much high talk, and Bill All's gonna 0:01:38.200 --> 0:01:39.679 have to speed it up so that we meet in 0:01:39.680 --> 0:01:43.160 the middle, right, all right, you know, before we jump 0:01:43.240 --> 0:01:46.160 into our anti trust topics, it would just be interesting 0:01:46.160 --> 0:01:47.920 to hear a little bit about your career path and 0:01:47.920 --> 0:01:50.000 how you got there and which role of all of 0:01:50.080 --> 0:01:51.600 those you liked the most. So tell us a little 0:01:51.600 --> 0:01:52.320 bit about yourself. 0:01:52.360 --> 0:01:55.440 So first, you know, I grew up in New York. 0:01:55.520 --> 0:02:00.760 And the only relevance of that is after college, where 0:02:01.120 --> 0:02:03.840 we both were at the same college down at Case 0:02:03.880 --> 0:02:07.880 Western and Cleveland, I came back to New York to 0:02:08.000 --> 0:02:13.640 work on PhD in economic and I found that I 0:02:13.800 --> 0:02:17.400 liked law and economics more so than you know, sort 0:02:17.400 --> 0:02:23.640 of microeconomic or financial economics. And this was in the 0:02:23.760 --> 0:02:26.359 late eighties early nineties, and. 0:02:26.480 --> 0:02:31.880 Giving away our age, I decided, I decided I wanted 0:02:31.919 --> 0:02:35.000 to do lawn economics as sort of a career path 0:02:36.000 --> 0:02:38.480 and thought, well, maybe I'll go to law school. 0:02:38.680 --> 0:02:43.720 And at the time, George Mason was the only school 0:02:43.800 --> 0:02:46.640 and I think still is the only school with a 0:02:46.960 --> 0:02:51.120 sort of an emphasis on lawn economics as sort of 0:02:50.800 --> 0:02:55.519 the framing of teaching and thinking about law. Now, many 0:02:55.560 --> 0:02:58.360 of the law schools now have a lawn economic scholar 0:02:58.680 --> 0:03:03.360 or two or three. But Mason, you know, now, the 0:03:03.400 --> 0:03:07.480 Anthon in Scalia law school at George Mason University, you know, 0:03:07.639 --> 0:03:10.800 has just many right and then and it was the 0:03:10.919 --> 0:03:14.280 it was the place to do law in economics. UH. 0:03:14.560 --> 0:03:18.480 And so I left graduate school to go to UH 0:03:18.600 --> 0:03:22.239 Law to learn the law and learn this framework. And 0:03:22.360 --> 0:03:25.480 when I was there, I discovered that I also liked 0:03:25.520 --> 0:03:31.560 the practical application of economics the law UH and and 0:03:31.639 --> 0:03:33.440 the field you do that in a sort of the 0:03:33.480 --> 0:03:38.800 regulatory fields or and I trust. And I had the 0:03:39.560 --> 0:03:43.640 great benefit to hook up with a great professor at 0:03:43.800 --> 0:03:48.120 at you know, the law school, Timururus UH. And then 0:03:48.600 --> 0:03:52.520 while a student worked at two great law firms, uh 0:03:52.600 --> 0:03:56.200 what was then Kylier Shannon, Rill and Scott with Jim 0:03:56.280 --> 0:03:59.680 Rill uh and then Morgan Lewis with guys like John 0:03:59.720 --> 0:04:02.760 shann Field and Kas Hobbs uh. And so I stayed 0:04:02.760 --> 0:04:05.800 in the field. UH. And you know, I had gone 0:04:05.840 --> 0:04:09.280 down to Washington with the idea of doing public service. UH. 0:04:09.320 --> 0:04:11.960 And so when when mrs became chair of the FDC, 0:04:12.160 --> 0:04:15.160 I went with him. We left, you know, more or 0:04:15.200 --> 0:04:20.359 less together, practiced together with not only with Tim, but 0:04:20.440 --> 0:04:23.520 with Christine Wilson, who's who's still a commissioner at the 0:04:23.640 --> 0:04:27.279 FTC for a few more days. You know, had the 0:04:27.480 --> 0:04:31.080 had the had the ability to work on, you know, 0:04:31.480 --> 0:04:35.960 projects that were not just you know, sort of deal work, 0:04:36.000 --> 0:04:40.440 but that were sort of interesting policy projects. When Joe, 0:04:40.640 --> 0:04:44.400 Joe Simons went back, I went went to the Commissioner's chair. 0:04:44.680 --> 0:04:49.160 I'd worked with Joe starting at Kalia Shannon and then 0:04:49.240 --> 0:04:53.039 worked with Joe in the in the Mrrors Uh commission. 0:04:54.440 --> 0:04:57.640 And and you know, Joe was kind enough to bring 0:04:57.680 --> 0:05:01.640 me back in the policy shop. And the policy shop 0:05:02.600 --> 0:05:06.799 was the most at least potentially the most fun job 0:05:07.040 --> 0:05:12.520 to have because I participated in the cases and the 0:05:12.520 --> 0:05:16.440 tough cases and the interesting cases, but didn't have any 0:05:16.520 --> 0:05:21.520 management responsibility for them, and spent most of my time 0:05:21.880 --> 0:05:25.159 with with my group and others at the Commission, you know, 0:05:25.360 --> 0:05:28.760 thinking trying to think forward about you know, how did 0:05:28.760 --> 0:05:31.760 we want the law to develop in certain areas, you know, 0:05:32.839 --> 0:05:38.680 thinking about policy, the policy statements that you know would 0:05:38.760 --> 0:05:43.280 impact how the Commission, how hopefully how the courts you know, 0:05:43.440 --> 0:05:48.520 thought about anti trust or thought about privacy. Now, we 0:05:48.520 --> 0:05:51.839 were handicapped a bit by you know, COVID. It knocked 0:05:51.880 --> 0:05:56.400 us out for a year, and you know, the like 0:05:56.520 --> 0:06:00.440 every agency, I think, you know, you're scrambling in that 0:06:00.560 --> 0:06:03.880 last year. You got people spread out, you'd manage, you know, 0:06:03.920 --> 0:06:06.400 trying to manage how to how to how to get 0:06:06.400 --> 0:06:08.560 things done that you have to get done, you know, 0:06:08.600 --> 0:06:10.400 and the policy stuff took a little bit of a 0:06:10.440 --> 0:06:13.320 back seat. So I regret that. But but that was 0:06:13.360 --> 0:06:16.000 the best, the best job because you were in the 0:06:16.000 --> 0:06:19.640 mix of interesting cases but also thinking about you know, policy, 0:06:20.640 --> 0:06:22.760 So that that was the best the best job. 0:06:23.279 --> 0:06:25.480 Yeah, I can imagine, and I do think I do 0:06:25.520 --> 0:06:28.479 feel like that Commission really got going and then COVID 0:06:28.560 --> 0:06:32.160 kind of just you know, slowed everything. Put the brakes 0:06:32.200 --> 0:06:34.359 on and there was just a lot less happening. And 0:06:34.520 --> 0:06:36.720 you know, I think that happened for all of us, 0:06:36.760 --> 0:06:38.920 but in particular You're right for you for the kind 0:06:38.960 --> 0:06:41.000 of work you were doing. It it sort of slowed 0:06:41.040 --> 0:06:42.680 what you were able to do and what you wanted to. 0:06:43.400 --> 0:06:45.120 Yeah, we had you know, you have to bring the 0:06:45.200 --> 0:06:48.400 cases because you can get a second chance, but policy 0:06:48.640 --> 0:06:51.000 you can do it. You know, when things settled down, 0:06:51.560 --> 0:06:54.560 and you know, I just I mean everybody this this 0:06:54.760 --> 0:06:58.279 was it wasn't clear at the time, but this was 0:06:58.320 --> 0:07:01.640 the beginning of this shift to you know, working from home, 0:07:01.800 --> 0:07:05.840 not having a central location, and the agency was managing it. 0:07:05.880 --> 0:07:09.359 And the agency, like everyone else, was managing you know, 0:07:09.480 --> 0:07:11.640 people who were sick. You know, you were losing people 0:07:13.040 --> 0:07:17.400 luckily just almost entirely just you know, sick, but you 0:07:17.520 --> 0:07:21.440 lost resources that people had to learn to manage people 0:07:21.480 --> 0:07:24.480 that they didn't see, you know for sure some months. 0:07:24.760 --> 0:07:28.000 So you know, it was a great job. A little 0:07:28.040 --> 0:07:32.120 bit of popes unfulfilled, but it was a great job. 0:07:32.160 --> 0:07:35.600 And you know, well, I think things have taken quite 0:07:35.640 --> 0:07:36.520 a different turn. 0:07:36.600 --> 0:07:36.800 Now. 0:07:37.160 --> 0:07:38.800 We're going to get into that a little bit. In 0:07:38.880 --> 0:07:41.720 a little bit. The turn that policy has now taken 0:07:42.000 --> 0:07:44.320 at the FTC since we have a new administration. But 0:07:44.400 --> 0:07:46.160 I want to first talk about this paper that you 0:07:46.280 --> 0:07:48.960 just published for Tech Freedom. I read it. I think 0:07:48.960 --> 0:07:52.800 it's a great paper. This is called Actual Potential Entrance, 0:07:52.840 --> 0:07:57.680 Emerging Competitors and the Merger Guidelines, And I think particularly 0:07:57.680 --> 0:08:01.080 for any antitrust geek, but anyone just interested in the topic, 0:08:01.720 --> 0:08:04.320 it's a great read. For me. I'm going to keep 0:08:04.320 --> 0:08:06.600 this as a resource because it's just such a great 0:08:06.640 --> 0:08:10.680 compendium of the history of the way this topic has 0:08:10.760 --> 0:08:13.480 been treated. So and we're going to talk about this 0:08:13.520 --> 0:08:16.880 because it's kind of a new focus for the current FTC. 0:08:17.200 --> 0:08:19.200 So talk to me a little bit about the paper. 0:08:19.720 --> 0:08:22.000 You know, what you've said in this paper and why 0:08:22.040 --> 0:08:23.000 you decided to write it. 0:08:23.360 --> 0:08:28.720 So the paper really is an outgrowth, excuse me, of 0:08:28.760 --> 0:08:31.720 work we were doing at the agency. So you know, 0:08:31.800 --> 0:08:36.440 when when we got there, there was this focus on 0:08:37.559 --> 0:08:44.439 perceived failures by the previous administrations, both democratic and Republican, 0:08:45.080 --> 0:08:50.600 you know, to to protect competition, and one concern was 0:08:51.120 --> 0:08:55.320 you'll have too many mergers and you didn't think hard 0:08:55.360 --> 0:09:01.600 about future competition, right, the acquisition of let's say, small 0:09:01.760 --> 0:09:06.000 firms that if allowed to develop outside of the context 0:09:06.000 --> 0:09:09.360 of an acquisition, would have been you know, the the 0:09:09.400 --> 0:09:12.320 new Titans to take on you know at the time 0:09:12.360 --> 0:09:16.480 and even you know, Google and Facebook. So there was 0:09:16.520 --> 0:09:19.800 this belief, not a part that people forgot about it, 0:09:21.280 --> 0:09:25.560 and also that the law was not favorable or you know, 0:09:26.520 --> 0:09:30.079 useful enough to bring these types of cases, you know, 0:09:30.200 --> 0:09:35.360 to stop acquisitions of small firms that might develop into 0:09:36.000 --> 0:09:42.199 larger innovative competitors. And I thought that was a mistake. 0:09:42.240 --> 0:09:44.880 I mean a number of I think anyone who's practiced, 0:09:45.520 --> 0:09:49.000 I think realizes that's a mistake that the law is there. 0:09:49.840 --> 0:09:54.080 These are difficult matters to bring because they're factual, and 0:09:54.120 --> 0:09:56.760 the facts are tough. You know, you have a you 0:09:56.800 --> 0:10:02.000 have an Instagram that has thirteen employees. You Facebook's acquiring them. 0:10:02.800 --> 0:10:05.120 Instagram is going to be a challenge to Facebook in 0:10:05.160 --> 0:10:05.680 a few years. 0:10:05.760 --> 0:10:08.679 Ye have to predict. Nobody can predict the future when 0:10:08.720 --> 0:10:09.280 it comes to these. 0:10:09.600 --> 0:10:11.520 So the ideas was to just go back and look 0:10:11.559 --> 0:10:13.400 at the law and look at the cases that we 0:10:13.400 --> 0:10:18.079 were bringing in this case, the FTC and and just say, okay, 0:10:18.440 --> 0:10:22.480 here's what we've done right outside of litigation, but through 0:10:22.760 --> 0:10:27.679 you know, the consent process, mostly what theories have we used, 0:10:28.200 --> 0:10:31.560 what theories maybe are missing? You know what, what what 0:10:31.880 --> 0:10:34.479 is there law out there that can be further developed? 0:10:35.000 --> 0:10:37.400 What you know it was It was really just intended 0:10:37.480 --> 0:10:41.680 at the time, you know, to inform both policymakers and 0:10:41.760 --> 0:10:45.640 practitioner both of the tools that were in a sense 0:10:45.679 --> 0:10:48.720 were available and the tools that had been used, and 0:10:48.800 --> 0:10:52.320 maybe identify areas where Okay, maybe that's an area that 0:10:52.360 --> 0:10:55.560 we don't that we haven't been able to capture, we 0:10:55.600 --> 0:10:59.320 haven't thought about, or the law isn't clear. Whatever, you know, 0:10:59.360 --> 0:11:02.320 what do we what do we do next? And so 0:11:02.760 --> 0:11:05.520 you know, we again we we didn't I didn't have 0:11:05.559 --> 0:11:07.760 a chance to sort of finish it as a as 0:11:07.800 --> 0:11:12.840 a commission project, but just sort of redid it, revised it, 0:11:12.920 --> 0:11:16.120 extended it, h and issued it just as a as 0:11:16.160 --> 0:11:20.560 a standalone paper. You know, there's there's no there's no 0:11:20.679 --> 0:11:23.640 confidential information in it. It just says, look, let's put things 0:11:23.679 --> 0:11:26.600 all in one place and use this as a resource 0:11:26.679 --> 0:11:29.600 to say, what are we doing, what are we missing? 0:11:30.040 --> 0:11:32.800 How can we think about this going forward? And and 0:11:32.880 --> 0:11:37.440 of course you know, also recognize that acquisitions of small 0:11:37.520 --> 0:11:42.880 firms maybe you know, beneficial products get to maybe products 0:11:42.880 --> 0:11:45.439 get to market faster or get the market at all, 0:11:45.640 --> 0:11:49.400 get impolved, yeah, get improved. So you know, let's not 0:11:49.760 --> 0:11:55.160 let's not stop things that are potentially beneficial. You know, 0:11:55.240 --> 0:11:58.760 let's let's in a sense balance what's the harm, what's 0:11:58.800 --> 0:12:01.160 the benefit? You know. So it was just it was 0:12:01.320 --> 0:12:04.160 almost as you said, it's a compendium, right, it really is. 0:12:04.200 --> 0:12:06.360 There's a lot of stuff and a lot of theories, 0:12:06.360 --> 0:12:11.079 and hopefully, you know, when they do merger guidelines, maybe 0:12:11.080 --> 0:12:16.040 they highlight some some things that could have been clearer 0:12:16.080 --> 0:12:19.640 in earlier guidelines. But but you know this, it's hard now, 0:12:19.679 --> 0:12:21.960 I think for people to say, you know, we have 0:12:22.040 --> 0:12:27.520 to do something new, totally new, right, because this I 0:12:27.600 --> 0:12:32.679 think includes somewhere near one hundred cases of potential competition 0:12:32.800 --> 0:12:36.959 Nason competition or something similar where the you know, the 0:12:37.320 --> 0:12:42.040 Commission just you know, protective future competition. Uh, you know, 0:12:42.400 --> 0:12:47.400 and it's it's a it's this constant part of the Antichrist, you. 0:12:47.360 --> 0:12:49.760 Know, it is, and I think there's a lot of 0:12:49.760 --> 0:12:52.200 focus on it today by the FTC and the Department 0:12:52.200 --> 0:12:54.440 of Justice too, when they're looking at these new mergers 0:12:54.480 --> 0:12:56.840 that are getting proposed because I think there's a little 0:12:56.840 --> 0:12:58.520 bit of trying to make up or the lost time 0:12:58.679 --> 0:13:03.040 right past regrets. You know, you mentioned Google and Facebook. 0:13:03.120 --> 0:13:05.120 You know, I think there are these regrets about having 0:13:05.120 --> 0:13:08.439 cleared Facebook, Instagram, and Facebook WhatsApp and having cleared Google 0:13:08.480 --> 0:13:12.199 Double Click, maybe Google YouTube, and so you know, obviously 0:13:12.240 --> 0:13:15.080 we saw this kind of in play recently because the 0:13:15.120 --> 0:13:17.680 Federal Trade Mission did try to block well, they at 0:13:17.760 --> 0:13:21.920 least sought a preliminary injunction right to block Meta from 0:13:21.960 --> 0:13:25.120 acquiring a small virtual reality company called Within that makes 0:13:25.120 --> 0:13:27.960 this fitness app. And Meta wanted this fitness app, and 0:13:28.280 --> 0:13:31.360 it was one of these potential competition theories. I mean, honestly, 0:13:31.400 --> 0:13:34.400 the first complaint it started as just a plain old 0:13:34.400 --> 0:13:38.240 horizontal deal. They said the two companies already competed. I 0:13:38.280 --> 0:13:40.960 they sort of pulled back on that, which I think 0:13:41.440 --> 0:13:44.720 was a difficult thing to try to to try to 0:13:45.480 --> 0:13:49.160 prove and show. But they did say that Meta would 0:13:49.160 --> 0:13:51.959 have been potential competition had they not bought the entity. 0:13:52.000 --> 0:13:55.040 Now they lost, but it was a failure on proof. 0:13:55.080 --> 0:13:58.800 It wasn't a failure on the legal theory, right, And 0:13:58.880 --> 0:14:01.439 I think the FTC kind of seeing that as a 0:14:01.520 --> 0:14:04.080 little bit of having lost the battle, but maybe won 0:14:04.120 --> 0:14:06.320 the war. I mean, what do you think about that decision? 0:14:06.600 --> 0:14:10.360 So, you know, as it all things yes and no, right, right, 0:14:10.520 --> 0:14:14.559 I mean, I agree they lost on the facts, and 0:14:14.600 --> 0:14:19.720 that's I think it actually was unfortunate they went forward 0:14:20.240 --> 0:14:23.880 on what appeared to me such weak facts because it 0:14:23.960 --> 0:14:27.360 could have affected and I think it did affect, you know, 0:14:28.200 --> 0:14:30.480 whether they sort of won or lost on the on 0:14:30.520 --> 0:14:34.520 the law. So here's you know, my sense is they're 0:14:34.560 --> 0:14:39.720 claiming victory or some sort of victory because the court 0:14:39.800 --> 0:14:44.400 accepted the idea of a you know, potential competition doctrine 0:14:45.560 --> 0:14:48.640 as as a standard part of sort of Section seven 0:14:48.920 --> 0:14:52.280 merger law. You know, I don't think that was ever 0:14:52.320 --> 0:14:57.080 in doubt, understand anybody who practices in this area. They 0:14:57.240 --> 0:15:03.480 also got the court to except that, you know, the 0:15:03.480 --> 0:15:08.480 the evidentiary showing of future entry by in this case 0:15:08.880 --> 0:15:12.120 meta you know, only had to meet sort of a 0:15:12.280 --> 0:15:19.160 reasonable probability standard, which is the standard of Section seven cases. 0:15:19.520 --> 0:15:23.640 But some cases in the late seventies early eighties adopted 0:15:23.680 --> 0:15:27.720 a higher standard of proof, something like clear proof, which 0:15:27.960 --> 0:15:33.720 I might uh aligned with, you know, beyond a reasonable 0:15:33.840 --> 0:15:39.920 doubt type type of thing, and and that that type 0:15:39.920 --> 0:15:44.760 of standard you know, clear uh, clear probability, clear likelihood. 0:15:46.280 --> 0:15:49.440 That's pretty high, right, because whether you enter a market 0:15:49.520 --> 0:15:52.840 or not uh as a as a business, you know, 0:15:53.000 --> 0:15:55.800 is often not so clear, right, you know, you have 0:15:56.000 --> 0:16:01.320 counter countervailing influence. So in that sense, the agency won. 0:16:01.960 --> 0:16:04.880 But but and here's where I think they really did 0:16:05.000 --> 0:16:07.480 hurt themselves, and hurt in a sense of the cause. 0:16:08.640 --> 0:16:12.640 If you're interested in this as an agency, reasonable probability, 0:16:12.680 --> 0:16:16.360 the court said, is well north of fifty percent. And 0:16:16.400 --> 0:16:20.160 that's pretty damn high it is. And the agency itself, 0:16:20.640 --> 0:16:25.280 I think does not actually use that standard when they're 0:16:25.320 --> 0:16:30.200 bringing their own consent order right when I would my goal, 0:16:31.280 --> 0:16:34.040 you know, in a as a as an agency person, 0:16:34.280 --> 0:16:40.160 was to get some case law or even guidelines clarification 0:16:40.760 --> 0:16:45.320 that said reasonable probability was in fact well south of 0:16:45.400 --> 0:16:48.760 fifty percent. And I you know how you measure these things. 0:16:48.800 --> 0:16:52.720 Who knows, but that you know that that we would 0:16:52.760 --> 0:16:58.920 accept significant uncertainty. And the court, both in this metal 0:16:59.000 --> 0:17:04.520 within challenge and in the most prior recent challenge that 0:17:04.600 --> 0:17:09.280 the FBC brought, you know, accepted, you know, more likely 0:17:09.359 --> 0:17:13.119 than not or well north of fifty percent, and that 0:17:13.119 --> 0:17:14.720 that is going to be a problem. 0:17:15.040 --> 0:17:17.160 Yeah, I think so, And I think. 0:17:17.000 --> 0:17:20.359 If they had better facts, the court might have thought 0:17:20.480 --> 0:17:25.119 harder about, you know, the potential magnitude of future harm 0:17:25.800 --> 0:17:29.560 or even you know, just does it really need to 0:17:29.640 --> 0:17:33.919 be above fifty percent? You know, you struggle with the facts. 0:17:34.200 --> 0:17:38.840 You know, you you make rough cutts, and you know, well, 0:17:38.880 --> 0:17:43.320 north of fifty percent is pretty high. I think in 0:17:43.359 --> 0:17:44.320 anti trust. 0:17:44.040 --> 0:17:45.560 Well, I think so too. I mean, I think that 0:17:45.600 --> 0:17:47.959 would be a very difficult thing to prove, especially if 0:17:47.960 --> 0:17:50.360 you think about the kinds of documents that are probably 0:17:50.400 --> 0:17:53.760 coming out in the evidence. Businesses talk about ideas all 0:17:53.800 --> 0:17:57.040 the time, they throw ideas around, they share them, they 0:17:57.040 --> 0:17:59.159 think about them, they develop them, and they go away 0:17:59.240 --> 0:18:02.280 all the time. And how to prove that, no, this 0:18:02.480 --> 0:18:05.560 was really going to happen. You have to be well 0:18:05.600 --> 0:18:09.560 down the road in introducing a product to be above 0:18:09.600 --> 0:18:12.760 that fifty percent. But let's talk about one where maybe 0:18:12.840 --> 0:18:15.160 I mean, I don't know because I only can see 0:18:15.160 --> 0:18:17.720 what's publicly available, but maybe the evidence is actually a 0:18:17.760 --> 0:18:20.439 little bit stronger. And that's a pending deal before the 0:18:20.480 --> 0:18:23.240 Department of Justice. I asked you about this earlier and 0:18:23.280 --> 0:18:25.720 whether you wanted to talk about it, and it's the 0:18:25.760 --> 0:18:32.000 Adobe Pigma deal. Again. I've researched this deal, and what 0:18:32.160 --> 0:18:34.919 struck me is the second I started to Google and 0:18:34.960 --> 0:18:37.320 look for information about it. The first thing I kept 0:18:37.320 --> 0:18:41.040 seeing was that Bigma was this new, scrappy company that 0:18:41.240 --> 0:18:45.080 was cutting into Adobe's market share, right. And if you 0:18:45.200 --> 0:18:47.560 see that, it's just jumping out at the page at you. 0:18:48.440 --> 0:18:51.200 And then you see that people say Adobe way over 0:18:51.280 --> 0:18:54.040 paid Pigma. You add that to it, which looks a 0:18:54.040 --> 0:18:57.880 little bit like the whole Facebook Instagram situation way back when, 0:18:58.000 --> 0:19:01.119 or WhatsApp. I wonder, now, we don't know what the 0:19:01.160 --> 0:19:02.800 evidence is really going to look like that will be 0:19:02.800 --> 0:19:04.960 before a judge, or that the d o J is 0:19:05.000 --> 0:19:07.240 looking at, But in my mind, it seems like that 0:19:07.359 --> 0:19:08.359 might be a stronger case. 0:19:08.520 --> 0:19:11.320 Well, I look, I think that's right. I think that's right. 0:19:11.480 --> 0:19:13.920 I don't you know, I won't be careful about talking 0:19:13.920 --> 0:19:17.479 about specific facts when neither of us have the underline record, 0:19:17.800 --> 0:19:20.720 But I agree that looks it looks stronger, it looks 0:19:20.800 --> 0:19:25.320 more poor. You know, to Adobe, you see of actual 0:19:25.640 --> 0:19:28.919 or there appears to be some actual effect you know, 0:19:29.040 --> 0:19:33.120 of of their of their entry. You just didn't see 0:19:33.119 --> 0:19:36.880 that in Metal Within, you know, in in Meta within 0:19:36.960 --> 0:19:39.399 it was a little bit of a you know, Meta 0:19:39.560 --> 0:19:43.280 Meta has these resources, they can enter any market. Mark 0:19:43.400 --> 0:19:45.360 Zuckerberg is interested, you know. 0:19:45.880 --> 0:19:48.199 In a lot of things they can do right. 0:19:48.400 --> 0:19:51.440 But but you know, so here I think it's a 0:19:51.440 --> 0:19:55.439 little different, and maybe I'd align it with uh, you 0:19:55.480 --> 0:19:59.360 know the visa plaid case DOJ brought in the Trump administration. 0:20:00.280 --> 0:20:01.840 You know, there was just it looked like there was 0:20:01.920 --> 0:20:07.320 more evidence of a focus on on the newcomer, the upstart, uh, 0:20:07.600 --> 0:20:12.080 the business model and seeing you know, some takeaway of 0:20:12.400 --> 0:20:15.640 of share or customers. You just you just didn't have 0:20:15.720 --> 0:20:17.960 that in the better and you know, it was it 0:20:18.040 --> 0:20:21.680 was just too speculative. It was you know, I don't 0:20:21.720 --> 0:20:23.920 I don't like to be critical of the agency, even 0:20:24.200 --> 0:20:27.480 when you know you could be critical because you know, 0:20:27.520 --> 0:20:30.359 you're when you're there, you're you're trying to put you know, 0:20:30.480 --> 0:20:33.320 develop the laws. Sometimes you know, you take a risk. 0:20:33.960 --> 0:20:39.320 But but that that seemed almost preordained. You know, Facebook 0:20:39.320 --> 0:20:42.080 wants to do a deal. Well, we don't like Facebook. Uh, 0:20:42.640 --> 0:20:45.280 this is the one in front of us. We better 0:20:45.400 --> 0:20:48.840 we better attack it, and you know, because otherwise we're 0:20:48.840 --> 0:20:51.720 gonna have some you know, some explaining to us to why. 0:20:53.320 --> 0:20:55.560 But I you know, I think it was a mistake 0:20:55.680 --> 0:20:58.719 just you just didn't see the evidence that you see 0:20:59.119 --> 0:21:01.880 in that. Potentially you've see in these other deals where 0:21:01.920 --> 0:21:05.520 products are further along or they're more in the fourth folcus, 0:21:05.600 --> 0:21:08.879 we see that, so I you know, they they may 0:21:08.920 --> 0:21:11.000 get a better result. This is still going to be a. 0:21:10.920 --> 0:21:13.439 Hard case, A hard case, absolutely. I mean, as you 0:21:13.480 --> 0:21:17.320 said that over fifty percent standard is really tough, and 0:21:17.400 --> 0:21:18.800 it is. I think that is going to be a 0:21:18.800 --> 0:21:20.280 hard case. We'll have to see what happened. I mean, 0:21:20.280 --> 0:21:22.480 there isn't a suit yet. It's still an investigation, so 0:21:22.520 --> 0:21:25.160 we don't even know that the Department of Justice will 0:21:25.160 --> 0:21:28.240 The news has suggested that there's been speculation, but we'll 0:21:28.560 --> 0:21:31.679 we'll have to see what happens there. I want to 0:21:31.680 --> 0:21:33.600 move on to another topic because I know that it's 0:21:33.600 --> 0:21:35.080 something you want to talk about, and I think it's 0:21:35.119 --> 0:21:38.639 really interesting, and I also think it's something that investors 0:21:38.680 --> 0:21:40.920 are not paying enough attention to. And that is Section 0:21:41.000 --> 0:21:43.399 five of the FTC Act. And so you know, we 0:21:43.520 --> 0:21:46.040 have a lot we have non anti trust folks probably 0:21:46.080 --> 0:21:48.680 listening to this, and so why don't we at least 0:21:48.680 --> 0:21:51.080 start by why don't you talk about what Section five is, 0:21:51.119 --> 0:21:52.760 what it does, and what's going on here? 0:21:52.960 --> 0:21:55.720 Sure, so, you know, we've been talking a lot about 0:21:55.720 --> 0:22:01.080 the FDC, and the FDC in fact, is not enforce 0:22:01.240 --> 0:22:06.920 the Sherman Act, but it enforces Section five of the Act, 0:22:06.920 --> 0:22:10.639 which prohibits unfair methods of competition. It also enforces the 0:22:10.680 --> 0:22:17.920 Clayton Act. But but Section five is believe, correctly, given 0:22:17.960 --> 0:22:20.640 what the courts have said, you know, to be broader 0:22:20.680 --> 0:22:24.720 than the Sherman Act prohibitions and arguably broader than the 0:22:24.760 --> 0:22:30.560 prohibitions of the Clayton Act, including the anti merger provisions, 0:22:31.280 --> 0:22:34.320 and so to the you know, some people believe the 0:22:34.440 --> 0:22:37.720 law has developed over the past forty years in a 0:22:37.760 --> 0:22:49.680 way unhelpful to plaintiffs, and the agency under new leadership 0:22:50.720 --> 0:22:56.440 has decided, I think, to reinvigorate Section five law as 0:22:56.480 --> 0:23:01.280 a way around the development of the law in the 0:23:01.320 --> 0:23:05.400 development of Shermanac law and Clatenact law. Right, So, for 0:23:05.520 --> 0:23:11.199 roughly forty years, the FDC enforced Section five in a 0:23:11.280 --> 0:23:17.359 manner generally consistent with the other anti trust laws. But 0:23:17.440 --> 0:23:20.080 that was a choice, right, It was a policy choice 0:23:20.119 --> 0:23:25.640 because of concern that too aggressive enforcement would chill pro 0:23:25.720 --> 0:23:32.400 competitive conduct. Well, you know, the new folks differ with 0:23:32.480 --> 0:23:35.879 respect to what conduct should be legal, what conduct should 0:23:35.920 --> 0:23:40.360 be benefit should be viewed as beneficial, and have decided 0:23:40.400 --> 0:23:47.880 to instance, reinvigorate Section five law. They've adopted a view, 0:23:48.040 --> 0:23:53.240 a policy statement of Section five that makes clear that 0:23:53.359 --> 0:23:57.879 it is distinct and separate from the Sherman Act or 0:23:57.920 --> 0:24:02.439 the Clayton Act, that it allows them to attack and 0:24:02.520 --> 0:24:08.360 prohibit conduct that does not meet the requirements of Sherman 0:24:08.440 --> 0:24:12.040 Act or even Play Act type cases. So this is 0:24:12.080 --> 0:24:16.359 a to me, this is a end run around. You know, 0:24:16.400 --> 0:24:19.560 the development of the case law in the last roughly 0:24:19.640 --> 0:24:24.840