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Speaker 3: My guest tonight or one of the main government agencies
Speaker 3: responsible for enforcing antitrust and protecting consumers in America, please
Speaker 3: welcome to the program. Federal Trade Commission Chair Lina Khan,
Speaker 3: be lovely to see you. You run the Federal Trade Commission,
Speaker 3: the whole shebang, and you are in charge of it's
Speaker 3: protecting Themericans from monopolistic government company practices, but also dealing
Speaker 3: with pricing and things like that, protecting consumers.
Speaker 4: That's right.
Speaker 5: I mean, the short of it is, we want to
Speaker 5: make sure that the American public is not getting bullied
Speaker 5: or coerced in the marketplaced or tricked, and so we
Speaker 5: enforce the nation's anti trust and consumer protection laws.
Speaker 1: And how is well?
Speaker 3: Please, now, I just want to make kills right, right,
Speaker 3: you were not bullied or tricked into applauding now, I
Speaker 3: don't want to be accused of monopolistic How much pressure
Speaker 3: do these companies exert on the Federal Trick Commission? In
Speaker 3: other words, how much do they fight whatever regulation you're
Speaker 3: trying to put into place to keep them from becoming
Speaker 3: monopolies or from these types of business practices.
Speaker 5: Well, look, monopolies are not fans of enforcing the anti
Speaker 5: monopoly laws, and so that type of pushback is baked in.
Speaker 5: But we have a fantastic team. We're a small agency,
Speaker 5: but we're mighty, and we play to our strengths being entrepreneurial,
Speaker 5: being strategic right, and getting real wins for the American people.
Speaker 3: What are the companies? So these are separate things monopolies.
Speaker 3: The way I always view it was, oh, that's only
Speaker 3: one company. But don't we have oligopolies in this country?
Speaker 3: Aren't there industries? Consolidation has made it. For instance, the
Speaker 3: entertainment industry is controlled by like six companies. Is that
Speaker 3: considered not a monopoly but a problem.
Speaker 1: Yeah.
Speaker 5: Look, we've really focused on how are companies behaving? Are
Speaker 5: there behaving in ways that suggest they can harm their customers,
Speaker 5: harm their suppliers, harm their workers and get away with it.
Speaker 5: And that type of too big to care type approach
Speaker 5: is really what ends up signaling that a company has
Speaker 5: monopoly power because they can start mistreating you but they
Speaker 5: know you're stuck.
Speaker 3: And what would be the metrics of that, Like, how
Speaker 3: would you how would you judge that? Because I know
Speaker 3: you've shooed Amazon, that's right, and that's for those practices.
Speaker 5: So our law suit does allege that Amazon is a monopoly,
Speaker 5: that they've maintained that monopoly.
Speaker 4: Through illegal practices. And look, there are a variety of
Speaker 4: ways that you.
Speaker 5: Can show a company is a monopoly and has monopoly power.
Speaker 5: One is you can try to figure out what's the
Speaker 5: exact boundary of the market, what's the market share. But again,
Speaker 5: the most direct way is to look at how is
Speaker 5: the company behaving. And as we lay out in our complaint,
Speaker 5: Amazon is now able to get away with harming its customers. So,
Speaker 5: just to give you a few examples, over the last
Speaker 5: few years, they've littered their search results page with junk ads,
Speaker 5: ads that internally executives realize are irrelevant and unhelpful to consumers,
Speaker 5: but they can just do it and it milks them,
Speaker 5: you know, billions of dollars in money. They've also been
Speaker 5: steadily hiking the fees that small businesses have to pay
Speaker 5: to sell through Amazon. And so now some small businesses
Speaker 5: have to pay one out of every two dollars to Amazon.
Speaker 5: It's basically a fifty percent monopoly tax.
Speaker 1: Wow.
Speaker 5: And so those are just some of the behaviors that
Speaker 5: we point to to note that this company has monopoly power.
Speaker 3: Is there anything in the company's leader that also suggests that, Like,
Speaker 3: for instance, if you were to go from being like
Speaker 3: sort of a nerdy dude who sold books out of
Speaker 3: a garage into let's say a jacked lex luthor type,
Speaker 3: does that also suggest either monopolistic practices or some type
Speaker 3: of injections.
Speaker 5: You know, we haven't tried to make those arguments in court,
Speaker 5: but it would be interesting to see how a judge
Speaker 5: would respond.
Speaker 3: I think quite favorable. How many lawyers do you like?
Speaker 3: For instance, So what are you up against? So you've
Speaker 3: got government lawyers. I'm assuming you've got a pretty good cadre.
Speaker 3: Like let's say you're going after Amazon, how many lawyers
Speaker 3: are they at?
Speaker 5: I mean, you know, if they have monopoly money, they
Speaker 5: can buy as many lawyers as they want. I mean,
Speaker 5: the FTC is around twelve hundred employees. But when we're
Speaker 5: going up against some of these monopolistic companies. They can
Speaker 5: outmatch us, outgun us sometimes one to ten, just if
Speaker 5: you're looking at lawyers, if you're adding paralegals and support.
Speaker 3: If you're just looking at lawyers, they outnumber you ten
Speaker 3: to one.
Speaker 4: Sometimes they can.
Speaker 5: Yeah, I mean, we have lawsuits against a whole bunch
Speaker 5: of big companies, and just in terms of sheer resources
Speaker 5: that they can pour into the litigation, we're pretty outgunned,
Speaker 5: but not outmatched, right, And this is where it comes
Speaker 5: to playing to your strengths being entrepreneurial.
Speaker 2: You know.
Speaker 1: So this isn't about just getting a fine.
Speaker 3: This isn't about going after Amazon and saying so because
Speaker 3: this is what the SEC does. The SEC, I think
Speaker 3: is overmatched as a government ager saying you don't have
Speaker 3: to comment out that, but just.
Speaker 1: Nod your head.
Speaker 3: Utterly overmatched, So they go after groups and then they
Speaker 3: can't really prove it in court. So then they're like,
Speaker 3: how about this. You give us a cut of your
Speaker 3: profit and we'll all be done here. How do you
Speaker 3: handle that with Amazon? It's not just about a fine,
Speaker 3: that's right.
Speaker 5: I think we've seen look over the last couple of decades,
Speaker 5: we've seen how businesses can treat fines just as a
Speaker 5: cost of doing business, right, and we need to make
Speaker 5: sure that we're actually deterring illegal behavior, and so that
Speaker 5: can mean naming individual executives.
Speaker 4: We in our smol old.
Speaker 1: Snap, you just did not go there. I like that.
Speaker 1: So have you had success with this?
Speaker 4: We have had success with this.
Speaker 5: I mean, we had a lawsuit against Martin Screlly a
Speaker 5: couple of years ago.
Speaker 3: All suddenly it turned into a pro wrestling match. Here,
Speaker 3: let's go, and he went to jail. Do you do
Speaker 3: you have to refer things to the DOJ or do
Speaker 3: you have an enforcement arm?
Speaker 5: So you're right, we don't have criminal authority. But the
Speaker 5: remedy we were able to get against Martin Screlly was
Speaker 5: to effectively ban him from doing business in the pharmaceutical industry.
Speaker 3: Right now, I imagine that the practice that he did
Speaker 3: in the pharmaceutical industry, which was taking a life saving
Speaker 3: drug and like Jack and the price up, I don't
Speaker 3: know how many thousands of percent.
Speaker 1: I mean, he did something crazy.
Speaker 3: Right, How do you keep that as a normal practice
Speaker 3: in the pharmaceutical industry?
Speaker 1: I mean, are they colluding as a group to keep
Speaker 1: prices high?
Speaker 3: Why are we having so much trouble with them and
Speaker 3: prescription drug prices.
Speaker 5: I mean, look, there are a whole set of reasons
Speaker 5: why for too many Americans drugs are unaffordable, right, I mean,
Speaker 5: I hear weekly monthly about American families who are having
Speaker 5: to ration life saving.
Speaker 1: Drugs absolutely and shortages of those drugs.
Speaker 5: Shortages of those drugs, and there can be all sort
Speaker 5: of tricks in monopolistic behavior that is leading to that.
Speaker 5: Just to give you one example, inhalers. They've been around
Speaker 5: for decades, but they still cost hundreds of dollars. So
Speaker 5: our staff took a close look, and we've realized that
Speaker 5: some of the patents that had been listed for these
Speaker 5: inhalers were improper, there were bogus, and so we sent
Speaker 5: hundreds of warning letters around these patents. And in the
Speaker 5: last few weeks we've seen companies delist these patents, and
Speaker 5: three out of the four major manufacturers have now said
Speaker 5: within a couple of months they're going to cap how
Speaker 5: much Americans pay to just thirty five dollars.
Speaker 3: So it is their game life, So you, being an
Speaker 3: entrepreneurial is their game. We're going to see how far
Speaker 3: we can push this and get away with it, and
Speaker 3: do these different things in the hopes that we don't
Speaker 3: run up against an entrepreneurial or crafty FTC.
Speaker 1: Are they waiting you out?
Speaker 4: Look, it's possible.
Speaker 5: But that's why you need to think about tactics that
Speaker 5: are going to be around to turn. And so one
Speaker 5: big area of focus for us is understanding what is
Speaker 5: the root cause of these problems? Right, Let's understand who
Speaker 5: is the mafia boss here rather than just going after
Speaker 5: the foot soldiers.
Speaker 3: Right, And I think you'd probably there's probably a biblical
Speaker 3: sin in there that's probably the root cause of.
Speaker 1: The whole thing. Right.
Speaker 3: I want to talk about the tech companies because they
Speaker 3: are the new oligarchs, it would seem they are the
Speaker 3: companies that and you see this especially in Europe where
Speaker 3: they are fined considerable amounts of money for monopolistic practices.
Speaker 3: Or Apple just had to pay an enormous fine. Microsoft
Speaker 3: has always been found guilty of certain monopolistic practices.
Speaker 1: When it comes along, how do.
Speaker 3: You handle enforcement for these new, incredibly consolidated and enormous oligarchies.
Speaker 5: So we have a lawsuit against Amazon, we have another
Speaker 5: ones against Facebook.
Speaker 1: We what is the one against Facebook?
Speaker 5: So that one was filed before I arrived at the agency.
Speaker 5: But basically it alleges that Facebook, when it was watching
Speaker 5: the transition from desktop to mobile, it realized it really
Speaker 5: couldn't survive in mobile, and so it ended up and
Speaker 5: buying out Instagram and WhatsApp. And the lawsuit alledges that
Speaker 5: those acquisitions were anti competitive, that they violated the anti
Speaker 5: trust laws, that instead of competing organically, Facebook instead bought
Speaker 5: its way to maintaining its monopoly.
Speaker 3: Now why why is that considered all of this? Wouldn't
Speaker 3: they say, well, that's a sign of our success. We're
Speaker 3: so successful, we have extra money, and with that extra money,
Speaker 3: we make bets on certain companies and we turn those
Speaker 3: into successes.
Speaker 5: So look, one key tenant of the anti monopoly laws
Speaker 5: is that you can't go out and buy one of
Speaker 5: your biggest competitors the whole, or you're.
Speaker 1: Not allowed to do that.
Speaker 4: You're not allowed to do that. In fact, can I.
Speaker 1: Tell you something crazy?
Speaker 3: So I had put in an offer for last week
Speaker 3: tonight I had come out.
Speaker 1: Now it wasn't I don't want to tell you so.
Speaker 3: Because it's Oliver I offered to him in the Blooms
Speaker 3: Is that what British people use. You have to make
Speaker 3: the decision then of whether or not they are cornering
Speaker 3: the market. They used to call it cornering the market,
Speaker 3: but couldn't you say, like Apple, Microsoft, they are kind
Speaker 3: of working together to corner markets now.
Speaker 5: So look, we are investigating to understand whether some of
Speaker 5: the investments and partnerships that they're entering into right now
Speaker 5: in the AI space may in fact be giving them
Speaker 5: undue influence or giving them special privileges. If we get
Speaker 5: any hint that there is actual collusion happening in the marketplace,
Speaker 5: we take that extraordinarily seriously and won't hesitate to take action.
Speaker 5: One trend that we're especially concerned about is the way
Speaker 5: that algorithms maybe facility price fixing.
Speaker 4: And so if you have a whole bunch of competitors
Speaker 4: in a.
Speaker 5: Market, be at hotels, be at casinos, and they all
Speaker 5: decide they're going to outsource their pricing decision to the
Speaker 5: same algorithm, they may in effect be fixing their prices,
Speaker 5: even if they're not getting in the back room and
Speaker 5: making secret deal.
Speaker 3: If that would be like if a hotel says, oh,
Speaker 3: you can get us on Expedia, or you can get
Speaker 3: us on Kayak or you can get us on. But
Speaker 3: all those companies are using the same algorithm. Would that
Speaker 3: mean that it flattens those prices and you are not
Speaker 3: getting the competitive advantage that you might get from those
Speaker 3: ten to fifteen apps that are searching for the cheapest
Speaker 3: hotel rooms.
Speaker 1: Is that the idea that's right.
Speaker 5: You may collectively see inflated prices because all of these
Speaker 5: companies are using the same algorithm, they're inputting the same data,
Speaker 5: and that algorithm is an effect allowing them to collectively
Speaker 5: raise their prices.
Speaker 4: So Americans are having to pay more.
Speaker 1: And it's not just pay more.
Speaker 3: I mean you could look at a company like Walmart,
Speaker 3: where you would say, okay, they came into areas and
Speaker 3: they dominated all the competition. They didn't buy up the
Speaker 3: mom and pop shops, but because they had access to
Speaker 3: cheap labor and overseas goods and those types of things,
Speaker 3: they could undersell them and put them all out of business.
Speaker 1: And even at that moment, they might not.
Speaker 3: Raise their prices, but boy could they and boy could
Speaker 3: they exert their influence on supply chains, and boy could
Speaker 3: they depress wages and make sure that people, even if
Speaker 3: they're working long hours.
Speaker 1: Still have to have social assistance. Is that something that
Speaker 1: you could go after.
Speaker 5: Look, monopolies harm Americans in a whole bunch of ways.
Speaker 5: You're absolutely right that it's not just higher prices. It
Speaker 5: can be lower wages. It can be suppliers getting muscled
Speaker 5: out of the market or seeing their own payments drop.
Speaker 4: It can also be shortages. I mean, we've seen over the.
Speaker 5: Last two years baby formula, baby formula.
Speaker 4: IV, bags, adderall adderall basic forums.
Speaker 3: I see the audience says no use for baby formula
Speaker 3: but has an interesting predilection.
Speaker 1: What do you do in that instance?
Speaker 5: So, look, we want to understand are there dominant players
Speaker 5: here that are using their muscle to coerce in ways
Speaker 5: that's contributing to shortages. We've also seen historically when you
Speaker 5: concentrate production, that concentrates risk, and so a single disaster,
Speaker 5: a single contamination, a single shock can lead the entire
Speaker 5: supply to be wiped out.
Speaker 4: I mean, the short of it is, don't put all
Speaker 4: your eggs in.
Speaker 3: One basket, and then you guys are the ones that
Speaker 3: have to separate the eggs. It's curious to me that
Speaker 3: the government wouldn't have other methods of working with these corporations.
Speaker 3: To ask them to curb their excesses in exchange for
Speaker 3: what they get, which is the stability of the American system.
Speaker 5: So look, we have a whole bunch of policies and
Speaker 5: laws in place that are actually designed to ensure our
Speaker 5: markets are more competitive and not as subject to these
Speaker 5: without killing innovation exactly.
Speaker 1: That's the balance.
Speaker 5: But forty years ago, under President Reagan, we've radically veered
Speaker 5: off course and undertook a much more hands off approach,
Speaker 5: and now we're living with the consequences of those disis.
Speaker 3: Is industry more consolidated today? I mean, my gut would
Speaker 3: tell me it is more consolidated. You have larger companies
Speaker 3: that swallow up in the pursuit of growth, swallow up
Speaker 3: and consolidate. It feels that way to me. Do you
Speaker 3: have the metrics that suggest that that's actually the case
Speaker 3: on the.
Speaker 5: Whole, Yes, I mean you always want to do a
Speaker 5: market by market analysis, But if you look at airlines,
Speaker 5: if you look at telecom, if you look at meat packers,
Speaker 5: if you look at huge parts of our economy across
Speaker 5: the board, you've see in huge waves.
Speaker 1: Of mergers less competitive.
Speaker 5: Do you go from dozens of companies just to a
Speaker 5: very small number, and again that hurts Americans and American
Speaker 5: communities in all sorts of ways and even leads to,
Speaker 5: for example, planes falling apart in the sky.
Speaker 1: Wait, what.
Speaker 3: Irish thought that was just I always thought that was
Speaker 3: all just DEI are you telling me? This gets us
Speaker 3: to our final point. So now they're saying this new algorithm,
Speaker 3: this new kind of machine learning model called AI, that's
Speaker 3: going to transform every aspect of American life, in the
Speaker 3: American economies. It's already being consolidated. Apple has bought thirty
Speaker 3: AI models. Microsoft is Pride Bog, Google has bought They
Speaker 3: all buy AI startups and put them behind their paywell,
Speaker 3: and they're already having an arms race to see who
Speaker 3: will be either the monopoly or this will be in Oha, gobly.
Speaker 3: I got to tell you, I wanted to have you
Speaker 3: on a podcast, and Apple asked us not to do it.
Speaker 3: To have you, they literally said, please don't talk to her,
Speaker 3: having nothing to do with what you do for a living.
Speaker 1: I think they just I didn't think they cared for you.
Speaker 1: It is what happened. They wouldn't.
Speaker 3: They didn't, they wouldn't let us do even that dumb
Speaker 3: thing we just did in the first Act on AI, like,
Speaker 3: what is that sensitivity? Why are they so afraid to
Speaker 3: even have these conversations out in the public sphere.
Speaker 5: I think it just shows one of the dangers of
Speaker 5: what happens when you concentrate so much power and so
Speaker 5: much decision making in a small number of companies. I mean,
Speaker 5: going back all the way to the founding, there was
Speaker 5: a recognition that in the same way that you need
Speaker 5: the Constitution to create checks and balances in our political sphere,
Speaker 5: also needed the anti trust and anti monopoly laws to
Speaker 5: safeguard against concentration and economic power, because you don't want
Speaker 5: an autocrat of trade in the same way that you don't.
Speaker 4: Want a monarch.
Speaker 1: But then it took them.
Speaker 3: I mean, it wasn't until the Sherman Act in what
Speaker 3: eighteen ninety some day? I mean, why when did they
Speaker 3: first decide? Was it the beginning of industrialization when they
Speaker 3: finally decided like, oh, we should probably put.
Speaker 1: A halt to this.
Speaker 4: That's right.
Speaker 5: You'd initially had some state level laws, but the first
Speaker 5: federal anti trust law was the eighteen ninety Sherman Act,
Speaker 5: and it was absolutely a response to the industrial evolution
Speaker 5: and a lot of the power that that had concentrated.
Speaker 3: Can we just hold on for one second? Why can
Speaker 3: you take the camera real quick? I want to take
Speaker 3: a single real quick If I can. Don't know which one,
Speaker 3: let me.
Speaker 1: Take this one. Now that Sherman thing didn't.
Speaker 2: I oh, came out of nowhere.
Speaker 3: I think I might have learned that in like ninth grade?
Speaker 1: Stuck.
Speaker 3: Has that been updated since eighteen ninety.
Speaker 5: So we had some follow on laws in nineteen fourteen,
Speaker 5: another follow on in the nineteen fifties, and then since
Speaker 5: then it's been a bit more sparse. So for the
Speaker 5: most part, our lawsuits are still based on those laws
Speaker 5: going back a century.
Speaker 1: What would you posit?
Speaker 3: What would you put forth to control this new AI
Speaker 3: technology that is looming?
Speaker 1: And I'm not talking about censorship.
Speaker 3: I'm not talking about government deciding you can't say that
Speaker 3: or you can't print that. I'm talking about in terms
Speaker 3: of business practices, these few companies controlling the entire mechanism.
Speaker 5: Look, the first thing we need to do is be
Speaker 5: clear eyed that there's no AI exemption from the laws
Speaker 5: on the books.
Speaker 4: We see sometimes.
Speaker 5: Business says try to dazzle enforcers by saying, oh, these
Speaker 5: technologies are so new they're so different.
Speaker 4: Let's just take a hands off approach. And that's basically what.
Speaker 5: Ended up happening with Web two point zero. And now
Speaker 5: we're re from the consequences, and so we need to make.
Speaker 4: Sure all of the was the Web two point zero is,
Speaker 4: you know, the rise.
Speaker 5: Of social media, and you know, in the early two thousands,
Speaker 5: the initial set of companies that ended up innovating but
Speaker 5: ultimately becoming monopolistic, ultimately adopting business models that are premised
Speaker 5: on endlessly surveilling people.
Speaker 3: And so and hoovering up data and creating algorithms that
Speaker 3: are clearly harmful not just to children but to political discourse.
Speaker 3: And there's it's it's pretty wild how they're able to
Speaker 3: do that, and they every now and again they get
Speaker 3: called in front of Congress and Mark Zuckerberg, you know,
Speaker 3: do I goes like like and subscribe?
Speaker 1: You know, I don't know, but it.
Speaker 3: Are you Are you optimistic that we will be able
Speaker 3: to catch up to this in time before something truly
Speaker 3: catastrophic happens through AI?
Speaker 4: Well, look, there's no inevitable out come here.
Speaker 5: We are the decision makers, and so we need to
Speaker 5: use the policy tools and levers that we have to
Speaker 5: make sure that these technologies are proceeding on a trajectory
Speaker 5: that benefit Americans and we're not subjected to all of
Speaker 5: the risks and harms.
Speaker 3: Right, boy, would you stay forever? Because it's incredible.
Speaker 1: I pass the way. You've got me so much. After
Speaker 1: sit Chat, Lupie.
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