Speaker 1: Hi, and welcome to the Votes and Verdicts podcast, hosted
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Speaker 1: The Forthcoming Conversation is part of the Bloomberg Intelligence Election series,
Speaker 1: covering the industry and company impacts of the upcoming election.
Speaker 1: On October twenty fourth, my colleague Jennifer Ree and I
Speaker 1: discussed what the election might mean for antitrust law and
Speaker 1: policy in the coming years. Any questions please feel free
Speaker 1: to reach out to any of us on the Bloomberg terminal.
Speaker 1: Hi everyone, and welcome. My name is Justin Teresi. I'm
Speaker 1: a litigation and policy analyst here at Bloomberg Intelligence focused
Speaker 1: on anti trust issues, and joining me today is the
Speaker 1: one and only Jennifer Ree, our senior anti trust litigation guru,
Speaker 1: and for both of us, our coverage really runs across
Speaker 1: all sectors. This webinar is a part of a series
Speaker 1: of conversations across the month of October focused on the
Speaker 1: upcoming election. Our first bourbinar considered financials, the second tackle
Speaker 1: TMT issues, and other discussions have included considerations on tax, healthcare, industrials,
Speaker 1: and consumer goods. All to help you get ready to
Speaker 1: understand potential impacts of the upcoming election. Where the only
Speaker 1: certainty around that issue seems to be uncertainty, we try
Speaker 1: to unpack a bit of a roadmap for what lies ahead.
Speaker 1: Playbacks for each of these sessions are available on the terminal.
Speaker 1: And first, just a little about Bloomberg Intelligence, where the
Speaker 1: investment research platform on the Bloomberg Terminal, singing over five
Speaker 1: hundred professionals covering over two thousand companies. We cover companies
Speaker 1: from the perspective of equities, credit, ESG, litigation, and policy.
Speaker 1: Bloomberg Terminal clients can always reach out to us with
Speaker 1: questions about our research. So with that, let's get started.
Speaker 1: How we've structured this today is a conversation between myself
Speaker 1: and Jen. First focus at some macro thoughts by Jen
Speaker 1: about what the FTC and DOJ might look like in
Speaker 1: the future, along with some considerations route M and A
Speaker 1: and the growing antitrust struggles that are facing big tech.
Speaker 1: Although I'll then weigh in on some policy considerations for
Speaker 1: some standalone legislation that might be considered in the next
Speaker 1: Congress and provide a quick rundown of what kind of
Speaker 1: activity we might see in the States. So with that, Jen,
Speaker 1: glad to have you here with me today. This is
Speaker 1: our second webinar for you.
Speaker 2: Yeah.
Speaker 1: So, I guess, hopping right into the material, the primary
Speaker 1: question that most people seem to be paying attention to
Speaker 1: right now with the elections as pertains to anti trust.
Speaker 1: They're asking whether the chair of the Federal Trade Commission,
Speaker 1: Lena Kahn, will continue in that seat under other Harris
Speaker 1: or Trump presidency. And this is the right question because
Speaker 1: the anti trust enforcement decisions aren't made by those folks
Speaker 1: at the FTC and DOJ personnel is policy.
Speaker 3: What do you think, Jen, Well, so justin you know,
Speaker 3: when you said earlier uncertainty, there's a lot of uncertainty here.
Speaker 3: There's a lot of uncertainty with respectiveness you too, And
Speaker 3: there are a lot of different viewpoints, I should say,
Speaker 3: and I think no consensus based on everybody I've talked
Speaker 3: to and things I've read. I have my own view
Speaker 3: based on listening, researching, thinking about personality types. But because
Speaker 3: you know, both candidates have said very little on their
Speaker 3: views of anti trust policy, this is really just my
Speaker 3: view and not particularly informed by their own comments about
Speaker 3: what their goals are. Now, the first thing I actually
Speaker 3: think is that I believe things will change from the
Speaker 3: way they are no matter what, though definitely not right away.
Speaker 3: These things absolutely take time, and it could be a
Speaker 3: little quicker if Trump is elected instead of Harris, But
Speaker 3: no matter what, it takes time. And I think the
Speaker 3: main question everybody is asking, at least in the business community,
Speaker 3: is whether this really aggressive interventionist approach we've been seeing
Speaker 3: for the last mostly three years, but going back about
Speaker 3: five years, that the current Federal Trade Commission and a
Speaker 3: Department of Justice have taken will continue. My opinion is
Speaker 3: that I don't really think so, even if Harris is elected.
Speaker 3: And I generally think that every new president will want
Speaker 3: to do things their own way, even if they're in
Speaker 3: the same party as the previous president. But I'll start
Speaker 3: with Harris. As you mentioned, justin personnel is policy, so
Speaker 3: you know, the main course of the antitrust approach of
Speaker 3: an administration is set by the decision makers of the
Speaker 3: FTC and DOJ, and I think there are quite a
Speaker 3: few people out there that actually expect President Harris to
Speaker 3: keep Lena Khan on as the Chair of the FTC.
Speaker 3: She's kind of the standard bearer for this very aggressive
Speaker 3: and activist anti trust enforcement that we've had. I actually
Speaker 3: don't think so. You know, Con is replaceable right now
Speaker 3: because her term has expired. It expired at the end
Speaker 3: of September, and if she is replaced, to me, that's
Speaker 3: kind of the catalyst for a little bit of change
Speaker 3: in tone at the agency. And I have a couple
Speaker 3: of reasons for thinking that Conn will eventually, not right away,
Speaker 3: but eventually be replaced if Vice President Harris is elected.
Speaker 3: And part of it is just that it's just sort
Speaker 3: of the right of a president to name their own
Speaker 3: senior officials. That's part of what they do. They guide
Speaker 3: their own policy, and this has happened even when they're
Speaker 3: in the same party. It's their right to do so.
Speaker 2: So.
Speaker 3: For instance, when George H. W. Bush took over from
Speaker 3: Ronald Reagan, the Republican chair of the FTC was replaced
Speaker 3: within about eight months and later both of the other
Speaker 3: Republicans as well. Now I don't know if that's because
Speaker 3: they left on their own volition, which often happens and
Speaker 3: could happen here too, or whether George Bush just chose
Speaker 3: to replace them. But you know, in this case, if
Speaker 3: Lena Khan did get the message quietly that Harris would
Speaker 3: like to name her own new Democrat or at least
Speaker 3: new chair, Con could leave on her own. Now, another
Speaker 3: reason I tend to think that there could be a
Speaker 3: replacement here is because I tend to think that the
Speaker 3: litigation approaches as prosecutors that either one have taken over
Speaker 3: the years are a bit different, and there's a little
Speaker 3: bit of a disconnect between the two. You know, Con
Speaker 3: really kind of has this scorched earth approach where she
Speaker 3: brings cases that are long shots for a win. That's
Speaker 3: not typical, I think for most prosecutors are a little
Speaker 3: more cautious, and it also carries some risk. And I
Speaker 3: tend to think Harris's approach as an attorney has been
Speaker 3: more nuanced and a bit less rigid, and she may
Speaker 3: want something like that in her own prosecutors. But in
Speaker 3: any case, I think if she wanted to keep her,
Speaker 3: she'd probably have to renominate her, and that actually could
Speaker 3: be difficult because we believe, we sort of expect Senate
Speaker 3: is going to flip to a majority Republican, and there's
Speaker 3: some doubt that if Con went back before the Senate,
Speaker 3: she'd be able to get the votes she needs. I
Speaker 3: should say that even if Harris does replace her, I
Speaker 3: don't see things going back to the way they were
Speaker 3: before the last three to five years. You know, an
Speaker 3: environment where very few deals were challenged and enforcement against
Speaker 3: monopolistic conduct was very limited. I think we're going to
Speaker 3: stay in a heightened environment. It's still going to be
Speaker 3: more aggressive than it was, just maybe tempered. Right now,
Speaker 3: Trump I think I can be a little quicker. I
Speaker 3: think absolutely replaced Con. I mean, I think there's no doubt.
Speaker 3: We know JD. Vance's vice presidential candidate, has praised Con,
Speaker 3: thinks she's done a good job. Would like to keep her.
Speaker 3: But this is going to be up to Trump, and
Speaker 3: I really think he's going to want his own people,
Speaker 3: particularly given that in his first administration he took a
Speaker 3: lot of recommendations and didn't end up being very happy
Speaker 3: with some of those people. I think he's going to
Speaker 3: be a little bit more careful this time. And I
Speaker 3: also think right off the bat, what he would do
Speaker 3: is name one of the current Republicans Melissa Holyoak or
Speaker 3: Andrew Ferguson as the chair. He can do that right
Speaker 3: away and then sort of demote le Nikan to commissioner
Speaker 3: from chair at least right away until he's able to placer.
Speaker 3: And I do think that we're probably going to see
Speaker 3: somewhat erratic, maybe idiosyncratic enforcement under a Trump administration, where
Speaker 3: he's looking more at the companies that he likes or
Speaker 3: the deals that he likes versus companies he doesn't like
Speaker 3: and DEALC doesn't like in terms of the hurdles that
Speaker 3: might be erected or the easing that might take place.
Speaker 3: So generally, I think some easing there, but maybe only
Speaker 3: for some companies and industries and not for others. What
Speaker 3: do you think justin right?
Speaker 2: Yeah, you know, and I'm not just saying this because
Speaker 2: we work together.
Speaker 1: But I tend to agree with your with your view
Speaker 1: on this too.
Speaker 2: You know, I think you're right. Trump is really the
Speaker 2: easy one to figure out here.
Speaker 1: I think there's absolutely no chance, Lena con says on
Speaker 1: with him being elected you're right, there's that populism I
Speaker 1: think on the right that they're the wing that seems
Speaker 1: to like her. But you know, for the same reason
Speaker 1: that Trump probably wann't want Lena conrun in the FTC,
Speaker 1: there's a there's a bit of a rogue factor there,
Speaker 1: right that Harris I think would encounter too. And you know,
Speaker 1: I think to your point that you know, it's all
Speaker 1: taken at each price, and it kind of wants their
Speaker 1: own folks in their administration, even though the FTC is
Speaker 1: this independent kind of commission. So I think that alone
Speaker 1: suggests to me that harr is really looking at Con
Speaker 1: that in this way. Even though they might agree and
Speaker 1: some things, or even maybe one might say all things,
Speaker 1: at some point, there is a bit of a rogue
Speaker 1: factor there in terms of the cases that could be
Speaker 1: brought by Con if she were to stay on, and
Speaker 1: it might not be on the same page all the
Speaker 1: time with what the White House is thinking. So I
Speaker 1: think that you're right, you know, there is that that
Speaker 1: kind of pushed probably replaced her at least at some
Speaker 1: point down the road. And you know, we're hearing all
Speaker 1: of that conversation right now. I think from folks like
Speaker 1: Senator Warren and you know, AOC last week i think
Speaker 1: made a comment too that there'd be a brawl if
Speaker 1: there was this move to replace Lena Khan. But you know,
Speaker 1: it seems to me that at some point down the road,
Speaker 1: and maybe not right away, you know, there's probably something
Speaker 1: that President Harris could offer Senator Warren or AOC or
Speaker 1: folks that are pushing for Khan to kind of minimize
Speaker 1: their opposition to a replacement if one comes in down
Speaker 1: the road. But you know, that's a game of chess
Speaker 1: and a lot of strategy, strategy, and you know, several
Speaker 1: moves ahead if that were to happen obviously too. So yeah,
Speaker 1: moving on from this topic, another one that's really been
Speaker 1: coming up a lot here, Jenna, is that you know
Speaker 1: these government monopolization suits that we're seeing it against big
Speaker 1: tech platforms. Can you kind of give us a rundown
Speaker 1: of the ongoing suits and whether you think those are
Speaker 1: going to be impacted at all by a new administration?
Speaker 2: Yeah?
Speaker 3: Sure, absolutely. I mean at this point, between the Trump
Speaker 3: administration and the Biden administration, just about every very very large,
Speaker 3: big tech platform has been sued for illegal monopolistic conduct. Right,
Speaker 3: so we have the DOJ that's gone after Google over
Speaker 3: search and gone after Google, I should say DJ plus States,
Speaker 3: but I'm focused sort of on the federal government right now.
Speaker 3: DOJ that's gone after Google over its conduct with respect
Speaker 3: to its ad tech products, and it's also now sued
Speaker 3: recently Live Nation related to its conduct with respect to
Speaker 3: its ticketmaster arm. The Federal Trade Commission, for its part,
Speaker 3: has sued Meta that's related to its act positions of
Speaker 3: WhatsApp in Instagram. And they've also sued Amazon, which was
Speaker 3: widely expected given you know, Lina Khon's well known antagonism
Speaker 3: toward Amazon and the way Amazon does its business. So
Speaker 3: I think these cases all just play out in courts.
Speaker 3: I don't really see the course of these cases changing
Speaker 3: much no matter who wins the presidency. First, the DOJ
Speaker 3: cases against Google are both very well advanced. I mean,
Speaker 3: trials have completed for both Search and add tech, and
Speaker 3: we already have a liability decision on Search. So we're
Speaker 3: on the remedies phase there, and I highly doubt that
Speaker 3: the remedy, even though the DOJ might ask for a
Speaker 3: breakup of Google as a remedy, I doubt that will
Speaker 3: be what the judge orders and so in that case,
Speaker 3: you know, people say, oh, it could be a repeat
Speaker 3: of Microsoft, where a court ordered under Clinton's administration a
Speaker 3: structural remedy, but then it was remanded and in the
Speaker 3: meantime George Bush became the president and then settled. I
Speaker 3: don't really see that happening because I don't think the
Speaker 3: structural remedy is going to be ordered in the first place.
Speaker 3: And nonetheless, I don't see settlements here because we know
Speaker 3: that Google. You know, Trump is no friend to Google.
Speaker 3: Google's no friend to Trump, and he has said in
Speaker 3: an interview with John Micklethwaite of Bloomberg that he does
Speaker 3: think Google needs to be regulated, that it needs to
Speaker 3: be contained. He didn't necessarily say it needed to be
Speaker 3: broken up. So to the extent there's a behavioral remedy
Speaker 3: in the case, I think Trump would agree with that,
Speaker 3: as what Harris. The other cases have a long way
Speaker 3: to go, not Antech, just the ones against Meta Amazon
Speaker 3: and lave Nation, and yeah, and I think that still
Speaker 3: they play out in court. The only way I see
Speaker 3: under either administration potential settlements, but way down the road
Speaker 3: is if they seem to be doing very poorly in
Speaker 3: the litigation, if they get some hint that they're just
Speaker 3: really struggling. Maybe they're already in trial. You know, sometimes
Speaker 3: the judge will really reveal how they view a case.
Speaker 3: Sometimes they don't, but sometimes you can get that feeling
Speaker 3: that you're going to lose, and at that point maybe
Speaker 3: there'd be some possibility of settlement. But I think that
Speaker 3: would be the case no matter who was the president.
Speaker 3: I think maybe if you know, if it was still
Speaker 3: the Biden administration's enforcers. So you know, that's where we
Speaker 3: are in Live Nations, the last one, and I think
Speaker 3: you know that goes through court no matter what, because
Speaker 3: it's it's a popular case with consumers. It's you know,
Speaker 3: politically desirable for either either administration to continue to pursue
Speaker 3: Live Nation. Nobody likes the fees they're charged when they
Speaker 3: buy tickets first sports.
Speaker 2: Everyone can agree on, right, right, you.
Speaker 3: Can all agree on that. Yeah, And they're seeking a
Speaker 3: jury trial there, and I think, you know, there's a
Speaker 3: good reason for that. Justice, But anyway, you know, these
Speaker 3: things play out the way they're going to play out
Speaker 3: no matter what. That's my view.
Speaker 2: Yeah, yeah, that makes a lot of sense. How about
Speaker 2: M and A.
Speaker 1: I mean, this is another area where the current FTC
Speaker 1: and DOUJ have been so, you know, pretty aggressive and interventionists.
Speaker 1: Do you think things change under a new president. If
Speaker 1: they do, how do they change? You know, what do
Speaker 1: we think about Harris? And then maybe can go to
Speaker 1: Trump after that?
Speaker 3: Yeah. I mean there's been a lot of changes the
Speaker 3: approach to M and A in the last three to
Speaker 3: five years, and I think two really notable ones are
Speaker 3: one that this DOJ and FTC have been very reluctant
Speaker 3: to ever accept any remedy for a deal that raises
Speaker 3: anti trust issues, which is really quite new. I mean,
Speaker 3: under the Trump administration we saw the beginning of the
Speaker 3: rejection of just at least behavioral remedies. That DOJ certainly
Speaker 3: accepted structural remedies and allowed deals to clear with that,
Speaker 3: but said, hey, we don't think behavioral remedies make sense
Speaker 3: because we're not a regulator and they don't work. You know,
Speaker 3: it's hard to keep companies to those promises they make.
Speaker 3: This administration basically says, look, if it's a problematic deal,
Speaker 3: it should be stopped. Remedies usually don't work, and in
Speaker 3: the few cases they have agreed to a remedy, it's
Speaker 3: really only been where they clearly were going to likely
Speaker 3: lose in the litigation, and there've been very few. That
Speaker 3: was one of the first big changes because it used
Speaker 3: to be that almost all deals cleared with a behavioral
Speaker 3: or structural remedy are both. Now they also the end
Speaker 3: of last year, the guidelines that are used to evaluate
Speaker 3: deals were changed. These guidelines are meant to be guidance
Speaker 3: for businesses to say, here's how we're going to evaluate
Speaker 3: your deal, guidance for the agencies and their own lawyers
Speaker 3: to go through their investigation, and guidance for judges in
Speaker 3: courts when the deals are challenged. Now they're not binding
Speaker 3: on the courts, but most courts have accepted them. But
Speaker 3: the revision at the end of last year was really
Speaker 3: done on a partisan basis because we only had Democrats
Speaker 3: at that time at the FTC and at the DOJ,
Speaker 3: and usually these revisions have been done in the past
Speaker 3: on a bipartisan basis. So it's unclear yet whether the
Speaker 3: courts will adopt them. And these guidelines are troubling for
Speaker 3: merging companies because they have lowered the threshold for finding
Speaker 3: that a deal is presumed to be anti competitive at
Speaker 3: the outset right. There are other changes beyond that, but
Speaker 3: in general, all of these changes essentially mean that more
Speaker 3: deals than before will be considered harmful. And I do
Speaker 3: think that these guidelines in general are here to stay.
Speaker 3: The question would be, with the next administration rescind them,
Speaker 3: go back to old ones, rewrite them, what would they do?
Speaker 3: I think a Harris administration probably would not. I did
Speaker 3: see a Q and A with Commissioner Andrew Ferguson not
Speaker 3: that long ago by the George Mason Mercadas Center, I believe,
Speaker 3: and asking him about this. He's a Republican, by the way,
Speaker 3: and he had said, look, I don't think they should
Speaker 3: be rescinded, but I do think they should be tweaked.
Speaker 3: So that gives us some good guidance that if we
Speaker 3: have a Republican president and the FTC flips to a
Speaker 3: majority Republican, they'd be able to do that. At the FDC,
Speaker 3: you need a majority vote to get anything done, and
Speaker 3: so they may be tweaked. It pulled back a little bit,
Speaker 3: justin and you know what, that pulling back could even
Speaker 3: happen under Harris. I just I doubt it more and
Speaker 3: I think it's more likely under Trump. So companies are
Speaker 3: going to have to live with slightly tougher guidelines. But
Speaker 3: again I said, the courts haven't accepted them yet, and
Speaker 3: they may not. With respect to remedies, I think there's
Speaker 3: a lightning up there across the board, and that's because, honestly,
Speaker 3: it's a really rigid position, and what it does is
Speaker 3: it forces the agencies to bring cases that they're unlikely
Speaker 3: to win because there are strong anti trust theories of harm,
Speaker 3: and there are weak anti trust theories of harm. And
Speaker 3: there are vertical deals where there are also arguably a
Speaker 3: lot of pro competitive benefits from vertical integration, and that's
Speaker 3: another case that's hard to win in court. So if
Speaker 3: you were completely across the board refuse to accept a remedy,
Speaker 3: you're forced to challenge a deal. Essentially, assuming the companies
Speaker 3: stick with it and fight, you're forced to fight a
Speaker 3: deal in court where you probably can't win. And I
Speaker 3: don't think Harris is going to want Harris's people, or
Speaker 3: even Harris will want to be in that position. So
Speaker 3: I do think we'll have a little lightning on whether
Speaker 3: or not a little more flexibility on the acceptance of
Speaker 3: remedies to resolve mergers that raise issues.
Speaker 2: Got it, got it, That's where I am there.
Speaker 3: So justin we've talked a little bit here about enforcers,
Speaker 3: We've talked about big tech lawsuits, we've talked about deals.
Speaker 3: Let's move on to some of the more complicated issues
Speaker 3: that you think about.
Speaker 2: Then.
Speaker 3: I'm glad you're thinking about and I'm not specifically. Let's
Speaker 3: start with AI. That's a big AI is the big thing,
Speaker 3: and how can we not talk about it any intersection
Speaker 3: with any that. I know you're thinking about a lot,
Speaker 3: and people in the antitrust bar are thinking about a lot.
Speaker 3: I don't know if everyday people are thinking about it,
Speaker 3: but let's just you know, let's just talk about whether
Speaker 3: there's any fallout here. There is activity right.
Speaker 2: There is activity that's right right, and.
Speaker 3: Will there be fallout? Will this continue on or will
Speaker 3: it change from the election?
Speaker 2: Yeah?
Speaker 1: You know so, I think this is an area where
Speaker 1: you know, this piggybacks obviously onto what you were saying
Speaker 1: about big tech, and you know this, this I think
Speaker 1: is one of those areas that really looks at what's
Speaker 1: happening from an enforcement perspective, and I think what we
Speaker 1: might see from a legislative perspective here down the road
Speaker 1: and what happens in the election there is really important
Speaker 1: to you. But just to catch everyone up, you know,
Speaker 1: we've been seeing some news and not just in the
Speaker 1: US globally regarding enforcement activity around a right. There were
Speaker 1: reports of a raid of offices in France by enforcement
Speaker 1: authorities there for Navidia this past year. There was news
Speaker 1: reports over the summer that the DOJ and FTC are
Speaker 1: splitting responsibility for investigating Navidio's at purported consolidation in the
Speaker 1: AI infrastructure space. And then you know DOJ looking at
Speaker 1: Visor excuse me, FUC looking at Microsoft's investment in open
Speaker 1: ai to twelve twelve point five billion dollar investment that
Speaker 1: happened there. Does that raise questions as to whether or
Speaker 1: not those those kinds of investments are really acting as
Speaker 1: an acquisition that would otherwise have to be reported under
Speaker 1: the Hartscott Redino Act for review. So that's kind of
Speaker 1: what we're seeing from this enforcement perspective. I think your
Speaker 1: points about big tech are well taken. Right, do we
Speaker 1: see a more measured approach from a new FTC or
Speaker 1: DOJ and what does that look like under either Harris
Speaker 1: or Trump? You know, again, I think everything you said
Speaker 1: regarding the reviews on big tech is relevant and important here,
Speaker 1: and the reason why is that we're seeing really the
Speaker 1: same act in the AI space that we're seeing with
Speaker 1: every other aspect of tech that's already been kind of
Speaker 1: you regulated or or enforcement has been taken. And you know,
Speaker 1: as I said, we've got Microsoft investing in open AI,
Speaker 1: We've got Navidia, We've got Apple now with the advent
Speaker 1: of Apple Intelligence and Sery integration. So all of those
Speaker 1: same players that have already been under that antitrust microscope
Speaker 1: are likely to be under that microscope again with regard
Speaker 1: to their activity around AI. And I don't think that's
Speaker 1: something that's going to entirely go away no matter who's
Speaker 1: elected to office. Big tech just doesn't have those friends
Speaker 1: and enforcers that some other industries might. So that's something
Speaker 1: to keep in mind. I think something we're going to
Speaker 1: see a lot more happen on no matter who wins
Speaker 1: the White House in the company weeks. But a big
Speaker 1: question here, I think is the issue of China's dominance
Speaker 1: in this space and to what degree that consideration for
Speaker 1: a poor foreign policy and economics perspective plays into enforcement factors.
Speaker 1: So you know, I think it's no surprise. In the
Speaker 1: same Bloomberg interview that you reference, Jen Trump talked about
Speaker 1: Chinese dominance in several economic areas last week, and you know,
Speaker 1: AI seems to be a space where that conversation really
Speaker 1: is developing out. You know, if we're raining in US
Speaker 1: companies from developing their AI infrastructures and power, if you will,
Speaker 1: is that coming at the cost of allowing a nation
Speaker 1: with which which we might not have the tightest ties,
Speaker 1: like China at the moment?
Speaker 2: Does it allowing places like.
Speaker 1: That to develop their infrastructure that comes at a competitive
Speaker 1: disadvantage US, Whether or not that's true, that's a lot
Speaker 1: of the rhetoric that we're seeing right now in this space,
Speaker 1: and it certainly is something that I think is really
Speaker 1: going to weave its way through any legislative or enforcement
Speaker 1: efforts in the coming couple of years here with regard
Speaker 1: to AI. And also kind of tied into all of
Speaker 1: this is the aspect of privacy, right We've got issues
Speaker 1: of biometric surveillance and you know kind of you know,
Speaker 1: looking at your research and where you're headed and how
Speaker 1: that informs and educates AI. So there really is this
Speaker 1: multifaceted legislative approach here. From an anti trust perspective, I
Speaker 1: think it's really looking at those investments that are made
Speaker 1: and AI startups and the consolidation that is said to
Speaker 1: be happening already, but none of that's happening alone in
Speaker 1: a silo. There really is this mix with issues of
Speaker 1: privacy and foreign policy that's really emerging, I think, to
Speaker 1: dominate how we're going to look at AI under either
Speaker 1: administration come next year.
Speaker 3: Yeah, it's interesting that China issue sort of. You know,
Speaker 3: there's a school of thought by some also with respect
Speaker 3: to all of these challenges to the big tech platforms
Speaker 3: that we really shouldn't be pushing our big you know,
Speaker 3: the big companies that innovate and have a lot of money,
Speaker 3: because it is going to put us to a disadvant
Speaker 3: at a disadvantage to China. Of course, the anti trust
Speaker 3: regulators would say that isn't a reason to allow anti competitive.
Speaker 2: Content, right right, Absolutely, there are.
Speaker 3: Some that think it should be so so talk about
Speaker 3: something else that's a little under the radar. It's not
Speaker 3: in the it was in the news a lot a
Speaker 3: few years ago, not so much now. It doesn't mean
Speaker 3: it shouldn't be because you know, there have been bills
Speaker 3: on the table for quite a long time. They keep
Speaker 3: getting reintroduced in new Congresses that would regulate a lot
Speaker 3: of big tech companies. A couple of them actually passed
Speaker 3: through committees a few years ago, and it's possible they
Speaker 3: could again. So let's talk about legislation. Are you seeing
Speaker 3: any situations where Congress might move the needle on any
Speaker 3: pending or newly introduced legislation.
Speaker 1: Yeah, you know, And to your point, I think it's
Speaker 1: not surprising we've seen these items kind of drop out
Speaker 1: of the head from headlines the last couple of years.
Speaker 1: I think, you know, everyone kind of forgets Congress is
Speaker 1: there sometimes due at the level of inertia. I think
Speaker 1: we've seen from from anything actually making its way through
Speaker 1: both chambers the last couple of years. So everything I'm
Speaker 1: about to say, I think that really hinges on whether
Speaker 1: or not we're in another divided Congress come come next year,
Speaker 1: which looking at polling data, it suggests we could see
Speaker 1: a red set and a blue house. We could find
Speaker 1: ourselves in a reverse but a similar situation to what
Speaker 1: we're seeing right now. But you're you're correct, you know,
Speaker 1: we've seen really specific legislation on the table that is
Speaker 1: aimed at particular industries. Senator Michael Is America Act is
Speaker 1: a great example of that, really aimed at you know,
Speaker 1: breaking up and reading in Google's behavior without mentioning them
Speaker 1: by name. And then you see broader moves to tackle
Speaker 1: things like self preferencing by companies and having their products
Speaker 1: appere first in search and things like that. So you know,
Speaker 1: the question becomes, is there any political will or an
Speaker 1: appetite to even move forward on more standalone legislation that
Speaker 1: might focus on specific industries versus everything in anti trust
Speaker 1: as a whole. And I think that remains to be seen,
Speaker 1: you know, just keeping our eye on whether we're in
Speaker 1: a divide Congress again next year. But one area I
Speaker 1: will point out where we're seeing a lot more conversation
Speaker 1: and bipartisan you know suggestion of activity is on pharmacy
Speaker 1: benefit managers or PBMs. Right, So, you know, we saw
Speaker 1: the FTC file a lawsuit just a few weeks ago
Speaker 1: under section five of the FTC Act, which really you know,
Speaker 1: there was a report in July they had put out
Speaker 1: that really seemed to touch upon anti trust concerns that
Speaker 1: PBM's cause with their kind of vertical consolidation relationships with
Speaker 1: insurance and the effect that their activities are having on
Speaker 1: smaller independent pharmacies that are trying to survive in more
Speaker 1: rural places in America. However, when they filed that lawsuit,
Speaker 1: that was really left out and the focus really was
Speaker 1: on this consumer protection aspect of what they had reported
Speaker 1: on earlier this year. So you know, I think what
Speaker 1: that does is in some ways might point to a
Speaker 1: situation where existing law might be inadequate to tackle a problem,
Speaker 1: and perhaps suggest to Congress that, hey, if there is
Speaker 1: this bipartisan agreement that something needs to be fixed, it's
Speaker 1: really going to be up to you to act. So
Speaker 1: we'll see how that shakes out. But you know, that's
Speaker 1: the one industry I really point to you, in addition
Speaker 1: to tech, where I'm starting to see this really bipartisan
Speaker 1: consensus for some kind of activity to be coalescing where
Speaker 1: we could see some actions, so tech and PBMs, but
Speaker 1: I'm also going to point to a theme we're seeing
Speaker 1: across you know, litigation as it's evolving and the impact
Speaker 1: that that's having on Congress. And what I mean by that,
Speaker 1: and this is just an example, is that you know,
Speaker 1: we've seen a swarm of these consumer class actions dudes
Speaker 1: that have been filed around the issue of these AI
Speaker 1: pricing algorithms, and you know whether or not and specifically
Speaker 1: in areas like you know, residential rents and hotels. But
Speaker 1: you know, the question is, you know, when companies get
Speaker 1: together and they submit, they're you know, kind of confidential
Speaker 1: or non public data to these these operators of AI
Speaker 1: algorithms and in return are receiving suggestions as to how
Speaker 1: they should be pricing apartments or pricing hotel rooms. Is
Speaker 1: that akin to what we would see in a classic
Speaker 1: conspiracy under the antitrust laws.
Speaker 2: So we're seeing, you know.
Speaker 1: Is folks kind of commenting on this saying, look, existing
Speaker 1: antitrust law is fine, it's just not being enforced. And
Speaker 1: the other side of the camp is saying, no, we
Speaker 1: need new laws to kind of tackle these problems if
Speaker 1: we're going to enforce antitrust effectively.
Speaker 2: So how is that shaking out?
Speaker 1: Well, the litigation against landlords trying to prohibit these these
Speaker 1: algorithms from setting rents as in the residential context, that
Speaker 1: litigation has been upheld on a motion to dismiss and
Speaker 1: it's continuing in Tennessee right now, but similar litigation involving
Speaker 1: similarly the same technologies involving hotel rooms, both in Las
Speaker 1: Vegas and Atlantic City. Those cases have both been dismissed
Speaker 1: on a peer They've both been dismissed at the trial
Speaker 1: court level, so they're both on appeal right now in
Speaker 1: in those situations. So it's it's kind of this mishmash,
Speaker 1: if you will, of different rules and trying to apply
Speaker 1: existing legislation to new technologies like this. But it suggests that,
Speaker 1: you know, new new legislation and new law might be
Speaker 1: necessary to curtail those behaviors if it's something that really
Speaker 1: there's a political will to take care of. So it's
Speaker 1: that mix of things. Is there a move against an industry,
Speaker 1: is there an effort to move against an issue, and
Speaker 1: is that political will there in a divide in Congress?
Speaker 1: Probably not for these broader questions, but I think we
Speaker 1: could see some action on some industries if there's enough
Speaker 1: of an outcry from the public on them.
Speaker 3: Very interesting, I'll be I'll be surprised if Congress does anything.
Speaker 2: Yeah, me too, me too, frankly. Frankly, I think that's right.
Speaker 3: They get sometimes they get something done. There was a
Speaker 3: kind of a little tiny bit of anti trust legislation
Speaker 3: passed at the end of last year, tagged on to
Speaker 3: a bill. But so last week, just have a few
Speaker 3: minutes left, So let's talk a couple of minutes about
Speaker 3: the states, because you know, state attorneys general have the
Speaker 3: right to enforce federal anti trust laws, and we've seen
Speaker 3: them become much more active in the last five years
Speaker 3: or so. What do you think about them acting on
Speaker 3: anti trust policy enforcement in the coming years.
Speaker 1: Yeah, you know, I think this is another issue that
Speaker 1: really really hinges beyond just electoral numbers. You know that
Speaker 1: they're really hinges on what happens here with the federal election.
Speaker 1: And what I mean by that is that, you know,
Speaker 1: if you think back to twenty seventeen with the election
Speaker 1: of Trump, or even to twenty twenty one with the
Speaker 1: election or with Biden taking office, you know, you really
Speaker 1: see activity in the states by attorneys general and state
Speaker 1: legislatures who might be from opposing political parties that really
Speaker 1: trying to have you know, it seems to be that
Speaker 1: create a political will, if you will, in legislatures and
Speaker 1: among state ags that take action where they see, you know,
Speaker 1: problems with how the federal government might be proceeding with
Speaker 1: certain issues. So I think we probably see that again
Speaker 1: regardless of you wins the White House. I think we
Speaker 1: see pushback from states that have majorities of a different color, if.
Speaker 2: You will, and you know, blue or red, and you know.
Speaker 1: I think you know how that's rolling out is. You
Speaker 1: can already see it in a bunch of different ways.
Speaker 1: So from the legislative perspective, you know, you look at
Speaker 1: the inertia in Congress and how things aren't getting done,
Speaker 1: and then you look at kind of an anti trust
Speaker 1: issue like the right to repair certain you know, equipment
Speaker 1: or electronics or what have you, and whether or not
Speaker 1: consumers can go to independent dealers to have these fixes
Speaker 1: kind of done. You know, nothing's happening in Washington, right,
Speaker 1: But I think Advocate seeing some opportunity at the state level.
Speaker 1: They've been able to have some of these bills introduced
Speaker 1: and passed in certain state legislatures.
Speaker 2: Right.
Speaker 1: Colorado now has a law manding the agricultural equipment has
Speaker 1: to be allowed to be fixed by someone other than
Speaker 1: the manufacturer per terms of a warranty. In New York
Speaker 1: State has done the same with regard to a lot
Speaker 1: of consumers or electronics items, So things like that, you know,
Speaker 1: we could see those smaller pushes on anti trust level
Speaker 1: in different states. And then New York and California both
Speaker 1: considering legislation right now that would update their state versions
Speaker 1: of the Sherman Act to add monopsonies to that definition. Right,
Speaker 1: So what is that where someone has a buying power
Speaker 1: in a market like Amazon for instance?
Speaker 2: Right?
Speaker 1: If it's really if you want to if you're a
Speaker 1: seller and you want to be on Amazon and Amazon
Speaker 1: is making purchases or setting prices, is that power something
Speaker 1: that that could be curtailed by state antitrust law. And
Speaker 1: New York's version of the legislation even includes a mechanism
Speaker 1: for a new class action that doesn't exist already. So
Speaker 1: you know, when DC isn't moving on particular issues, I
Speaker 1: think it's certainly possible we might see some movement in
Speaker 1: different states. And we could also see movement from those
Speaker 1: states as kind of a pushback mechanism as things they
Speaker 1: don't particularly enjoy.
Speaker 2: Coming from the federal government.
Speaker 1: And I'll say, you know, to your point about state
Speaker 1: enforcement actions too.
Speaker 2: You're right. I mean, you know, the Google case.
Speaker 1: First, the Google ad tech matter was first brought by
Speaker 1: Texas and a group of attorneys generals before before DOJ
Speaker 1: stepped in to do that.
Speaker 2: Do you have state attorneys.
Speaker 1: General challenging the Kroger I'm an ideal right now, that's
Speaker 1: going on Croger Albertson's and on the PBM front. You
Speaker 1: even see some state ags who have filed their own
Speaker 1: lawsuits there too. So there's a lot happening in the States,
Speaker 1: and certainly something that shouldn't be ignored.
Speaker 3: So much going on in the anti dress world. But
Speaker 3: I think much that's about it for us today, right,
Speaker 3: I think so.
Speaker 1: I think that concludes our prepared remarks, and yeah, I
Speaker 1: don't know if we have any questions from the audience,
Speaker 1: but if not, I think we'll want it there.
Speaker 2: Thanks so much for joining.
Speaker 1: Everyone really appreciate you joining our webinar today.