Home The Role of the State Antitrust and Competition Dinner Keynote with Jonathan Kanter and Lina Khan: Transcript

Dinner Keynote with Jonathan Kanter and Lina Khan: Transcript

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Assistant Attorney General Jonathan Kanter and Chair Lina Khan in conversation with Guy Rolnik at the 2024 Stigler Center Antitrust and Competition Conference.

The following is a transcript of Guy Rolnik’s conversation with Assistant Attorney General Jonathan Kanter and Chair Lina Khan at the 2024 Stigler Center Antitrust and Competition Conference.


Guy Rolnik

Good evening from Chicago, and thank you for joining us. I’m Guy Rolnik. I’m a Clinical Professor of Strategic Management at the University City of Chicago Booth School of Business and one of the organizers of this conference series. Tonight I’m happy to host a conversation with Assistant Attorney General Jonathan Kanter and the Chair of the Federal Trade Commission, Lina Khan.

Before we begin, please note we are on the record and live streaming, and we will also post this event video on the Stigler Center YouTube channel later. If you have questions for the speakers, we will address them in the last 50 minutes of this conversation. As usual, the views expressed by guests are their own, not those of the Stigler Center or the University of Chicago.

I want to welcome to our conversation two of arguably the most transformational regulators in the 21st century: Lina Khan, Chair of the FTC and Jonathan Kanter, head of the Antitrust Division at the Department of Justice. So, welcome Lina and Jonathan. [applause]

It has been seven years since we had Lina and Jonathan here at our inaugural Stigler antitrust conference. Of course, a lot has happened since then. But if I had to choose the most surprising change that we couldn’t have expected seven years ago, it would be that the topics of our conversation here tonight were previously considered to be very boring, fringe and technical, even sometimes by academics. Those topics have now gained significant interest with many many people.

March of the same year, of 2017, I believe it was Judge Richard Posner that declared here in this room that antitrust is dead. Well, antitrust is not only alive today, alive and kicking, it’s actually pretty cool. How do I know that it’s cool? It’s so cool that John Stewart thinks that he can leverage it to get his prime time ratings back again by having Lina on the show. [laughter]

What it means for us here this evening is that the audience of this this conversation that we’re going to have tonight is not only you people here, that are experts in antitrust law and economics, but the public at large. They are watching us live. Later maybe in short snippets they will see it on social networks—that is, of course, if the social networks don’t suppress it.

Let me join you now.

After calling you the most transformational regulators in the US in the 21st century, I want to start by asking you, Lina and Jonathan, how did you transform the agencies that you lead? Lina, you’re going to be, in June, three years in your job. Jonathan, for you it’s somewhere like two and a half years. So let’s start with, tell us the transformation from your perspective, Lina.

Lina Khan

Well, first of all let me just say it’s so terrific to be here, and thanks so much to Guy and Luigi and Stigler for convening such an important discussion. Stigler has been at the forefront of helping, not just capture the state of policy debate around these issues, but actually drive it forward. Partly it’s been able to do so through a commitment to open-mindedness and genuine curiosity and a focus on evidence-based discussion, which has been so critical to make sure that we’re revisiting assumptions that may be outdated and really mapping out an approach to the law and policy that’s actually reflecting the reality of how markets are working.

So, my thanks to you all for helping convene such an important set of discussions, year after year.

At the FTC, our focus has been on making sure we’re enforcing the law in a way that’s faithful to the tools that Congress has given us; updating those frameworks and tools where we need, to make sure they’re reflecting the reality of how businesses are operating and pursuing their strategies in the year 2024; and third, through making sure that we’re regularly engaging and hearing from and learning from the public. Across each of these dimensions, we’ve really been focused on, first of all, making sure that we are fully dusting off the tools that we need.

I would say for the first 12 months, a lot of the focus was on making sure we were doing things like issuing our new Section 5 policy statement, embarking on a journey to revise the merger guidelines, adopting new policies and processes, and really sharpening all of our tools. The last 18 months, we’ve been in execution mode, continuing to sharpen those tools but making sure that we’re actually able to follow through.

It’s been enormously exciting time, and in some ways it feels like the work is just beginning.

Guy Rolnik

Thank you. Jonathan?

Jonathan Kanter

Let me echo Lina, thanks for having us, and also echo the importance of this conversation and the conversation that this conference and Stigler Center has been at the forefront of leading. I remember quite vividly that first conference. It’s remarkable to think about the conversation we’re having today, the conversation that the public is having today, compared to where we were then.

I remember, I was actually thinking as you were introducing us, I had the pleasure of being on one of those panels. And I remember saying at the time that our profession, the profession of antitrust lawyers and economists and professionals, was at risk of becoming irrelevant because the public was seeing a problem. The public was seeing a problem with corporate concentration. The public was seeing a world where they may not use the same vocabulary to describe antitrust, but they were concerned.

We were stuck in this bubble, in this insular bubble with our exclusionary words and static models while real people were suffering real harm. And I remember saying and thinking that we were at risk of becoming irrelevant, and we better get our act together as a profession or we’re going to be left behind. I think, with a lot of hard work, we’re getting our act together as a profession and we are finally focusing on addressing modern problems in a forward-looking way. That’s a good segue into the transformation.

First and foremost, we’ve really tried to instill a world where we start with, how do things work? How does competition work in this market? Rather than trying to fit facts into models, we’re starting with saying, how does competition in this market function? Forget if it’s vertical or horizontal or two-sided or multi-sided. How does it work, and does the conduct or the merger that we’re encountering threaten that competition? If the answer is yes, then we figure out how we want to address it and how we want to deal with it. That shift to a focus on market realities, including broadening the disciplines that we rely on to help investigate and bring cases, has really transformed the way we approach enforcement.

Like Lina mentioned, we’re also going back to first principles. First principles in antitrust is that competition is good. We like competition because it has a range of benefits that flow from lower prices, but also it affects our democracy. It affects our liberty. Why? Because we are a country that believes in opportunity, in access to markets, in diversity of viewpoints and ideas. A competitive economy helps elevate those principles.

Guy Rolnik

Thank you for these opening answers, but I want you to be more specific if you can.

Tell me, first Lina and then Jonathan, which of your wins that you had in the last 3 years were the most important to you.

Lina Khan

Well, I think a critical input across all of our work is the fact that we are closely engaging with and responding to the public.

That relates to comments that both of you made, which is, one key catalyst for the transformation has been, in fact, the way that there had previously been a gap between how we were analyzing problems in the economy and how people were actually experiencing those. Across the board, actually continuing to deeply engage with and learn from the public has been critical. In part because it helps inform how we do our work, how we pick our priorities, but also because it helps continue to build support for the transformation that has been underway, and make sure that we make clear to people that this reflects government in their corner fighting for them, which is important when you think about the disillusionment that we’ve seen at various points with government. The sense that things are just not working. The sense that the outcomes in your life are not necessarily a reflection of your own hard work but a reflection of arbitrary decisions that are being made by powerful entities far away. Making sure just at a fundamental level that we are engaging with and learning from and hearing from the public is critical.

The fact that we have seen that part of our work shift has actually been an enormous win, not just for the next few months, the next few years, but it’s actually going to be a critical input for the institutional durability of what we’re doing. The fact that people are connecting the problems in their day-to-day lives with decisions that are being made in Washington, DC, is a really critical set of feedback loops to make sure that these shifts are going to be in place for the long term.

More generally, we’ve been really thrilled with progress that we’ve been able to make both when it comes to updating some of our tools and frameworks. I mentioned the Section 5 policy statement. The unfair methods of competition authority that the FTC has is existentially fundamental to why the institution was created. For many years it had been somewhat dormant, and we’ve been activating that bringing cases based on that authority. Last year we proposed a rule to eliminate non-compete clauses across the vast majority of employment contracts based on that authority.

We were also really thrilled in partnership with the DOJ to put out revised merger guidelines, which reflects a lot of the first principles that we’ve been talking about. Fidelity to the underlying law, both the law that congress wrote as well as the precedent on the books. Fidelity to the realities of how competition is functioning today.

And third, a lot of engagement with and feedback from the public. Over the course of that process, we got thousands of comments from the public, which is just worlds of difference from prior iterations. Now that those have been finalized, we’re continuing to bring some of our cases in a way that fully reflects the updates in those guidelines, be it a more sophisticated set of understandings about how competition and digital platforms work, a more sophisticated set of understandings around how competition and labor markets work, a recognition of evolutions in certain types of business strategies, the ways that you can have serial acquisitions, these rollup plays in which you may have a series of deals, each one of which may seem benign and fly under the radar but, in the aggregate, which can result in consolidation and roll up of an entire market.

We’ve also been really pleased with a whole set of important lawsuits that we’ve been able to file, be it a lawsuit against two pesticide giants that were engaging in pay-to-block schemes that ended up inflating the price that farmers were paying to the tune of billions of dollars. A lawsuit against Amazon, which plays an important gatekeeper role in the economy but has now been abusing its monopoly power in ways that result in both shoppers paying more and sellers paying more. A whole set of merger lawsuits as well. We also last year brought a lawsuit against a private equity company for architecting one of these rollup schemes in Texas. They went out and bought up all the large anesthesiology providers in Texas and then hiked up prices. Importantly in that case we named not just the practice that did the rollup, but also the private equity funds because we think, across our work, it’s important to look upstream and make sure we’re holding the actual decision makers to account.

Guy Rolnik

Thank you. Jonathan?

Jonathan Kanter

I think it’s important to not focus on any one specific matter, and I’ll explain why. Because I think the body of work, and it’s really across both agencies, speaks more to the progress I believe that we’re making. I recently undertook an interesting exercise with my team where we took—without any commentary, just a list on one page—all the things that we’ve done over the last two and a half or so years. When you look at that in its totality, it’s a very exciting picture. It makes me tired! I realize we’ve been working really hard.

I’ll give you examples.

We talk about the cases that we’ve litigated and won, including not one but two airline mergers. The first time ever, we litigated to block and successfully blocked the airline mergers. Blocking a book publisher merger based on a monopsony theory, harm to laborers. We have seen approximately 20 acquisitions abandoned in the face of either a lawsuit or an in-depth investigation.

I can’t overstate how important that is, the importance of deterrence and the importance of, rather than having these transactions harm competition, having them go away completely. That is a very important measure of success.

We’ve filed groundbreaking civil litigations around monopolization cases, including two very large tech companies, and we’re litigating those cases in court. We have a case in the agriculture space where we’re talking about protein prices. We have seen, the first time ever, a systematic enforcement of Section 8 of the Clayton Act and interlocking directorates, and as a result we’ve had approximately 20 board resignations across a wide range of companies as result of our Section 8 enforcement. We have brought groundbreaking criminal cases including, for the first time in over 45 years, a conviction for criminal monopolization. Then we got another one recently. We’re litigating a criminal monopolization case this fall. We also saw, for the first time ever, a divesture breakup of a company in order to resolve a criminal antitrust violation that resulted in the divesture of pharmaceutical assets that were being fixed to a high price for consumers, and we required that company to give free pharmaceuticals to people in need.  

These are real results. We have a whole range of convictions and plea agreements, including litigated trial victories.

On the policy side, as Lina mentioned, we’ve been hard at work working with our colleagues at the FTC to probably undertake the most extensive overhaul of the merger guidelines ever. One that focuses on fidelity to the law, focuses on market realities. We incorporate a lot of the traditional approaches to merger review. We have unilateral effects and coordinated effects, but we also talk about platform markets. We talk about entrenchment of market power. We talk about labor competition. We talk about serial acquisitions and rollups. These are real issues that we are confronting on a regular basis.

We are bringing labor cases. We brought a successful resolution to a case that involved poultry processing plant workers, including $80 million in direct restitution back to those workers in a labor theory. We brought a labor case involving esports and got relief for esports competitors. We are seeing a very vast and extensive body of work.

We’ve also—and this is really important—worked with the FTC and our counterparts throughout government to initiate a whole of government approach that the President has championed. That whole of government approach has us working with the US Department of Agriculture. For the first time to our knowledge ever, the United States Department of Justice brought not one but two packers and stockyards at cases. We’ve worked alongside our colleagues at HHS and DOT and agencies across the country to focus on competition as a core value of our economic policy. I’m really proud of that work.

We’ve also been a leader on the international stage through our work at the OECD and the ICN.
Antitrust was invented in the United States. As the inventors of antitrust, we have something to say about its future, too. We are always with a mind toward optimizing for US law and US citizens, making sure that we are taking up our role as leaders on the international stage.

Guy Rolnik

Let’s for a brief time go back to a little bit, some history. David Dayan, who has participated in many of the conferences here since we started, wrote right after the first conference that he thinks that a new movement is born. Later he called it the New Brandeis school. And of course I know both of you are admirers and students of Brandeis.

Jonathan Kanter

Is it the New Brandeis or the New Chicago school? [laughter]

Guy Rolnik

We’ll talk about that later. So, do you feel that…

I’m trying to get you in hot water, you’re trying to get me in hot water. Okay

Jonathan Kanter

Turnabout is fair play. [laughter]

Guy Rolnik

So, do you feel that you are applying Brandeis’s ideas when you are enforcing the Sherman Act and the the Clayton Act?

Lina?

Lina Khan

We’re law enforcers that are focused on being entirely faithful to the laws as Congress has written them.

There’s a rich history of precedent on the books, and we are close students of all of that precedent. There had been moments, especially starting in the 1980s, where we dramatically veered off course and enforcers decided that there were provisions or statutes or precedent on the books that made them uncomfortable, that were no longer in fashion. So they decided to really stop hewing and faithfully enforcing those provisions or the precedent on the book. As an enforcer, that gives me a lot of discomfort. We are bound by the laws on the books, by the task that Congress has given us. That’s why we’ve been going back to those first principles.

I do think that, across the board, one commitment of Brandeis was a devotion to understanding how things work in the real world. You read some of his opinions and they’re such deep expositions of the mechanics of how a particular contract was functioning. I got my start in all of this as a business reporter. The mechanics and how stuff is really working in the real world is absolutely critical to make sure that we’re not perpetuating certain blind spots, that we’re not just relying on stale theories or outdated assumptions, but we’re actually doing our work and enforcing the law in a way that maps onto the reality of how businesses are operating. How competition is actually functioning. So I would say Brandeis’s commitment to reality is a core principle throughout all of our work.

Guy Rolnik

Jonathan?

Jonathan Kanter

I agree. [laughter]

Guy Rolnik [23:45]

Okay. So, let me move to one of the main subjects of tonight’s discussion.

In January of this year, the participants at the World Economic Forum, they had a yearly survey about global risks. For the first time since this survey has been running, the number one risk that executives, politicians, academics, and experts all over the world said the most dangerous and risky phenomena in our world today is not climate change (that took the first spot for years) but misinformation.

What do you think?

Jonathan Kanter

It’s a real problem. The fact of the matter is, you know, I’m an antitrust enforcer so I’ll try to stay in my lane and focus on antitrust enforcement. For all those who think about the importance of output as the goal of antitrust, I would ask you the question, “What do you think about increased output that leads to the spread of disinformation and misinformation, and even monetization of ads alongside that misinformation and disinformation?”

I think we have to take a step back and say, okay, these are economic realities that we confront. Markets function differently than they did 30 years ago. We need to adjust our thinking to keep pace.

Guy Rolnik

Lina?

Lina Khan

Traditionally, we’ve had a news ecosystem and environment that relied on dispersion and decentralization.

Situations where you instead have gatekeepers that are consolidating control over who gets heard, who gets to speak, magnifies some of the risk that certain types of information are going to win the day without real competition.

For the FTC, we’re really focused on commercial speech. We look at fraud and the way that some of these AI tools are enabling the turbocharging of fraud, enabling much more sophisticated scams that can be hyper-targeted to people based on their own personal social media profile, based on their own communities. Those are some of the risks that we’re focused on in terms of the turbocharging of fraud.

Guy Rolnik

Okay, so let me try to be more specific.

We are a decade (maybe more) into a world where much of the information and discourse is controlled by the algorithms of five tech firms. And yet we are still treating those companies most of the time as just another case of very large private companies. Maybe we should think differently about them because misinformation, disinformation, are changing the very fabric of our democratic institutions.

Jonathan Kanter

I think that’s self-evident. The fact of the matter is, it does change our democratic institutions. Building on what Lina said, we care about antitrust because it helps us have more choice, and it helps us get lower-priced products and services, and it protects innovation. But it also goes to our democracy.

A competitive economy and corporate actors can have a significant effect on what we see and what we think and how we act. That goes to the heart of our democratic ideals. It goes to the heart of our freedom. The flow of information and the accuracy of information is key to the political discourse. It’s the beating heart of our um our democratic process.

We have to make sure that we are fighting to preserve that. To the extent that companies who have outsized influence because of concentrated power, and they’re maintaining that influence and that power through anti-competitive means, then it’s all the more important that we act. Because it’s not just dollars and cents that’s at stake. It’s our very liberty. It’s our very democracy and our very freedom.

Guy Rolnik

You said you want to stay in your lane, so let’s talk about the antitrust toolbox.

Big Tech and democracy. Which tools are available at your disposal at the FTC and at the DOJ to protect democracy?

Lina Khan

To the extent that the news and media ecosystem and the free flow of information deeply affect democracy, some of the cases especially that the DOJ has filed are absolutely critical to that.

We’ve seen over the years how the consolidation we’ve seen in digital ad tools—the way that we now have a handful of gatekeepers that often end up controlling dissemination of news and information—bears directly on democratic values. The lawsuits that we’ve seen filed that are addressing some of those problems are key.

Stepping back though, there’s a deeper connection here between some of the threats that come from consolidated power—including in digital markets—and our democracy. One of those major threats is the way that consolidation allows the exercise of arbitrary power, and the way that the exercise of arbitrary power can also enable coercion. It can enable gatekeepers to dictate terms, to bully people, to call all the shots. And for most people, their experience with power in their day-to-day lives is not with their elective representative. They experience power in their commercial transactions, in their economic transactions. If you’re a small business whose livelihood depends on whether one of these gatekeepers, you know, what they think of you on any given day, and if in order to succeed you have to bow down to whatever dictates of that gatekeeper, that’s going to create a very different experience of liberty. If you feel coerced in your day-to-day life, it’s difficult to really feel free.

That’s how, on a more fundamental level, I see the work that the FTC does as really contributing to real liberty and real democracy. To make sure that we have an economy and markets where people can actually exercise choice. Where people can actually exercise autonomy and self-determination, rather than just be coerced and bullied and pushed around.

Jonathan Kanter

Let me add on that because I think it’s such an important point and it’s something that it’s easy to lose sight of.

The one theme that I think you’re probably sensing throughout this discussion, and Lina hit on it so eloquently earlier, is the impact on real people. I’m a lawyer, and I have a client. My client is the public. But we can’t understand the needs of our client unless we engage.

I want to give you a couple of examples. I think it illustrates how it really goes to our fundamental freedoms.

I recently had the opportunity to sit around the table with family farmers and rural community and talk to people who have had farms in their lives, in their families, for decades. Generations. Around the table, we had the local bookstore owner and the local pharmacist and a local hospital worker. What you realize is that the destruction of the family farm not only destroys that business, but it destroys the rural community. This is affecting the livelihoods, the lives, of real people. And they get it. The words they used to describe it are profound and they’re sophisticated, but they’re real. Similarly, just earlier this week I had a conversation with emergency room physicians, talking about how concentration of power has impacted their ability to save lives in the ER, and how concerned they are about the ability to care for their patients at the time when patients and families need them most. That’s real.

They’re not talking about it in this abstract way. They’re saying that concentration of power, abuse of monopoly position, acquisitions have made it worse. This goes to the foundation of our very freedom in our very way of life. If we don’t protect that, then we are not adequately protecting our clients as lawyers.

Guy Rolnik

Both of you were clearly able to change the enforcement of antitrust in the last two or three years. Congress here in the US had very limited successes on this front. Perhaps Europe is leading now again with the DSA, while here Congress basically buried the bills that were supposed to rein in the power of Big Tech.

What do you think is missing to have real partisan support for those antitrust bills?

Lina Khan

I’ll say as a general matter, I’ve been really struck time and time again by the degree of bipartisan concern about monopolization in our economy.

I’ve had the chance to testify before Congress a few times, and each time I’m just struck by the way that folks across the aisle will share how concerned they are about how, for example, their local communities are being hollowed out. How local farmers, how local grocers can’t get a fair shake. Not because customers don’t love their services, but because there are gatekeepers or firms with outsized power that are messing them around, that are discriminating against them.

We hear a lot of concern about outsize power in digital markets, but it’s also across healthcare, where we see bipartisan investigations right now into the role of private equity in healthcare. We see bipartison investigations into the role of pharmacy benefit managers. Bipartisan investigations into consolidation in agriculture. It’s to a striking degree, given today’s politics. We see just an enormous amount of bipartisan concern.

Both of our agencies have filed lawsuits with a bipartisan coalition of state AGs. The essential ingredients are there, and we’re all waiting to see um what comes out legislatively of Congress.

Jonathan Kanter

We have to respect the role of Congress to write the law. We’re law enforcers. My experience has been the same as Lina’s, which is that the concerns around competition and concentration of power transcend political boundaries. There are folks across the entire political continuum who express not just interest but desire for more enforcement, who think that these are issues that go to the heart of our very existence as a nation, and that we need to be vigilant and enforce any antitrust laws.

Guy Rolnik

The reason I raise the question, bring into the fold the question of Congress’s action is that in the last two or three years, whether you liked it or not, both of you have had to become experts on the questions of platforms and technology.

My question is, do you feel that bringing more competition to Big Tech—and you’re trying to do it with various lawsuits—would actually solve the inherent motive of those players to design algorithms that are more addictive and therefore more toxic, divisive, and polarizing. Because this is basically the context of the world in which we live today.

So, is competition really the solution? Or do we need Congress to act?

Lina Khan

We’re competition enforcers, so those are the tools that we have. But historically, there’s no question that competition and antitrust have just been one set of tools in a broader toolbox. That includes things like public utility tools. That includes things like public options.

Historically there’s been a first order question about whether competition is really going to be enough to discipline market power or monopoly power. And there’s a long tradition of—in certain sectors, be it in railroads or telecom—recognizing that these are network industries and that there are going to be a special set of tools and principles that we need to apply, be it things like common carriage and non-discrimination, be it things like mandated interoperability, be it things like structural separations or quarantines. Because sometimes your networks play such a critical role that you can’t allow their incentives to be corrupted through certain forms of vertical integration. That’s a set of tools that goes back over a century.

I think what happened was, as we saw a lot of deregulation starting in the 1970s and onward, a lot of that toolkit was somewhat forgotten. Even if you just look at law school curricula, through the 1970s and even into the 1980s, there was a course called regulated industries that actually taught all of these different policy tools. And people like Stephen Breyer cut their teeth on learning about that toolkit alongside competition and antitrust. For the last couple of decades, that’s not even been a law school class that’s taught anymore.

Audience member 1

Columbia! [laughter]

Lina Khan

For the vast overwhelming majority of law students, they’ve not even had an opportunity to learn about that toolkit in an integrated way. You might kind of encounter it in banking law or in communications law, but the idea that there is a coherent and integrated set of tools that we’ve historically applied in markets that are networked that have certain types of network features, there was kind of a great forgetting that happened.

Now we’re at the beginning of rehabilitating that. Some of that’s happening in classrooms and textbooks. Some of that’s happening quite organically. The Ohio attorney general has brought a case invoking common carrier and how it applies to some of these modern-day tech platforms. We’re still at a bit of a nascent stage, but even some of the bills that Congress has introduced reflect some of these principles.

We’re limited in some ways by the tools that we have. But one thing that’s been really important to me at the FTC is not to be kind of arrogant with regards to the role of competition. There have been periods in the past where, you know, enforcers have filed  amicus briefs saying that gig drivers trying to organize are violating antitrust laws, even though it’s pretty clear that Congress sought to exempt labor and labor organizing from antitrust prosecution.

I’m rigorously focused on enforcing the laws that Congress has given us, but making sure that we’re not exaggerating the role of the tools we have.

Guy Rolnik

Can we envision a situation where—as part of a remedy or a settlement or something like that in one of the Big Tech lawsuits and trials—we’re going to see you intervening in the algorithms of Big Tech? Banning some kind of behavior?

Jonathan Kanter

I can’t talk about ongoing litigation, but I think it’s important that if we’re going to have remedies in antitrust cases that those remedies are effective. That they’re forward-looking and they focus on promoting and restoring healthy competition.

Both of our agencies are litigating cases that have major significance involving companies with significant reach and influence. Both agencies are pursuing those cases in order to obtain meaningful relief. Relief that does not allow the same anti-competitive practices and gatekeeping power that was used to violate the law to reemerge.

We have to look ahead. To the extent that data algorithms and other technology tools factor into how those products are made, built, and delivered, it’s certainly relevant to the conversation. AI is an example where we are looking down the road, and we are seeing the dawn of new technological innovations, some of which are really exciting. But a lot of those innovations are built on data sets that were consolidated in the current environment. And I think we have to be mindful of that.

Lina Khan

One of the core principles that we apply to our work is, not just understanding the business practices, but also understanding the business incentives that are driving those practices.

In digital markets in particular, we’ve been very focused on understanding the ways that, for example, behavioral ad-based business models can drive certain incentives when it comes to trying to maximize engagement on the platform, incentivizing surveillance of people and endless data collection. Understanding those incentives is key when you’re trying to design effective remedies.

For example, in our consumer protection and privacy work, one remedy that’s been central is, when there is data that has been unlawfully collected, a core part of the remedy has to be not just deletion of the data but also deletion of any algorithms or models that were trained on that unlawfully gotten data. Because if you’re just focused on things like fines, you can see how illegally collecting data could just be a cost of doing business because it could end up being commercially valuable enough to do so unless you’re actually being forced to effectively get rid of the unlawfully gained commercial value.

Guy Rolnik

And you feel that the FTC has authority on looking only at the advertising side of the platforms? Because the same data and the same questions about privacy and how we are targeted is also used in the news feed, in the organic part of the platforms. One can argue that those are more much powerful in influencing public discourse than the advertising part.

Jonathan Kanter

Pass.

Guy Rolnik

Okay. All right.

Lina, you want to pass too?

Lina Khan

I think so.

Guy Rolnik

All right, so I want to continue.

Jonathan, you introduced into the conversation AI.

Are we looking actually into a world where Meta, Google, Microsoft, and Amazon (perhaps also Apple) take over AI? Is this dangerous? Is this inevitable? And what can you do?

Jonathan Kanter

How much time do you have?

Guy Rolnik

Two or three hours. You have a flight. I know when your flight is.

Jonathan Kanter

Yeah. So, I’ll start at a pretty high altitude here just because this is a, you know, meaty subject.

First, it’s important not to talk about AI as if it’s just this one single technology. There are lots of different kinds of machine learning and algorithmic-based technologies, and they serve different purposes and they involve different data sets. It’s going to become, and is becoming, common across so many different industries and affecting so many different people. We need to be thoughtful about how we take our mission, which is to enforce the antitrust laws and apply it in a meaningful impactful way as all of these different technologies emerge.

We also have to understand what makes these technologies run. What are the characteristics that can lead to anti-competitive bottlenecks and gatekeepers and power? Data is one of the most important elements or ingredients to these machine learning and AI-like tools. To the extent that, as I mentioned before, data has been aggregated or resides in the hands of a small few, then that may become the high water mark for competition because the barriers to entry and scale and access to these key ingredients is limited to a small number of players. There needs to be a significant degree of urgency and attentiveness as we think about the implications for these new technologies. It starts with making sure we understand how they work and making sure that we are addressing problems as quickly and as definitively as we can.

Guy Rolnik

Lina, do you want to chime in on the AI question?

Lina Khan

I would echo a lot of that.

We’re very focused on looking across the stack, from the chips to the cloud to the foundation model to the applications, understanding the economic properties of each one. Understanding if there are already certain types of bottlenecks or choke points emerging and, if so, why.

Some of these bottlenecks may be occurring for more organic reasons. Some of them may be occurring for reasons that implicate the antitrust laws. Even if you have bottlenecks that were not unlawfully obtained, are you exploiting those bottlenecks in ways that could extend or maintain your monopolies? These are some of the questions that we’re focused on.

We are scrutinizing some of the investments and partnerships that we’ve seen underway, in part to try to ensure they’re not a way to sidestep merger review. A lot of times with these technological inflection points, you see some of the tactics change slightly. But at the end of the day, there is a poor monopoly playbook and we just need to make sure that we’re fully understanding what that iteration will look like in the context of this new technology.

Guy Rolnik

Lina, recently I read that at another event, at Remedy Fest, you used Ronald Reagan’s famous quote about the most terrifying words: I’m from the government, and I’m here to help. And you said the most terrifying words in the tech world are: I’m from the app store developer support team, and your application has been rejected.

Do you think that perhaps (this goes to our conversation) that today the most terrifying words are: I’m from Big Tech, and I’m here to democratize your country? [laughter]

Lina Khan

What my comment was intended to surface was the recognition that concentration of private power can undermine people’s liberty in all sorts of fundamental ways, much in the same way that outsized and unchecked government power can. That’s an understanding that goes all the way back to the foundation of our antimonopoly laws and tradition, and it’s one that folks across the country, across parties, are recognizing.

Guy Rolnik

I have a question for both of you.

Clearly you have made tremendous progress when it comes to enforcement of antitrust and Big Tech. But when both of you assumed office two and a half years ago, the combined market cap of the large Big Tech firms was $7 trillion. Today it’s more than $10 trillion.

And that has to do with the question, you are moving fast, but is it fast enough? When you look at the S&P in the last 12 months, we see that much of the return has to do with those five large companies. Do you think that the market is signaling something to us?

The fact that there are now $10 trillion companies, is it more innovation and real growth? Or is it more about their obtaining more market power?

Jonathan Kanter

We have to start with, we follow the facts and the law. At the end of the day, we’re law enforcement agencies. We look at conduct. We determine if that conduct violates the law. If it does, and we believe we have the proper basis to bring a case, we bring it.

I think this discussion has helped animate some important principles.

There’s one question (these often get conflated and it can be confusing) which is, why do we have antitrust laws? Why do we care about competition? Why do we care about competition policy? Why do we want to enforce the law? Why do we care about or think that there’s a risk of under-enforcement? That goes to the earlier part of our conversation because it results in risks. Those risks might be economic risks. They might be risks to our very freedom. I think that is an important conversation to have.

There’s a separate conversation which is, is somebody engaging in conduct or practices that violates the law, and is it actionable?

Both are important to have, and they’re related. But they’re also two distinct questions.

Lina Khan

The other thing I’d note is it’s important to try to recall that we can’t fully imagine what the counterfactual would have been in a more permissive environment. And to underscore a point Jonathan made earlier, deterrence here is key. As law enforcers, deterrence is a key goal.

We see quite routinely, you know, prominent bankers or deal lawyers saying, very openly, that as recently as several years ago when thinking about deal making, antitrust risk was considered at the very end of the process. If at all. And now antitrust risk is front and center, from day one.

From a law enforcement perspective, that’s just a huge win.

Jonathan Kanter

I want to point something out, just an observation as Lina was talking. I think it also underscores the importance of a whole of government approach, and the importance of alignment between our two agencies.

The effect of that deterrence and the effect of enforcement is exponentially greater when it is done with a unified vision of policy. A unified vision of mission. I think the presence of a strong FTC makes the DOJ antitrust division more effective. And I’m hopeful that the presence of an effective, strong DOJ antitrust division makes the FTC more effective. I think together is so much more meaningful and impactful than each of us independently.

Guy Rolnik

Before we move to some Q&As from the audience, let’s briefly talk about inflation and cost of living. Cost of living is of course skyrocketing. Almost everything is more expensive today. What’s your position, what’s your stand what’s your perspective on this debate?

Is inflation like a monetary phenomenon? Or is it due to the market power of so many monopolies, oligopolies, and so on?

Lina Khan

I think it’s a really important question. It’s actually been really striking to me to see how just the asking of this question sometimes provokes a very emotional response.

We have to follow the facts and look at the data. We’ve seen over the last few years that, you know, prices shot up during the pandemic in part because of the supply chain disruptions. Even as some of those supply chain disruptions have eased, some of those prices have stayed high. It’s important to try to interrogate why that is. From a competition perspective, we can imagine that an environment of inflation could give cover to companies to either maintain higher prices or potentially collude. We’ve also seen how consolidated supply chains can heighten the risk of those types of price shocks because a single crash or a single disaster can have such outsize ramifications. The FTC also, a couple of years ago, initiated a study into supply chain disruptions within grocery. We recently published some of our findings, one of which was that, during the pandemic, larger retailers were able to use their clout and their power to demand preferential supply from suppliers in a way that disadvantaged independent grocers and smaller grocers. So, even there we saw how muscle and power gave certain entities a leg up.

I’ve been very interested in the scholarship and the research that has been taking a more rigorous approach to this question in a more open-minded, curious way. As policy makers, we really owe it to the public to make sure we’re actually following the facts, rather than falling back on some of the kind of derogatory statements that we’ve seen about even asking the question. I think getting beyond emotion and thinking about this in a more reasoned way is going to be key.

Jonathan Kanter

It makes me scratch my head sometimes because one of the debates—including at this conference going back to the original incarnation and since—has been one side saying that antitrust is about a whole wide set of values, including price but not limited to price; and then another side saying we should just care about output and price.

Okay. So both sides should agree that, if there’s a monopoly or concentration of power, it can result in a higher price. How it intersects with inflation? I’ll leave that to others to untangle. But in an inflationary environment where people are concerned about higher prices, absolutely we should be concerned about competition. That’s probably the one thing we should all agree on.

Guy Rolnik

So you’re blaming the Chicago school for the inflation?

Jonathan Kanter

That’s what you said just now? The new Chicago School the Old Chicago School?

Guy Rolnik

Let’s take a questions from the audience.

Audience member 2

Chairwoman Khan, I’m one of your many right-of-center admirers. And I’m someone who talks about corporate private power but also deals with it as the proprietor of a small magazine.

It seemed to me in 2020, around the election and the Hunter Biden laptops story and I was at the New York Post at the time, there was a great deal of bipartisan interest (or at least on, especially on the right) for various forms of reform, of reining in Big Tech power. Since then, the energy has died down. I think many on the right have made the mistake to think, “Well, one of our own has Twitter, so we’re good on that,” and have stopped. But there are elements of corporate power or market power involved, kind of translating into condition power, in the sense that Big Tech can shape how we think using its market power. So for example, the fact that a lot of the algorithms just in general sort of derogate links, anything that has links, but especially if it’s a link to a news story. That’s very bad for me, and for everyone else here who wants to promote a story. How is that not a competition issue? And it’s not just Zuckerberg, it’s not just Elon. All of them, it’s now kind of well-known that they derogate links, which it adds to the fact that they’re often on both sides of digital ad markets, etc., etc. It’s one more way that they act anti-competitively. Is that something FTC can address? Save my business?

Lina Khan

We always look at the specific facts and are really interested in understanding what are the implications of some of these decisions. I think, historically, we’ve all seen how concentrating that decision-making, especially in areas that affect news, the dissemination of information, is really critical. We take that seriously.

Audience member 3

How, if at all, are your agencies preparing for the possibility of the Supreme Court moving away from the Chevron Doctrine?

Lina Khan

We’re following all the developments in the courts closely, including the Loper case and the implications there. The FTC does do rule making, both on the consumer protection side as well on the competition side. The competition side, we do the rule making pursuant to the Administrative Procedure Act. There in particular, any different outcome there would affect us. So we’ll look closely at it and follow the court.

Guy Rolnik

Filippo?

Audience member 4 (Filippo Lancieri)

I want to ask a question about litigation strategy. Because you have different powers in terms of evading a little bit a judiciary that’s still antagonistic to antitrust enforcement to a certain degree. You can bring jury trials, or you can use administrative law judges.

How do you think about the allocation of cases between a traditional judge-decided case versus an administrative law judge or a jury trial? What was the strategy behind one or another case? I’d love to hear any thoughts you have on that.

Jonathan Kanter

We need to think of ourselves as litigators and law enforcers. So, when we bring a case we, we bring to win. We bring because we believe we’re right on the facts and the law.

In litigation, there’s a lot of strategy and strategizing  but at the end of the day it’s about telling a story. It’s convincing a fact finder. It’s convincing a judge or a jury. Explaining why something is important, explaining why conduct is wrong, and explaining why somebody should care all go to the very heart of any litigation, regardless of where you bring it.

Audience member 4 (Filippo Lancieri)

But there are certain types of conduct that are more amendable to juries than others, that would make you want to bring, like, a tech jury case or not? How do you see this? I wonder if it’s like, “This is easy to explain,” versus, “This is so complicated.”

Jonathan Kanter

I’ve thought a lot about this issue, as you might imagine.

There’s a long history of bringing complicated issues, whether it’s securities fraud or commodities manipulation, and a wide range of industries and disciplines to juries. Part of the exercise when you bring a case before a jury is, you have to make it digestible and you have to explain the difference between right and wrong. That actually can be a very valuable exercise because it helps you distill the essence of your case down to its core elements, and it helps force you to explain something in a way that non-experts can understand.

Going back to the theme we were discussing earlier, part of our approach to antitrust is to make it more about people. It’s the people’s law, and so antitrust was never meant to be too complex for a jury. So, in my view, we should always be able to make a case digestible to a jury. And that is on us as an agency to make the material accessible.

Antitrust was never supposed to have expert courts. It was supposed to have the antitrust laws, the Sherman Act, The Clayton Act. Cases were supposed to be brought, at least by the Department of Justice, before general courts and juries. So if it’s too complicated for a judge or a jury to understand then, perhaps we’re making it too complicated.

Guy Rolnik

Tim?

Audience member 5 (Tim Wu)

Thank you. At an opening panel today, Tommaso (who is still here I think) produced a finding where he found that competition enforcement increased productivity and economic growth, if I’m not mistaken, but that there’s just not enough of it.

He also pointed out later that the resources given to the antitrust agencies and FTC are a fraction (and FTC also being consumer protection) are a fraction of other economic actors, say Treasury or the Federal Reserve or something like.

Another, third point I’ll say, Thurman Arnold back in the day, he was bringing, I don’t know, hundreds of cases. Much higher volume. And people say you bring high volume, Thurman Arnold, the volume is extraordinary.

So I was wondering, in an ideal world, what full level of resources would it take to have the kind of antitrust enforcement that you think would really maximize the productivity possibilities of a strong competition policy? I don’t even know, but it would obviously be more than that. But is there some limit? Or would you agree with me that we’re grossly underfunding the antitrust enforcement side of our government?

Lina Khan

I would overwhelmingly agree, and I don’t even know that there’s a natural ceiling that comes to mind there. [laughter]

Jonathan Kanter

Yeah. I concur.

I will point out that, sitting here today, we still have far fewer people at the antitrust division than we had in 1979. Let that sink in. And that’s against the backdrop of a much more complicated and a much more challenging economy, and a litigation environment where we have to consume massive amounts of data and documents in order to bring even the most basic of cases. All of that is to say, thank you for the question.

Guy Rolnik

I think Tim is arranging a crowdfunding for you for the two agencies.

Jonathan Kanter

GoFundMe.

Guy Rolnik

I will just end with one note. Perhaps some of you have seen Lina on John Stewart two weeks ago. During that interview, Stewart revealed for the first time that actually, when he worked for Apple, he wanted to have Lina on the show and the Apple people told him, “No, don’t bring Lina.”

So I think that, you know, it’s Apple, and then it’s going to be not on YouTube, and later not on Meta, and pretty soon they’re going to kick you out from all the platforms. So Luigi and I want to commit that, on this platform, you will always be welcomed and invited. [applause]

Articles represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.

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