SOTN2022 11 What Does the New Biden Antitrust Team Mean for Big Tech?

6:13PM Mar 3, 2022

Speakers:

Gary Ireland

Keywords:

ftc

antitrust

consumers

competition

executive order

companies

rulemaking

bills

market

question

point

compete

competitors

define

disruption

antitrust laws

innovation

legislation

facebook

privacy

So actually, we're going to start talking a little bit about what's been going on in Congress before moving on to some of the other aspects of the administration. So Charlotte, you've testified before a couple congressional committees about why you think we need to update the antitrust laws. Why do you think that's needed? And what do you think of some of the bills under consideration right now?

Thank you, Leah. And

I'm so excited to be here talking about these important issues today. So we are facing a serious problem of dominant digital platforms that are too powerful in this country. Antitrust, I think, has been trying to address this problem. But we have seen that it is not working, it has not been sufficient. And there's a variety of particular limitations that I think, have been holding antitrust back, I don't want to say that it's just about politics, I think that there really have been limitations in the precedents that we have seen that that make it incredibly difficult to use today's antitrust laws. We are trying. So there is currently an antitrust case against Google, there is currently an antitrust case against Facebook, from DOJ, and FTC. And I think that those are strong cases. But even if those cases are wildly successful, we are still going to need legislation, we need more. So there has been a package of bills starting on the House side that has had great success made it through the judiciary committee markup that would do a full package of important tools. What has made the most progress so far on the Senate side is the non discrimination requirement. So I think this could be really powerful in addressing the special situation that we have here, we're dominant digital platforms, also own companies that are competing on the platform. And they control the key avenue of competition against themselves, which is their own platforms. So this is a tricky situation that we have been trying to get antitrust to take care of for a long time. But it's very clear now that new laws will be needed.

Jennifer, let's bring you in, because I know net choice has been very actively opposed to a lot of this legislation,

you know, I have a very different read of what these bills are and what they would do then then Charlotte would, in part, because I do think the consumer welfare standard has been a wonderful tool and is a very objective tool when it comes to antitrust. And when it comes to the ability to make sure that we are focused on consumers, and that we're continuing to see a dynamic marketplace evolve, when it comes to what some of these proposals would do. I'm going to start with the self preferencing proposal that was mentioned, I think we really need to ask that question of not only what would this do to current large tech companies. But what does this actually mean for the consumer? What does this actually mean for some of the smaller players that have benefited from this tech ecosystem, as well as what a dramatic change, this would be for antitrust law, and what that might mean beyond the tech sector. So with that in mind, I kind of have three key points with what I see that that proposal would do. The first of which would be a loss of services that many consumers enjoy, and that they are not being harmed by. This means everything from when you go on Google, if you had decided to go out to lunch, if you are here at say the net in person and typed in restaurants near me, and at the top popped up a map with the hours and the reviews all conveniently there, that information could still be there somewhere in the Google search. But it probably wouldn't be that top result that has really made it more efficient for a lot of us. And that was a response to what consumers want it. It means that the prime logo when you go to, when you go to shop on Amazon, might not be able to be there so that you know what products you can and can't get that quickly. Secondly, there's a lot of questions about what this would do for privacy and security. what this might mean in terms of some of the interoperability requirements, what that would mean for consumers, as well as what that would mean for businesses on the platform. Then finally, I think we have to address the fact that particularly when we're talking about the Senate Bill, there's not a lot to keep it only in the tech sector, these have largely been portrayed as anti competitive as Bill's responding to anti big tech, two concerns about the tech sector. But there's a lot the way they're structured could easily reach large retailers like WalMart, or large financial industries. And we're increasingly hearing from some of the proponents of antitrust reform on the left, that they want to expand this well beyond the tech sector. So I think that's something else we have to consider. A trust is a very powerful tool when it comes to intervening in a in the economy and in a sector of the business. And we want to make sure it's being used with an objective purpose and not for political motivations.

Thank you as Summit your organization is very focused on consumers. I wondered if you could talk a little bit about why you guys support the bills. Thanks.

Thanks. Well, thanks for having us. Yes. So we are a consumer focused organization, we look at this from the viewpoint of consumers. And we think these bills will be good for consumers, I have to disagree with a few points there. First, these bills focus on the tech sector. You know, I think the bills have done a very good job of actually identifying where there are problems in the market, and prohibiting of this this exclusionary conduct in those markets. So, you know, it'll be the Google, Facebook, Microsoft, Apple, Amazon, not going to be covered. But I would go further and say that even amongst these companies, not everything they do is going to be covered. Now, we like, you know, the products and services these companies produce, I want apple to innovate and produce new services. And if Apple wants to enter, you know, search services, online services, it can do so under this bill, under no restrictions on Apple doing that. So it's, I think these worlds and offices actually said, what these mills are supposed to say that first is the open app markets Act, and the American online choice Innovation Act. The latter is more broad reaching bill, which imposes non discriminatory or non discriminatory requirements on a bunch of companies. And the App Store will closely focuses on Apple and Google's monopoly on the App Store. So it's right. So going back. So you know, these companies will continue to have a bunch of continued to innovate. So the belts actually do a good job of balancing, on the one hand, introducing more competition into the system, and leaving enough space for folks to innovate, including these big companies, loss of services, etc. I don't think those arguments I buy at all, what these bills do is make sure that these companies have to do business somewhat differently. So let me let me give an example. You know, prime, what's the problem with prime is not that good. Amazon has that service. But the issue is that Amazon preferences products that use the prime logo, what this will do as if I'm a seller of mousetraps, and I want to use DHL or some other fulfillment service to deliver myself to deliver my product, my production be treated the same way as another mousetrap that sold on with the with the prime badge. So that's all this bill does. So they will have to change. The way to do business is life's going to get more complicated for Google, Amazon, Facebook. But I think that's what we want. We want these companies to change the way they do business so that consumers have more choice. And there's more space for competitors. Can I make one more pointer is okay, so yeah, he may Yeah, and we're gonna rally. So the thing about consumer welfare standard, right, and because this is brought up very often. So as an economist, consumer welfare, as I define it, means a lot of things, it means not just price, but what we call quality adjusted price, which means, you know, privacy, security, the quality of the goods and service, everything. So what's happened, I think, and I think Charlie's probably better, others. But over the years, the way the courts have interpreted the consumer welfare standard, has meant that DEP sort of added consumer surplus and producer surplus together. So the oldest look at total welfare, whereas the original idea behind these laws was always to look at consumer surplus, and look at the consumer side of things. So that's why we need some of these new laws are solid sir. Thanks,

Arlene. Let's bring you in here.

Right. Thank thanks for having me. It's a great pleasure to be among these great panelists. I think I want to step back for a moment before answering those questions of what what should we change or what we do better? We should be we be doing? I think this is very important to say why there's this antitrust momentum, why we talk about antitrust and why it's becoming so popular those days. I think we are in a new Gilded Age, we're in a new revolution and as a gilded age, because the main proponents of the antitrust reforms, Tim who and Senator Klobuchar have in their books, subtitles of the new Gilded Age. And so we are in the new Gilded Age, this gilded age from the 21st century that refers to the 19th century where there was a massive amount of innovations and of course disruptions. And so back then the Gilded Age was not the lack of competition, but was the excess of contract too much competition, which basically means disruptive competition when the railroads were able to reach some farmers with lower price, and that disrupted some rural communities and local communities that suddenly have to low price. And so this is innovation and this is competition. And unfortunately, there's this all this narrative say like we live in The world those days where there's a lack of competition, I think that is incorrect in a sense that there's no lack of competition, there is a disruptive competition that itself displays competitors and displace rivals. And that's hurtful. That's true. But the process of competition is not to protect competitors, is to protect consumers. And the thing is, we really need to protect this competitive process where disruption can take place. I mean, this large company, think about digital advertising, digital advertising as completely disrupted print advertising or TV advertising or radio advertising. But this is still a disruptive process that we favor and we should embrace rather than having this attack clash. And so why do I speak about this gilded age? Because back then, at the end of the 19th century, this gilded age, spooled, what we call this antitrust populism, this view of populist antitrust, whereby big as bad, and the point was to protect smaller businesses against the scale economies in this cup economies have big businesses, which will lower prices and these low price we're not, we're too low for law firms that couldn't compete. And I think we exactly need some moments, when in the same moment to have a new populist view of antitrust, where's big companies are bad. And we see that with antitrust bills with the President Biden executive order on competition where the target is more market power and bigness in itself than the abuse. Why do I say this? Well, if we're talking about anti competitive conduct, then we should prosecute these anti competitive conduct, irrespective of the size of this companies. But what auditors bills and other reforms do is precisely to single out few companies, and to prohibit these companies to engage in some pro competitive and pro innovative conduct that should these smaller companies do that, then it would be just completely unacceptable. So I think what is most important is to have this antitrust perspective, which is more size neutral, so that we can really look at the anti competitive ness of these conduct and prosecute with a strong antitrust enforcement within the current laws, rather than trying to single out some companies that may be the disruptors of today's in this new Gilded Age. And we will prohibit these companies to engage in competitive behavior that will be pro consumers and pro innovation. So I think we need to be careful. And to put that into a historical perspective that we've been there before. In the beginning of the century, there was this chain store was where the target were supermarkets, which were charging too low prices. I think, if we start thinking about too low prices as the main point of antitrust prosecutions, then at the end of the day, smaller competitors may benefit those logout firms, but the consumers will be hurt. So we have to be extremely careful. And I will say that this current antitrust laws are very flexible. These current antitrust laws are the economic charter of American economy in sense that extremely flexible when they were drafted, they were drafted at the end of the 19th century. And he did they didn't providers to break up at&t Or to prosecute Microsoft, and I don't think Senator Sherman, when he dropped drafted these bills. He fought about Microsoft. So what I'm saying is that it is these rules are very flexible, and they think they are up to date for the 21st century.

Thank you. Um, you brought me a little bit where I wanted to go next, which was on to the Biden executive order on competition last summer, President Biden signed an executive order suggesting all of the government agencies sort of take a look at competition in their respective sectors. There were 74 individual things in there that he suggested to do but more broadly, think about ways to increase competition across the economy. Why don't we start with you, Summit? And then we'll we'll sort of go on if you have any thoughts sort of about the executive order and sort of this idea of focusing on some of the biggest players in the economy?

Sure, thanks. So, I have the executive order in front of me, right. And you're right, the focus increasingly, is on more than just prices, as it should be. Now, if you look at the executive order, it talks about, you know what competition means for workers for small businesses. As for entrepreneurs, and ultimately consumers, right, so what the executive order does very well, I think is puts a framework and tells us why competition is important for the whole economy. And it affects. And it's just more than pricing. So it is a value chain that's affected. So that's the first point right about about the executive order. The second thing that it does is adopt, it allows, and clearly states government policy on existing laws. So I agree with you. In many cases, the existing laws are flexible, and there's room to use those right, to make progress. And that's the direction largely in that the executive order pushes us in as to use those existing laws more effectively.

Yeah, to either view on winner or like, go ahead.

Sure. And then I'll take a minute to respond to some of our earliest points about the legislation if that's okay. So I think that the executive order is a promise on the part of the Biden administration, setting some goals. And I'm really looking forward to a lot of work that we're all going to have to do and that the administration is going to have to do to make this happen. But I think, sort of jumping off of Summit's point, I think he's you know, using the tools at his disposal. And so that's why it's focused on existing law. But I don't want to discount the role of Congress, we need to be using all of these tools. At the same time, the executive branch should be doing all the things that it can do, and the agencies should be doing all the things that they can do. But I think on its own, that is not going to be enough. And we need legislation, because these companies are very powerful. And this problem is large and complex. This point about disruption, I think, is really interesting. And I really see the goal of a lot of this advocacy is not a theory that prices are too low. Right now, I don't hear people saying that. It's that innovation isn't happening. And I think these bills are targeted at innovation. And a lot of the advocacy around improving the antitrust laws is about innovation and the innovation that we are not seeing today, because there were opportunities for disruption. And I think the example I often think of is when Facebook was allowed to purchase Instagram, there was a big sort of disruptive moment that consumers were really switching from desktop to mobile as their sort of primary way of accessing the Internet and social media. And Facebook was really having trouble with that transition. And that could have been an opportunity for a new competitor to unseat Facebook, from that very powerful position that they were in, and Facebook was allowed to then buy that competitor. Now, there's a variety of reasons that may have happened. But I think that's an indication of sort of the the potential for disruption that is being lost today. And it's difficult to envision what a more innovative Internet might look like, I think that we have sort of lost that imagination, because we have had the same products for a very long time now thinking about, you know, seeing a prime logo, so that you know, or seeing the restaurant show up on Google Maps. And it's hard for me as an advocate to say, you know, here's a million dollar idea that that the next big entrepreneur would come up with that we could be using right now, that would be a much better product. But those people who have those ideas have not been given the opportunity to do that. Because these gatekeepers that really benefit from the status quo are preventing that from happening.

If I can jump in here, and somewhat pick up on something Charlie just said, and then go back a little bit to the executive order more generally, innovation has often been our best competition policy, if we'd been having this conversation 20 years ago, we would be talking about how Yahoo won the search wars and what we're going to do about AOL, and whether MySpace is a natural monopoly. And you know, critics like to say that this time, it's different. But if you look at the new stories, we're seeing new competitors. So we're seeing tick tock emerge, we're seeing that Mehta has fallen below that threshold or close to the threshold at times. So this idea that, you know, we're not seeing innovation and disruption, I think that it's we're still seeing a lot of research and development investment, we're still seeing new competitors emerge, we may not always be able to predict what that new competitor is, just like you said, I don't always can't say and this is going to be the billion dollar idea. And that's what's great about having a marketplace that allows that next great billion dollar idea to emerge that none of us could then 10 years from now, imagine our lives without I do think when it comes to the executive order, and I know we'll get into some of the more specific actions we've seen. Out of the DOJ and the FTC, what we've really seen is an increased degree of antitrust scrutiny, and an increased amount of emphasis placed on this area, not only in the tech space, but much more generally and a question of what that means. Not only For these large players, but also for some of the dynamics that are going on in these industries, particularly, particularly around things like mergers and acquisitions, that can be extremely beneficial at times. I also think it raises those questions, again, of where is the focus on the consumer and the consumer welfare standard and that objective standard that is really served to provide signals to consumers to small players into large players on what it means to compete fairly in the marketplace.

Great. So one of the things that was in the executive order that I wanted to drill down on is there were, I believe, six or seven requests that the FTC consider rulemaking on a couple of different things. One of them is pretty interesting. It focuses on perhaps making a rulemaking on privacy. There's also a suggestion that they make a rule defining a little bit more broadly, what an unfair methods of competition is. So I wanted to get some thoughts from you guys. I mean, what do you think of the FTC undertaking this kind of rulemaking? Do you think it's clear that they can? And where should what should the FTC be looking at here?

I was saying, Yes, I think I just want to come back to FTC rulemaking, and these and these under legislation that we're talking about as well, because I think they play a similar role. The legislation, I believe, will empower the FTC, to more concretely make some of these rules, which is why I think that legislation and the FTC rulemaking, especially when it comes to unfair medicine, competition, non discrimination, etc, are linked. And I think it's fundamentally we don't want the disagreement between this panel, your bed. But if you look at the market evidence, you know, Google's had 90% of the search market for many years, Apple and Google have had a monopoly on us about for the last 10 years, the market shares have been more or less the same. So I think we are we are a different starting point. We're not starting from a position where there's competition in the market, we starting from a position where there isn't competition in the market. And the question that is, what can we do to introduce more competition, more innovation, and that's what this FTC rulemaking will be about, is to define non discrimination standards. Ban or limit, I won't say banned, but limits are preferencing. When, when inappropriate, require interoperability. And talking about what, what this could do and what innovation will look like. I always like his examples I'll give it again, is that today, if I'm a smart, if I'm a smartwatch competitor, and I want to compete with Apple's watch, I'm fully dependent on Apple allowing my smartwatch and to operate appropriately with its iOS and iPhone. That is not something that happens today. Now, an FTC rulemaking would say, Hey, you have to allow equitable interoperability to a competing smartwatch would help consumers a lot because you'd have other smartwatch competitors coming in. And, you know, competing with Apple. Another example on closed ecosystems, by the way, is, you know, my, my windshield wiper fluid ran out the other day, and I was looking to buy some, I looked on Amazon, and it was 19 bucks, the same product, or at Home Depot, five minutes from home was $3. So I know there are huge advantages that these companies get from operating these closed ecosystems. And it's essential that we have rulemaking and legislation to break those down and make a more interoperable system. Really,

just one word on the execute builder, because I haven't addressed that. Before looking at the execute order, you have to look at the assumptions behind those these execute order. So first, before we in critical D is good over I will just say that there's a number of proposals that are very welcoming, like sending over the counter hearing aids or scrutinizing hospital mergers. I think these are good proposals, also to look at unreasonable non compete clause in order to favor labor already. That's great, too, limits unreasonable restrictions on occupational licensing. Also, that's great, because states can restrict labor mobility. So there's few instances where the executive order get it right. But what the easy way to get it very wrong is that the assumptions behind these gurus say like, not only there's a lack of competition, there's no competition, but also there's a massive amount of concentration. I mean, it if we looked at the data, and the data doesn't support those assumptions over the last 20 years, the corporate concentration in America went from 34% in 20 years to 35%. which is insignificant, which doesn't mean there's any increase 4% of the industries in America are highly concentrated 4%, meaning that 96% are either not concentrated or moderately concentrated. And even more, what we find is that over the last 20 years, those industries that they were the the lowest, had the lowest ratio of concentrations increased by 25%. What does it mean? It means that those industries that are not concentrated, were the most likely to increase. So we see we don't see this massive amount of concentration that the executive order of President Biden claims and relies on. So we don't see consolidation. And I will say that even if there is concentration, even if there's consolidation, consolidation, and concentration doesn't mean, no competition. I mean, think of airlines, would we want like hundreds of airlines in this country, now you need some sort of consolidation, you need some sort of concentration in order to report the economies of scale economies of scope, and to offer low price. So it's some some sense of constantly consolidation and concentrations are necessary in order also to compete globally with European Chinese tech companies. So that's the first point, the executive order as a wrong diagnostic. And so it's very unlikely that the recommendation would be right, unless there are some few exceptions as I, as I noted, now, on the FTC rulemaking authority, I just want to say one thing. The FTC has rulemaking authority on consumer protection. That's not contested. It's uncontroversial. But the FTC doesn't have rulemaking authority when it comes to unfair method of competition. I will just mention a case from the Supreme Court 1920, the Grots case, that precisely said that the FTC doesn't have authority. When it comes to unfair methods of competition, only courts can define what is unfair method of competition, not the commission. That's the case from 1920. So right after the FTC Act has been passed in 1914. And we don't have any other case from Supreme Court for the last 100 years. So we don't know what the Supreme Court stance will be. But it's very likely that it will just be the same stance as back to 1920. So we know, the FTC doesn't have a rulemaking authority on unfair methods of competition, should the FTC engage in rulemaking authority, because we see that it's going to happen, right? There's a risk that not only it will be there, it would be subsequently followed by judicial backlash. But also economically speaking, I think it would be quite detrimental. Let me let me explain why. I think it would be a shift from experts to judicial enforcement of antitrust rules toward more exante types of regulations. And this, this sort of exotic type of relation is exactly what we see in Europe with a digital market act. And it is underpinned by a precautionary logic, meaning that it's forbidden, unless you prove otherwise, the presumption is against the company, it has to prove the pro competitive and pro innovative effect of the conduct he wants to engage into. So what does it mean? It means that it's a reverse the burden of proof, there's a prohibition unless you prove otherwise, it's not freedom unless it's prohibited. But it's a reverse bunch of proof so that it gives a create a sort of precautionary attitude, a risk averse attitude to companies, others referred are disruptive. I mean, disruption is precisely to break up the status quo, to break up those incumbents in many different industries. And to be radical, otherwise, there won't be disruption, it will be like marginal competition, marginal increase, but that's what we want in terms of innovation leadership. So not only it will be legally very questionable for the FTC to engage in rulemaking authority, when it comes to unfair methods of competition, but it would be economically damaging detrimental because it will just create this precautionary logic that we take inspiration from Europe. And that's very detrimental for the disruptiveness of American innovation.

Thanks, Charlotte. I wondered if we could go to you and also if you could address a little bit about the judicial enforcement versus regulations.

Yeah, thank you. Alright, so real quick before I forget, though, I want to respond to this point about ex ante. So I don't think that it's like a necessary component of the use of the tool of rulemaking that they would be automatically putting in the precautionary principle that's like a particular rule that you may be concerned about. But I think they could make rulemaking with a variety of substance and content. And I think that there probably are some situations where we need presumptions. And I want that burden of proof reversed. But rulemaking is a tool like any other and it can do a variety of things. I've forgotten the question that you actually asked. I was so focused on my retort.

I was saying it on the FTC rulemaking, and if you wanted to address court cases versus regulation,

yes. Okay. So I think Orelia is right, to an extent that there is, you know, some questions like, I think it's quite clear, when you look at the plain text of the law, I think it's quite clear when you look at the legislative history that the FTC does have rulemaking authority under unfair methods of competition, but I do expect that it will face litigation when they attempt to do it. And so we will find out. But it is such an important tool that I think, can really provide predictability for businesses to have rules that state very clearly what the requirements are. But it also will be so much more efficient for FTC resources. And we need to give the FTC a lot more resources. This is something that Congress really needs to do, it should be a high priority. And I know that it is. But bringing cases in order to clarify the law and, you know, notify businesses that this type of conduct is in violation is very slow. I think about the example of the Pay for delay cases. It's not worth going into the details of what Pay for delay is if you're not aware of it, but it was a health care issue. And the FTC spent decades bringing cases to try to clarify Pay for delay and show that pay for delay was concerning. It did finally bear fruit, but 20 years on one issue, you know, that's a ton of staff resources, that's a ton of time that consumers are being harmed. So it would just be so much more efficient to be able to use both adjudication and rulemaking. And so it will be really valuable if we can use unfair methods of competition rulemaking at the FTC. I do anticipate that it would face litigation. But it's it is worth the investment because it would be so efficient. And does that answer the Yeah.

Jennifer, I wondered if you had any thoughts?

Yeah, I want to jump in on a couple of things that have been said. And first, I apologize if I misheard something. But I want to make clear. I do believe these are competitive markets. So I do believe the tech sector is still dynamic and competitive that we are still seeing new entrants and what not. Okay. Okay. So we do have some disagreement on the on the panel. But I, when we're talking about the FTC, I two of the points that were brought up earlier, one of which is around privacy, we often hear privacy kind of brought up in the broader competition debate in the broader debate over antitrust reform. And I think we need to recognize that antitrust is a very specific tool for a very specific purpose. And while there can be certainly impacts on privacy, if our goal is to have a federal data privacy framework, that should be a different debate, it's a debate that I very much think we should be having is a federal data privacy framework. And I think I could get agreement on this panel on that tip. But when we're talking about the impact of antitrust, on privacy, that's going to be a separate conversation than the one just more generally about what we should do with privacy, that is a top concern. For many consumers and voters. I think it's very important to be aware of what's going on at the FTC not only because we've seen some very significant state, very significant actions, including around the section five statement, including around the vertical mergers guidelines, we've seen a growing partisan divide at the FTC where things that that had been largely agreed upon and kind of as a principled approach are now being very, are being very divided. And we're seeing some pretty dramatic shifts, it seems or at least potential for some pretty dramatic shifts in some of these policies that have come about. But when we look back to those congressional bills that we were talking about earlier, a lot of them are looking at vesting a lot more power and a lot more enforcement and a lot more resources at the FTC. So we certainly want to very much pay attention to what it's doing with the current power it has, especially if there is a potential impetus to give it even more power over this extremely. This tool that has a lot of ability to to intervene in various sectors of the economy.

First, I just like to challenge a point that you made sorry, that, you know, the underlying assumption of the Biden exam order is that there is more concentration. And there's evidence to show that that is indeed the case. You know, some evidence is probably better than others, I would just refer folks to the Thomas F report, I think, a a country, fellow countrymen of yours, who presented, you know, in the Joint Economic Committee, and he looks at ranking of companies, you know, of the companies who've been top 100, over five year periods. And he finds that the same company, that this the rankings change a lot more before 2000. But then after that changed a lot less the same companies remain in the top 100. That's what changed. That's, you know, that sort of evidence that everyone can understand and relate to, I think, on the executive order, by the way, and the FTC rulemaking issue, now, I'm not a lawyer, you know, but I do think if we have these bills pass, and these are bipartisan bills, we have the executive order, we have these bills that pass that will make it a lot easier for the FTC to do rulemaking, and give it some precedent to do that. So I think that's, that's important. That's important point to make as well. And there's a lot said, Yes, I'm going to stop there, but I'll keep going. Thanks,

Charlotte. I saw you grab your microphone. Thank

you. So you asked about privacy rulemaking. And I think it's important to point out the privacy rulemaking could also take place on the consumer protection side under Magnuson Moss, where there is no question that the FTC does have rulemaking authority. So Jennifer was talking about antitrust and the impact that antitrust can have on privacy, but the FTC also could do rulemaking on this directly. And Magnuson moss is has a bad reputation for being incredibly slow process, which is certainly true. But they have, I think, you know, done some excellent research recently within the FTC and Commissioner slaughter has spoken about how we can actually speed up the Magnuson moss process significantly. So I think that that's another good option for privacy rulemaking.

Great, I wanted to open it up for questions from the audience. So if you all have a question, we are delightful. He will bring you the mic. If not, I will keep asking questions because that's my job actually.

Jeremy petzner Carnegie Mellon University, it strikes me that one challenge of sort of talking about competition in the digital space is defining the markets in the sense of is Facebook, a competitor with YouTube or Tik Tok, or formerly Instagram or even Netflix? And so, I believe a recent appellation from the FTC called Tik Tok a content and Broadcasting Service. So I wonder what your thoughts are on how we would define the markets and what particular factors and criteria we might consider if trying to figure out who's competing with who

I just get first, I think I think that's sort of the the right point to raise. But the wrong question to ask was, I think the problem is that today to enforce existing laws, there seems to be this presumption that you have to define markets to find market power. Whereas I don't think in these complex, you know, in this complex ecosystem, where you have Google and Facebook operating so many different services across the digital ecosystem, you know, you have to look at the whole thing together, you have to look at direct evidence. And which is what these builds do, I think there's this we'll get away from this strict need to define a market. But still say, we can see that there's tangible effects of these of this market power, when you look at the terms and conditions that folks have to sign on to the fact that there aren't any other alternatives that consumers can go to, you know, get Facebook or Amazon, or the fact that these it's very difficult for new entrants to come in because the garden to operate because it does have network effects, so on and so forth. So I think the whole idea is we don't need to do a lot anymore. When you look at direct evidence, and the ecosystem services.

I think that this is exactly the right question to ask. I think this is the question that's playing out in the courts right now, particularly around the FTC case involving Facebook of what is the the question of market definition and to kind of pick on the examples that were just given at the end there? I mean, you have Amazon you have Shopify, you have you know, you have Walmart increasingly relevant in that sector, as well. You have Facebook you have Tik Tok, you have twitter you know, one of my favorite moments is always when someone tweets about how Facebook has a monopoly. You know that I think that we do see a growing discourse and a growing question around how to how to define these markets. But I think in the majority of cases, many of us, even in our own experience, have an experience with a competitor or an alternative, where we can see that there is more than one option for most of even these large digital platforms.

So the question in antitrust, not law is not is there possibly in the world another option that one consumer could use? Right? It really has to be broadly substitutable. But I really want to focus on Susan's point, which I think is absolutely right, that this is one of the problems and limitations that is holding antitrust law back from being able to effectively promote competition in these markets. What the legislation is recognizing is that the power of these companies, a lot of it comes from their vertical holdings. That's something that's difficult to capture when we're focused on market definition questions. Historically, antitrust, a monopolization case is not supposed to require defining the market, you ought to be able to show harm directly, without having to spend time defining the market. It's frustrating that that I think for many years, people want to antitrust enforcers went ahead and did both sort of a belt and suspenders thing. And now we seem to have lost the ability to show harm directly. But that is one of the problems that I think these bills are trying to get out. Although, of course, we do also need broader antitrust reform.

Probably one point, I think I totally agree with you. I think a market definition is is an overrated auditors tool, we need a more nimble, more dynamic more just to look at the market realities to just rather than having bright rules, they like you compete, and then you outside market finish. So you don't compete with that with that company. But market definition rules should be amended or stripped down. But it shouldn't be a pretext to see monopolies everywhere. I mean, just to quote, a Nobel Prize winner Ronald Coase, like when economists don't understand something, they just go for a monopoly explanation. Of course, we have this case of Facebook where the court say Tiktok doesn't compete with Facebook. In Europe, we have Google Shopping say it doesn't compete with Amazon. And we can just add up so many cases where the main competitor of that company that is investigated is just outside the market, they're deficient, so that the market definition is so narrowly defined that of course, you come for a monopolistic explanation. I think we have to just look at things in a more evolutionary perspective in a more time, time time consuming manner, and that will help improve the antitrust analysis. So I would agree that market definition needs to be amended, if not just completely removed, but not just to explain that we should go only for even our approach so that we can have monopolistic expansions everywhere. So I would agree with reforming the tools, but not in having an even more narrower more Monaro explanation.

I'm just going to give a shout out to myself. In that what my contribution to the consortiums Facebook papers work was actually going through a lot of Facebook's internal documents looking at how it defines its competition. So I would just note that you know, sometimes company sort of recognizes that it dominates in one space but is competing with another in another space. Are there other questions that we have here? We have a couple more minutes Yeah, right here

this whole thing some thoughts come to mind that you didn't answer at all It didn't even address including Do you count companies as tech companies that position themselves as retailers like WalMart which competes with a definitely with a tech company as medical companies pharma companies, others who are very much in pharma and insurance were very much involved in tech how do they figure into any of this plan for the Biden administration looking into regulating overseeing doing something with tech and in some cases the like medical services are regulated at the state level not at the national level federal level so how how is that all gonna play out in this and as I say, I'm totally ignorant so I believe anything you say

I just make one point that the the two bills legislation are really closely focused on the Microsoft, Amazon, Google, Facebook, etc. And on the other issues that arise pharma etc on Rebus don't let others speak

I If we had this little bit of disagreement earlier, the the way the bills are, are defined who is covered would make it possible for particularly say Walmart to be covered in the future in in the cloud, which are Grassley,

I think, let me just say it this way, if Walmart, because Walmart is moving online, right, and it's getting more online subscribers, and if it becomes a substantial online business sells many more services to the Internet, then maybe then it should be covered. Why not? Similarly, Facebook, you know, if these rules come into play, and Facebook decides voluntarily, to break up and spin off WhatsApp, and Instagram, and each of those companies are much smaller than they should not be covered, I mean, I would not have an issue with any of those things changing dynamically as the market evolves.

I appreciate you saying that, because I think oftentimes, the rhetoric is portrayed as the the antitrust reform is just targeting, quote unquote, tech companies. Whereas when we're talking about antitrust reform, more generally either looking at actions that have occurred by the FTC, or at some of these bills, while some of the spirit behind them may be related to how some of the politics around quote unquote, big tech right now, the impact could be felt in other sectors. And I think we can certainly have a debate about whether or not that is a good or a bad thing, I would again, point to the consumer welfare standard being an objective standard and a great tool to use. But with that in mind, I think that that goes back to antitrust is about much more than just the tech sector.

So the text of the legislation is very clear that it has to be an online platform. And it has to have very high market capitalization. So an important part of what Sumon saying about how potentially Walmart could become covered in the future is if Walmart grew significantly in size. So there's potential for that to happen far in the future, in terms of the impacts on other industries. So I think that it could have a positive impact in that the power of the dominant digital tech firms may go down, other companies are going to have a fair shake. And I think that's the impact that we'll see across the economy.

Just just one word on the again, because it reverts back to the market definition. There is no such thing as a digital company. Every company has a digital presence. I mean, in a post COVID world we live in, how can you be a company and not have a digital presence, you just add competed? So the very ID in Europe to have the digital market Act means that you define digital market, as opposed to as opposed to offline market? What is the offline presence? What is it doesn't exist, there's no such thing as a digital market. There's a digital industry, there's a digital channel, amongst other channels. But that said, right, look at advertising. There's digital advertising, there's TV advertising, print advertising, all these is part of advertising. Digital is just one means of reaching the consumer. It's not like you have digital advertising that is completely outside competitive rivalry with TV advertising or print advertising. So to think that, okay, we're going to regulate online platform. So it means that we make these bright lines, again, with what is online platforms, and what is offline company, that what is offline company in the post COVID world, these doesn't exist. It doesn't exist for every company, as a digital channel. And I mean, for example, you have big companies like Amazon, but Amazon competes with Shopify, compete with any other companies that as an online platform, online presence, at least. So the idea of defining digital markets and to regulate this digital market so that offline companies are outside doesn't make sense. And precisely it data and it creates unfair competition. Just let me give you an example. If you have financial payments, right, you're we all have Apple pay Google Pay. But can we say that banks, traditional banks don't have a digital digital presence? Of course, we all have apps from our traditional banks. So to what extent banks don't have a digital presence, and I think banks are quite a big incumbents in the financial industry. So shouldn't be should they be exempt from other trusts prosecution or from other trusts? Security? I don't think so. I think there should be a level playing field so that we can create the conditions for fair competition and the common regulatory framework, not like different regulatory framework, according to some discreet designation.

I'm just gonna make one point um, last week, the Justice Department sued United Healthcare over its acquisition of change health care, and the reason this is actually One of the most interesting court cases for the digital economy right now is the main point of this lawsuit is that they were concerned about the access to data and how much United Health was going to be able to know about its rivals based on acquiring this database data platform. So it they're very much the agencies which we didn't get to talk about as much on this panel, as we had hoped. are very cognizant that there are a lot of companies like every company is a data company now and how it is playing out in lots of different markets. fintax agriculture and health care i