Factually! with Adam Conover - How to Fight Monopoly Power with FTC Chair Lina Khan

Episode Date: November 8, 2023

America has been sliding back toward levels of corporate control, consolidation, and inequality not seen since the Gilded Age. This resurgence in monopoly capitalism has sparked a corresponding movement in antitrust reform known as the New Brandeis movement. Lina Khan, appointed chair of the Federal Trade Commission by President Biden, has become the foremost voice of this movement and has engaged in high-profile battles to reshape how America deals with monopolies. In this captivating episode, Lina joins Adam to discuss the FTC's efforts to enhance the quality of life for Americans, from shielding our finances from corporate greed to protecting workers from extortive non-compete clauses in the workplace.SUPPORT THE SHOW ON PATREON: https://www.patreon.com/adamconoverSEE ADAM ON TOUR: https://www.adamconover.net/tourdates/SUBSCRIBE to and RATE Factually! on:» Apple Podcasts: https://podcasts.apple.com/us/podcast/factually-with-adam-conover/id1463460577» Spotify: https://open.spotify.com/show/0fK8WJw4ffMc2NWydBlDyJAboutHeadgum: Headgum is an LA & NY-based podcast network creating premium podcasts with the funniest, most engaging voices in comedy to achieve one goal: Making our audience and ourselves laugh. Listen to our shows at https://www.headgum.com.» SUBSCRIBE to Headgum: https://www.youtube.com/c/HeadGum?sub_confirmation=1» FOLLOW us on Twitter: http://twitter.com/headgum» FOLLOW us on Instagram: https://instagram.com/headgum/» FOLLOW us on TikTok: https://www.tiktok.com/@headgumSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

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Yeah, but that's all right. That's okay. I don't know anything. Hello and welcome to Factually. I'm Adam Conover. Thank you so much for joining me again. I am so excited for this week's episode. We have one of the most massive guests we have ever had on this show. I am beside myself. This week's topic, we are talking about one of the biggest changes in how America deals with business in decades. We're talking about how we are finally fighting back against monopoly capitalism by pursuing antitrust reform. Now, I talked about this in my video on monopolies from a few months ago,

but just to catch you up on the history, during the Industrial Revolution and the Gilded Age, American life was transformed for the worse. Monopoly capitalists built up incredible and unprecedented power. And this was rightly seen by most people as an assault on American democracy and democratic ideals, because, you know, the billionaires were calling the shots instead of the voters. So in response, our government, pushed by average people like you and me,

built an enforcement regime that broke up those monopolies and prevented new ones from forming. And this massive change helped create a golden era for American equality after World War II. But then the capitalists fought back. They devised a legal and political philosophy which infected American government from Reagan through Trump. This philosophy portrayed Americans not as citizens, but as consumers, and it allowed for a return to gilded era levels of corporate control, consolidation and inequality. We basically stopped doing antitrust enforcement whatsoever. But in the past few years, we have started to see a sea change. The pendulum has swung back and we are now seeing scholars, economists and people in

our government start to fight back once again against monopoly capitalism. It's called the New Brandeis Movement. And today, our guest is the single most powerful and influential member of this new school of thinking. And she happens to occupy an extremely high post in the United States government. And I will introduce her in just a second. But before we get to her, I want to remind you that if you want to support this show, you can do so on Patreon. Head to patreon.com slash Adam Conover. Just five bucks a month gets you every episode of the show ad free.

And if you want to come see me do stand up in a city near you, head to adamconover.net for tickets and tour dates. I'm about to announce a whole bunch of new dates. So check that URL. Now let's talk about today's guest because I am so excited to have her on. Just six years ago, Lena Kahn was a Yale law student when she wrote an article for Yale Law Journal called Amazon's Antitrust Paradox. This article went viral and it helped transform how people across academia and our government thought about antitrust and monopolies in our era. And it

opened an entire new generation to the possibilities of activist antitrust and monopolies in our era, and it opened an entire new generation to the possibilities of activist antitrust enforcement, the likes of which hasn't been seen for decades. Then, just a few years later, President Biden appointed her to be the chair of the Federal Trade Commission. And now, at the age of 34, she is the leader of the most important regulatory body for antitrust in this country. She's waging high profile battles against major corporations and changing how America approaches monopolies after decades of consolidation. She is without a doubt one of the most significant people we have ever had on this show. And I am so thrilled to have her. So please, without further ado, welcome FTC chair Lena Kahn.

Lena, thank you so much for being on the show. Thanks so much for having me. I'm really thrilled to have you because as anyone who watches what I do knows, I'm a huge fan of antitrust enforcement. Weird thing to say, but it's like literally a pet topic of mine. It's incredible to have you as the chair of the FTC here. How do you describe when you're at a cocktail party what the FTC does and what do you do there? So the Federal Trade Commission is a law enforcement agency. We also

have rulemaking authority. We also have an in-house court. And big picture, Congress created the FTC to prevent unfair methods of competition. So the FTC was created back in 1914 against the backdrop of the industrial trusts and the robber barons. And there was a real concern that a handful of companies across our economy had accumulated too much power and that they were using that power in ways that harmed consumers, harmed workers, harmed independent businesses. And so the FTC was created as the cop on the beat. We also now enforce consumer protection laws. So we go after unfair, deceptive business practices across the economy. Why is consolidation like that something that the average person should worry about? You know, like these companies will claim, oh, well, prices are going to go down. That's good for consumers. Right. What's what's bad about that? Why does it cause concern? So historically, we've seen that a lack of competition and consolidation and monopolization results in higher prices.

It can result in lower wages. It can result in less choice. And these really aren't abstract issues, right? I mean, consolidation can mean the difference between having to drive five miles to a hospital versus 50 miles for life-saving care. It can mean the difference between being able to for life-saving care. It can mean the difference between being able to afford life-saving medicine and it being out of reach. Right now, we've been hearing a lot of concerns about a big grocery merger that the FTC is reviewing, and people

are worried, am I going to have to spend $10 on eggs instead of $4? And so these are real life issues. There's also been a whole set of research over the last decade showing that labor markets in the U.S. are much more concentrated and that that correlates with stagnant wages or decline in wages. It can also result in worse working conditions. People have told us how after a merger, you know, they'll have less control over their schedule. And so there are all these dimensions on which when firms have to compete for your business, be it for your business as a consumer or for you as a worker, they're incentivized to offer you better terms, right?

And when you see instead consolidation and that competition disappear, firms instead can become too big to care. And I think we see that, unfortunately, all too often. Yeah, we've had like a huge surge of consolidation and like reduced competition over the last couple of decades, right? That's exactly right. I mean, over the last three to four decades, we've seen waves of mergers and acquisitions, waves of consolidation. And there's a lot of research showing that huge segments of the U.S. economy are now less competitive than they were several decades ago and that Americans are suffering as a result. How did you find your way to this topic? Is there a moment that you can think that consolidation as a problem first became apparent to you?

So one of my first jobs was as a researcher and business journalist. And one of my first assignments was to look at the agriculture industry and specifically to look at chicken farming. And so the poultry industry, like many agriculture industries, is kind of shaped like an hourglass. So you have millions of consumers on one end, thousands of farmers on the other end, and they're just connected by a handful of companies, basically four big chicken processors. And Tyson, a couple other ones. Exactly.

Tyson, Purdue, a few, a couple others. And practically what that means is that if you're a farmer, oftentimes you're actually just dependent on a single company to get your chickens to market. And, you know, I talked to a lot of these farmers, tried to understand over decades of consolidation what that meant for them. And it was pretty brutal. I mean, these chicken farmers were entirely dependent on this one company and the companies would use that bargaining power in coercive ways. At the most extreme, you know, there was a moment when government officials were going around trying to understand the experience of chicken farming and the chicken processors actually threatened them. And so you had these farmers that were

afraid to speak out. And that was a really notable moment for me because, you know, in America, we really value the First Amendment, really value people's ability to speak up. And oftentimes we think about threats to the First Amendment and threats to free speech as coming from the government side. And yet here we had a really salient example of how monopoly power and concentrated private power can also infringe on core freedoms and core liberties. And so that's really what got me recognizing the stakes of monopoly power. I mean, so the companies were literally saying to the farmers, like, if you talk to the feds about this, we are going to exact retribution on you. That's not exactly really savory business practice. Exactly. We're going to cut you off. We're going

to, you know, dock your pay. And so these people were, you know, fearing for their livelihoods and unable to kind of come out and speak to the feds. You sound like mobster tactics, like, you know, to put it, I mean, you don't have to put it that way. I can put it that way. So what are you doing at the FTC to, youTC to fight back against consolidation? You just brought a huge case against Amazon, right? That's right. So we do a whole set of work. Some of that is focused on preventing the problem from getting worse. So the FTC, along with the antitrust division, enforced our anti-merger laws. And so when there are mergers that are, you know, beyond a certain size, those gets reported to laws. And so when there are mergers that are beyond a certain size,

those gets reported to us. And so we consider, is this anti-competitive? Is this violating the antitrust laws? So we have a reinvigorated merger enforcement program. We're extremely active. We've been bringing a whole set of suits to block mergers that we believe are anti-competitive. We've also been doing things like revising our merger guidelines, which sounds very technical, but it's basically our enforcement manual. And so we're putting the market on notice. It's been great to see that we're already having an effect. And so we've heard on TV from very prominent deal lawyers and bankers saying that previously, when companies were having conversations about merging, they'd talk about antitrust at the very, very, very end if it came up at all.

And now, given the new aggressive environment, companies are talking about it at the front end and some deals aren't even getting done because people recognize that the antitrust risk is significant. Yeah. And this is a big deal because, I mean, my understanding is that based on the work that I've done on it, for decades, we had very little antitrust enforcement or we had sort of almost tacitly pro merger policy. This is like a change that is we've seen sweep not just in your agency, but really a change of thought in like a lot of America and a lot of different government

departments. Is that right? That's right. I think there, you know, 40 years ago was an assumption made that monopoly power, if it ever occurs, is likely to self-correct because if a monopoly ever chooses to exercise its power, you'll immediately see a rush of new competitors that will discipline it. And so I don't see that happening anywhere. Yes, fair. I mean, there were a whole set of assumptions made that basically led to a much more hands-off antitrust posture. Yeah. And so I think we've been living in a 40-year natural experiment. And now increasingly we're looking at the world around us and noting all of these ways in which the reality is not mapping onto those assumptions.

Right. And so instead, all too often we see, you know, incumbent dominant firms using their market power in ways that's harming their customers, that's harming their workers, that's unfairly muscling out independent businesses. And we actually need reinvigorated antitrust enforcement. And so that's what we're doing. Yeah. So let me ask you this. I mean, you wrote a famous paper on Amazon like six, seven years ago called Amazon's Antitrust Paradox. Right. That was sort of making this argument that the way we went about prosecuting mergers was was wrongheaded. Now, less than a decade later, you actually find yourself in the enforcer position. For me, as someone who spends my life yelling about problems that I see in the world, right, but never having the ability to actually, OK, take up like the reins of power and do something about it.

Like, what is that like to go from advocate to, you know, someone who's actually, you know, working the mechanisms of government and has the power to do something about it. Yeah, look, I mean, it's an incredible honor and, you know, huge credit to President Biden for his leadership. And, you know, he signed a really important executive order two years ago on competition that said very clearly we've been living in for 40 years under a set of assumptions that Robert Bork introduced. And it's clear that that way has failed. And so we need to turn the page. We need the antitrust enforcers to be more aggressive. But we really need a whole of government approach that's embracing anti-monopoly and embracing the importance of competition. So it's a remarkable moment. And we very much recognize that these windows of opportunity don't come around very often. And so we're acting with an enormous amount of urgency. That said, you know, the FTC is relatively small. We have

around twelve hundred people overall. The number of antitrust people that I have. But yeah, right. I mean, the number of antitrust lawyers is, you know, closer to three hundred. And so we're small but mighty. We're smaller today than we were in the back in the 1970s. And, you know, well, you know, we got a bunch of budget cuts from Congress and those have really stayed in place, though we've been grateful over the last couple of years to get a bit of an increase. So we've been able to do some hiring. And more generally, you know, the FTC is supposed to go up after against monopolists and monopolists are well resourced. They're very powerful. They have access to a lot of lawyers. And so oftentimes we're significantly outmatched in terms of just the sheer number of resources that we have. And so that requires us to be nimble, to be strategic, to be playing to our comparative advantage.

So, for example, we've signed MOUs with the Department of Labor, with the National Labor Relations Board to make sure that we are really functioning as one government and able to act as force multipliers across all of our tools. MOU means? A memorandum of understanding. So we're able to share non-public information. If we're doing an investigation and we see something where we're not able to act, but we think one of them can, we can refer it to them and vice versa. So you're going up against, you have 1200 people, you're going up against some of the biggest companies in the world. Again, you have a case against Amazon. Like what, what can you tell me? I know there's plenty that you can't say, but in terms of the general problem with, with Amazon, right? Why is that a particular market, something that you're concerned with? So in the lawsuit that the FTC filed, we really allege that Amazon has unlawfully maintained its monopoly through a set of illegal tactics.

And to really understand the lawsuit, you have to understand how digital markets work and how e-commerce works in particular. And in this market, in order to really compete, you need a basic level of scale, right? You need a critical mass of customers on one side to then be able to attract sellers on the other side and to really benefit from what Amazon called its flywheel, which basically means the accelerated momentum and growth that you can see in digital markets. And what our lawsuit alleges is that Amazon was able to benefit from achieving a critical mass of customers. But since then, it's systematically engaged in a set of tactics to deprive any rivals from being able to similarly get that critical mass of customers on either side. Either the merchants that depend on Amazon or the consumers on Amazon.

And that's illegal. We claim that's illegal. And, you know, the harms here are quite real. And that's illegal. basically a 50% tax that companies have to pay to Amazon to sell on Amazon. And more generally, you know, the quality of Amazon's storefront has been degrading. So we know that Amazon has proliferated a whole set of ads, including irrelevant ads. And if you step back, you know, in a healthy competitive market, if you have a company that's both raising prices for its customers and worsening service, that should create an opening for competitors to come into the market. But what we're seeing is that those competitors have been

blocked out because of Amazon's illegal tactics. And so that's what our case is about. Is there a specific example that you give of them blocking out a competitor? Sure. So one of the set of practices that we go after are what we call Amazon's anti-discounting tactics. And what this means is that Amazon says to merchants that the prices that it charges merchants. So merchants are facing higher costs on Amazon, but they're not able to put a higher price on Amazon than on other platforms. Right. Even though Amazon costs them more to use. Exactly. Exactly. And so what that means is that even if you have a lower cost platform, a lower cost rival that's more affordable for merchants, merchants can actually list their goods on that platform for a lower price. And instead, what they're doing is raising their prices everywhere but Amazon. And so it has this deeply distortionary effect that's blocking out even

more affordable, more competitive firms. So are these companies, you're saying that because they're getting gouged by Amazon to compensate for that, they can't raise the price on Amazon. They're actually raising it on the other merchants in order to stay afloat. Exactly. Sometimes they raise it on other merchants. Sometimes they just don't sell anywhere else anyway. And that's because Amazon deploys a pretty punitive set of tactics. If they ever find out that you have, in fact, been listing your goods cheaper elsewhere, you know, they can deny you the buy box, which is where the overwhelming number of sales get made. You can basically disappear from Amazon's storefront.

And for a lot of these businesses, I mean, they currently depend on Amazon for an overwhelming number of their sales. And so they live in fear. And we have quotes in our complaint that document how Amazon realizes that these merchants live in constant fear of its retribution and its punishments, which it exacts any time it sees even a hint of a lower price elsewhere. And so that's how it hurts the sellers. We already talked about how it hurts consumers because prices are going up. And my own experience is that Amazon is a much worse place to shop. I no longer even trust it in the way that if I if I click add to cart and buy, I'm like, I'm not sure I'm going to get the thing I ordered in the way I was maybe 10 years ago when I was using the service. But what about labor? What about the people who work for the company? How does its massive size, you know, there's been a lot of discussion in recent years about how workers for Amazon are not getting a fair shake.

And so we cover, you know, we follow all of that research in those reports. I just saw a report today about how a significant number of people who work in its warehouses end up getting injured and burnt out. And so I think there are very legitimate concerns there as well. And they cycle through people so quickly and they're like, go through an entire workforce in an area. And it's very difficult. Well, let's, uh, let's move off of, uh, Amazon. I'm curious to talk to you about, uh, the media industry, about, about Hollywood, the industry that I work in, uh, you know, my, my union, the writer's guild does a lot of, has done a lot of work, uh, on consolidation in that area of put out, wait, we have a wonderful research department that's always writing papers and things like that.

Until recently, it sort of seemed like those papers fell on deaf ears, that maybe nobody at the federal government was like, oh, why should we worry about movie studios buying each other or et cetera? Whereas we felt that impact of consolidation on labor really directly. If you're selling a TV show and there's only three people who could bid on it rather than 10, you're not going to get as good a good of an offer. It's been very apparent. I'm just curious if the if our little corner of the American economy has has interested you at all. Absolutely. And we've been so grateful for the submissions from the WGA to, you know, as we've been reviewing our merger guidelines, we looked at those very closely and they've been really, really helpful. You know, stepping back, I think there's really interesting parallels between the stories that we've heard from writers and others in the

entertainment industry and what we've heard from folks across our economy, right? So to go back to the chicken farming example, I think we see a lot of parallels where you see dominant gatekeepers or dominant intermediaries that start controlling access to markets and start controlling access to commerce and the ways that they can then use that gatekeeper power, be it over chicken farmers or be it over writers. And I think you're absolutely right that over the last few decades, we've seen enormous consolidation across the entertainment supply chain. And so we've gone from a market where you had, you know, thousands of theaters, you know, dozens of studios, lots of different

pathways to market to now a much more closed system where you really just have a handful of pathways. And we've heard from writers and actors and really folks across the entertainment industry about how that is bad for the workers, but also ultimately is probably coming at the expense of the creativity and the vibrancy of the content that's being produced. Yeah. It used to be more of an open market where you could find some financing for a film and then, you know, sell it to a studio or sell it to, you know, to theaters that were not, you know, directly owned by the studios or whatever. Once it's all vertically integrated by a small number of companies, those companies get to make the choices and they end up, we could draw a line

to, oh, they just buy up IP and make things based on that IP over and over again because they own the thing. They don't want to take a risk on something new. There's a very strong argument that the sort of wonderful movie industry of the 80s came out of the fact that it was a much more open market. But the interesting thing about it to me is that, you know, the federal government actually came in in the middle of the 20th century and, you know, enforced competition on the film industry, right? In lots of different ways. There are paramount consent decrees, blah, blah, blah. We don't need to get into the details, but there was actually government intervention in the entertainment industry that in the past couple of decades has been removed or selectively enforced or whatever.

We've seen those protections go away with the result that we have more consolidation. It's very strange to for all of this to be a battle that we have fought and won in the past and to have lost ground sort of invisibly. And now we're trying to play catch up. Does it look that way to you? Yeah, that's a great way to put it. And it's absolutely true that there are a lot of resonances between, you know, the regulatory battles and the renewed anti-monopoly interest that we're seeing today and what we saw a century ago and at various points throughout the last century.

And you're absolutely right that at various moments, there was a recognition, for example, that when you have a concentrated industry that's also vertically integrated, that that can create problems. And so you noted, you know, the paramount decrees. We also had the Finson rules. Yes. And both of those were basically premised on this insight that when you have the pipes also controlled by the companies that are producing content for the pipes, that that can lead to certain conflicts of interest. Right. When you combine distribution and content, that that can lead to conflicts of interest that are then disfavoring rival distributors or rival content producers. And I think we're at a moment where we're kind of revisiting some of those core insights. So how did the backslide happen, right? If we, you know, had this, had this big battle over monopoly power in the early part of the 20th century,

a whole school of thought arose about it. We started making laws and creating departments like the FTC and et cetera, that, that enforced these laws. And we actually broke up some big companies in the case of, again, the little old movie industry, not even that important of an industry. We had laws put in place, um, or, or various rules. And then they all started falling away. Like what, what was the change in American thought or government that like allowed that to happen? So overall, during the 70s and 80s, there was a retrenchment that we saw on antitrust and across economic rules and regulation more generally. And an antitrust, at least,

that was premised on a set of assumptions that antitrust had gone awry, that we really needed to be more hands-off, and that the market would fix monopoly problems wherever they arose. We also took a much more hands-off approach to how we did merger enforcement, and that's what contributed to the decades of consolidation that we've seen. And this really took place through the enforcement agencies, so the FTC and the antitrust division, but also ultimately in the courts. And so now we're, you know, 40 years in and really trying to make sure that we are fully enforcing the laws that Congress told us to enforce.

Right. I mean, the laws themselves are fairly clear. But is there some like underlying cause for that shift to happen, like for the for the agencies, you know, to enforce differently or or some pressure that was being being put on the country at large back in the 80s? Yeah. Yeah. I mean, you know, in the 70s, there was significant inflation. And so there was a lot of concern about any policies or enforcement that may have been contributing to higher prices. There were some arguments made that antitrust as it was being enforced was part of the problem.

some arguments made that antitrust as it was being enforced was part of the problem. There was also a sense that, you know, with growing globalization, that firms in America were competing globally. And so, in fact, we needed to, you know, be a bit more hands off and allow them to fight it on the global stage. So those were just some of the backdrop arguments. But, you know, this really wasn't unique to antitrust. There was a whole set of rethinking happening around the relationship between government and the economy and a more hands off approach that was taken, you know, particularly during the Reagan administration. But really, it started even in the Carter administration. People often call the neoliberal turn that like this, this renewed faith in free markets and government hands off. And and we could talk a lot about the reasons for that. But let, let's actually take a quick break and let's come back and talk

with you more specifically about what you're doing and how you do it. We'll be right back with more Lena Kahn. So we're back with the chair of the FTC, Lena Kahn. How do you choose which cases to take when you're looking at the economy? We said there's consolidation all over. It's a great big problem. When you how do you decide, OK, this is an industry that we actually need to look at. And then how does that process culminate in you bringing a case? Yeah, it's a really good question.

And it's absolutely true that we have to think very hard about how to prioritize, given that we're pretty strapped on resources there. So there are a few dimensions that we think about. One is just where do we see the most harm? Oftentimes, we see the most harm from some of the biggest companies since they have the most customers. We also think about how critical is a particular sector. And so we're especially focused on, for example, health care, food and agriculture, and digital markets, since those are becoming so central to so much of the economy. And so, you know, if we're choosing between going after a merger that might make yacht prices higher versus a merger that might make insulin more expensive, you know, we think about those types

of questions. We also think hard about how do we make sure that we are identifying problems on the front end and intervening earlier rather than waiting decades. And so particularly in digital markets, I think there's been a big recognition that we actually need to be more vigilant, right? So in the early 2000s, as we saw the rise of these digital platforms, there was an assumption that these markets are so fast moving, we're seeing so much dynamism. And so government just needs to step back and get out of the way. And what that enabled, unfortunately, was a whole set of mergers that in hindsight, we realized were illegal, right? So the FTC, before I arrived, sued to block sued to undo Facebook's acquisition of Instagram and WhatsApp, claiming that those were unlawful monopoly maintenance schemes.

The Justice Department has brought lawsuits claiming that a whole set of Google's acquisitions in the ad tech space were anti-competitive. with the fact that in digital markets, because you see have things like network effects and self-reinforcing advantages of data, these markets can in fact be more likely to tip. And so we need to be especially vigilant and prevent illegal acquisitions or illegal conduct from doing that. So that's why we're being especially vigilant in some of these newer digital markets. So we just launched a few months ago an inquiry into cloud computing because we recognize that more and more of the economy is depending on these cloud computing providers. How do we make sure that we're being vigilant there?

These are the providers that are like underneath the service that you use, right? Like you're using Dropbox, but they are, or whatever service it is, but they're subcontracting to some gigantic cloud service provider that is like, you know, secretly running a huge portion of the Internet. Exactly.

And so, you know, we've been very clear that we're scrutinizing some of these AI technologies. I think more generally, and this implicates our consumer protection work. We also want to make sure that business models that we worry may be predatory or exploitative and unlawful are not getting baked in. And so we want to be very vigilant as some of these new tools come to the market as well. I mean, when you say digital markets, you mentioned Facebook and Instagram and that part of the Internet, at least the social media part of it, feels so monopolized currently. It feels like, you know, 10 years ago I would log on,

had all my bookmarks I would go to. And now it feels like I just check three websites over and over again and half of them own each other. And I've often fantasized about what it would be like if Facebook and Instagram were competing. So I feel like it it it's apparent to people. Do you feel the public is starting to understand the effects that that monopolies or consolidations having on them? It definitely seems that some of the polling suggests that. I mean, I've also been going out and meeting with various communities. We did a whole set of listening sessions around our merger guidelines and, you know, people get it. I mean, I was just out doing a listening session around this potential grocery merger, and people were very concerned about how this merger could affect their prices, could affect,

you know, their wages, could affect the union contracts that we have. I think people have seen mergers go through in the past and promises that either have been broken or, you know, the way in which the service gets degraded. And so I think people have seen it enough in their own lives that they get that consolidation can be a problem. Yeah, I mean, it's pretty straightforward when these companies for decades have just claimed that, oh, well, prices will go down because the merger, because we'll find synergies and prices have not gone down for anything.

I mean, even again, just in my industry, you know, all of the streamers are raising their prices continually and people feel that and they feel that the products are getting worse even as they, you know, continue to buy each other up. So as you said, you have limited time in office. I'm sure every appointee who's appointed by a president thinks, okay, I got four years or eight years max, right? And likely maybe less than that. And the truth is, you know, you can bring cases, you don't always win them. And so how do you think about that?

Do you try to bring cases that you think you're very likely to win? Or is it more about, you know, are the big swings worth it? Even if, you know, the courts don't always rule in your favor. So look, we only bring cases where we think there's a law violation and where we think we can win. And we have, you know, fantastic litigators, fantastic teams that work hard to really fight for the American people when we think there are illegal business practices. I think stepping back, you know, one of the consequences of various dormant periods and

antitrust over the last few decades has been that various parts of the doctrine have become calcified. And so there hasn't been case law that's developed as much relating to some of these digital markets or relating to some of the business practices that we're seeing today. And so I generally think that there is enormous benefit from getting clarity from the courts, from getting the courts to engage with the types of monopolistic practices that we're seeing today. We always want to win. When we don't win, you know, we go back and look closely at what happened, how we can do better. Congress, of course, is also following this. And there's a lot of legislative interest in Congress to think

about, do we need to be strengthening the laws, improving the laws, reforming the laws? And so those end up being inputs in their decisions, too. When you're thinking about working with the courts, you know, I was really struck by I read one of Tim Wu's wonderful books a couple of years ago. And his account of how this transition happened was that, you know, the school of thought arose that all that mattered when judging a merger was whether prices went down. And one of the advantages was that's very easy for a judge to understand, you know, when, you know, we're talking about very complex financial transactions. And so the companies can just go say, oh, the prices are going to go down. And the judge is, okay, well, as long as they are, you know, bang. And so to some degree, it seems like, you know,

you're part of a shift in a school of thought. But there's a bunch of people who maybe still have an older school of thought that you are not, you know, totally in control of. And so I wonder, like, is it about sort of trying to move the boulder a little bit by a little bit and making your making your case and sort of trying to change the overall body or. So the laws themselves talk about, you know, things like unfair methods of competition, monopolization. They don't say that can only manifest through, you know, increases in price.

And so the laws are broad and flexible and they're like that for a reason because Congress recognized that, you know, in 1890 or 1914, we can't foresee all the different ways that firms are going to, you know, monopolize markets unlawfully. And so we want to create flexibility. We want these statutes to be durable, to last over time. But what that means practically for us as agencies is that we need to continue to apply those laws to the new fact patterns that we're seeing. And the burden's on us to be persuading the courts and explaining to the courts why these traditional,

you know, century old laws should apply in this way in these new markets. And, you know, we've already had some successes. So shortly after I joined the FTC, the court, you know, tossed out the complaint against Facebook and we had an opportunity to refile it. After we refiled it, we actually got a really good decision where we survived the motion to dismiss. And the court recognized that, for example, degradations of privacy by Facebook itself can also be an indication of market power. And so that was important because especially in some of these digital markets where people are paying with their data rather than with their dollars, what harm looks like and what exercise of monopoly power looks like will be different,

right? If you're not paying any dollars, it's not an increase in dollars that you're going to be suffering, but say an increase in data that you're surrendering that you didn't actually want to. And so we've already seen some incremental advances. I think there's a lot more opportunity. We're also in court on the consumer protection side in a case relating to Kochava, this company that we allege has been making people So we're already seeing some progress. Of course, there's apps to try to nudge you in some places rather than another. When they make the clothes box really hard to find on the thing they want you to opt into. back 100 years. And we're now applying that to these dark patterns online and saying that the

method of deception might be different, but it's deception all the same. And the tools that companies have to do it in digital markets is just going to look different. And so that's another area that we've been successful. We're also doing a whole bunch of rulemakings. And so related to this, one of our rules right now is going to require that companies make it as easy to cancel a subscription as they do to sign up for one. It would be incredible because, you know, firms use all these dark patterns to make it easy to sign up. I have been paying an embarrassing amount of money to my cable company for like years because I don't want to call them on the phone because I know that they're going to read me the whole script about. And I just I can't deal with it. I'm like, fine.

Yeah. So this is our click to cancel rule. We've got a lot of positive feedback about it. Incredible. We're also going after junk fees. So these are the fees that, you know, are surprise fees that come on at the end of your transaction. They're called things like service fees, convenience fees. Somebody was just telling me about an email fee that they saw.

Even like Uber has this. You see like, OK, there's the this charge, that charge, driver benefit charge. That's before a tip. You know, it's it's infected really almost everywhere. Right. And, you know, it's frustrating for consumers. It's costing people billions of dollars. But it also harms honest competition.

Right. Because what it does is that it hurts the firms that are being up front with you about what the total price is. And if you're on the front end saying, hey, it's just ten dollars. But then by the time you get to the checkout, it's actually 18. The firm that advertised a 16 on the front end is going to lose out. And so there's a real dimension of this that's also going to promote honest advertising rather than dishonesty. Because it's a way to make it look like you're getting a discount when you don't.

And if some amount of people don't notice, then that's some unfair competition. So when you say that you're putting rules in place, or is the merger guideline a rule? Does it count as a rule or is it a guideline? It's a good question. It's guidance. So it technically doesn't carry the force of law,

but we hope it can be persuasive and instructive. That was that was my question where, you know, like, you know, there's laws made by Congress, there's the rulings by judges, but the sort of, you know, you're able to put out rules which are somewhere in between. Like what status do these rules and guidelines have? Yeah. So the guidelines, you know, are just looking to be persuasive. But when we do rules, those do carry the force of law. And so, for example, if we're able to finalize our click to cancel rule, our junk fees rule, that will mean that if a company engages in a violation of these rules, it'll be on the hook for money. We'll be able to take them to court.

We'll be able to require that they pay back their the victims. And so these rules actually do effectively carry the force of law. And then if they're violated, you know, we can take enforcement action. We also proposed a rule in January that would eliminate non-compete clauses from people's employment contracts, which is another rulemaking that's really important to us. So that would eliminate non-compete clauses just like nationally. Yeah. As we've proposed it, it would ban them nationally in people's employment contracts. There are minor exceptions for if you're looking to sell a business.

But, you know, these non-compete clauses started off in the boardroom, but they've really proliferated across the economy. And so you see, you know, security guards, fast food workers, but also journalists, engineers, healthcare workers. And so we've heard so many stories about how these non-competes, A, are being used in coercive ways such that they're hurting workers. Our staff estimate that American workers are making $300 billion less because of these non-compete clauses. And it also means that there's just less job opportunity, right? These non-competes actually lower wages, not just for people who are directly covered by them, but even for other workers.

Because if you're covered by a non-compete and you're less likely to leave your job, that means there's less job opportunity, even for the workers that are not covered by the non-compete. And so overall, there's just less churned. Right. Because they are. Yeah, because there's not enough competition in the market generally. So it hurts those workers. Exactly. We've also seen that it actually hurts competitors. So we've heard from firms where there was a very concentrated industry. We bought a case, for example, in the glass container industry. These are the firms that make glass bottles. It's fairly concentrated. We heard, for example, from a company that was

looking to enter that market. They were able to secure financing, build the factories, but ultimately they weren't able to grow because all the relevant workers were tied up through non-compete clauses. And so there's harm to workers, but there's also harm to competition. And so that's why the FTC is looking to act. It just seems on the face of it. I mean, competition is important. One of the purposes of your department is to safeguard competition. Anti-competitive practices are illegal. These are called non-compete clauses. It seems very obvious that they are, that they're nefarious in this way. And it would be a huge, it'd be a huge difference for, for people if those were broadly removed. And yeah, and they're literally affecting fast food workers. Like, like you work for McDonald's,

you can't go take a job interview at Wendy's or whatever. Yes. They affect fast food workers. One of the lawsuits we brought was in the context of security guards. These security guards are making close to minimum wage. There was one security guard, for example, who wanted to switch employers because he wanted a more flexible schedule. He wanted to be around for his kids more. And so he went ahead and went to take that job and his employer sued him for hundreds of thousands of dollars. These are people making minimum wage, right? I mean, this can have a real chilling effect. Interestingly, in this context, the Michigan court ruled that these non-competes were non-enforceable, but the company went ahead and enforced them anyway. So there's just a deep, deep chilling effect that can happen. I mean, who wants to risk getting sued by their employer,

right? Like even if they're never going to, I mean, you see that with NDAs too, where, you know, some people live in fear of them, even if your actual risk for being sued is maybe not that high, just the threat that you maybe could be, or that you signed a thing is going to frighten you. And I mean, it's just so much, you know, a thing people say so often in America is if you don't like your job, go get another one. And in this case, you are literally being prohibited from getting another job is mind blowing to me. Right.

I mean, it really undermines core economic liberties in a very fundamental way. But it also makes me think that in the same way that these companies are able to have a chilling effect on consumers or workers, anybody else, you companies are able to have a chilling effect on consumers or workers, anybody else, you perhaps are able to have a chilling effect on the companies that, you know, if you're going after, I don't know, a security company for this, another company might think twice about it. Or, you know, even if, you know, you're going after one giant merger case, doesn't go entirely your way.

But the fact that other companies know they're going to receive more scrutiny might cause them to behave a little bit differently. Is that is that part of the hope? I mean, as a law enforcer, you also always want to be promoting deterrence, right? You always want to be have firms thinking about not violating the law in the first instance, rather than violating it and saying, hey, maybe we'll get caught. Maybe we won't. And so to the extent we are having that deterrent impact where firms are thinking twice, we think that's a good thing.

Yeah. There's the fact that there's a cop on the beat at all. Are you starting to see, you know, any general movement on on these issues? You know, I know you've only been in office a couple of years now. And and of course, the confirmation process and blah, blah, blah. It always takes a couple of years to get up to speed whenever there's a presidential transition. But, you know, are you seeing encouraging signs? So, look, we've you know, are really proud of the cases we've already filed. Some of these cases can take quite a bit of time to get resolved, but we're very confident in them. We're really excited about the rules we've been able to promulgate. I think stepping back, one of my big priorities has been to make sure that we're more regularly engaging with the public and hearing directly from the public.

I think one of the factors that contributed to, you know, antitrust becoming more hands off over the last few decades was it was perceived as more technocratic. And so people stopped connecting the dots between the fact that their local grocery shut down and the fact that a handful of policymakers in D.C. were responsible for that. Right. And so I think more and more we're seeing people connect the dots between the ways that monopoly power is hurting them in their day to day lives and the realization that this is not inevitable, right? This is not inevitable. This is, in fact, shaped by policy decisions, by law enforcement decisions, that there are people in D.C. making these decisions that are affecting whether you have one option or five options for your grocery stores.

And I think the more that we continue to see people connect those dots, that's really what's going to set this up for more long-term durability. And so whoever follows us in these positions is also going to be held accountable. Yeah. I mean, I've seen the public rise up to a certain extent about this. I mean, again, just in our industry, like over the last year, we started having writers and actors come to our union and say, Hey, the FTC is taking public comment. Should we all, should we like email all our friends and like all give public comment? And I was like, yeah, yeah, no, we're, we're on it. We're going to, we're going to send out an email to everybody and tell you guys, blah, blah, you know, we're, we talked to the FTC all the time,

um, because I'm sort of like in the middle of our unions work on that, but it was like amazing to have, you know, just regular, uh, you know, you know, folks in the industry come up and say like, hey, are we doing this right? How do we get involved? Please, you know, I read an article somewhere and now I want to, you know, show up. I mean, have you seen an outpouring of people joining these sessions and making these comments? We have. I mean, for our non-compete rule, we got over 25,000 comments.

Wow. A lot of these were from, you know, just regular people like in their day to day lives who've been hurt by a non-compete or have a view on it. We heard from nurses. We heard from doctors. We heard from writers. We heard from journalists. We heard from, you know, hair braiders. I mean, it's really just runs the gamut. Similarly, on the proposed merger guidelines we just put out, I think we got somewhere over 3000 comments, again, overwhelmingly just from regular people who have seen how mergers or consolidation has affected them in their day to day lives. And so I certainly think that we're seeing more public engagement. The FTC also does these regular open commission meetings where anybody can sign up and come talk

to the FTC commissioners. And through that as well, we hear a lot from people ranging from, you know, gig drivers to hotel franchisees to, you know, patients who are not able to afford their medicine. And it really just gives us a snapshot of the real problems that people are facing in their day to day lives that the FTC should be aware of and acting on. And you can actually use those comments to actually make rules that will actually affect people's lives in positive ways, hopefully. That's right. I mean, there's a real feedback loop here between who we hear from, what we hear and

how we act. And so, for example, we heard very soon after I took office, we heard a lot from independent pharmacies and patients about how these pharmacy benefit managers or these middlemen in the pharmaceutical supply chain about how their practices may be resulting in Americans paying more for life-saving medicines and also could be squeezing out independent pharmacies, which especially in rural regions are basically key health care providers. And so soon after we undertook this inquiry, scrutinizing the practices of

PBMs. Similarly, you know, we've heard a lot from a whole set of people that have informed our work. Yeah. And let me say, as someone who's commented at some of these sessions, like it's incredibly powerful to, you know, show up or, you know, type into a little government box and like say, this is what happened to me. And know that someone on the other end is reading it and is actually perhaps empowered

to do something about it. Yeah. Yeah. I certainly hope that that's what people feel. And, you know, we have a big obligation. I mean, we're public servants. We serve the public. We've been tasked by Congress to enforce the laws that are supposed to protect people from

abuses of monopoly power. And I also know there's a lot of disillusionment out there. I mean, people have, you know, for decades now been seeing, you know, the economy become less hospitable to them. People feel like they're not getting a fair shake in the market and that the government's been part of the problem rather than part of the solution. And so we also know we, you know, carry a big burden to make sure we're actually working for people and actually delivering. Amazing. So if people are listening to this and they're like, hold on a second, I want to go see how I can make a comment or participate in any way. How do, what's the first step? Where do people go? You can go to our website, ftc.gov. There's a section on there where we know we have regular commission meetings and

you can, you know, sign up to share a comment. We also have a whole bunch of public dockets where we're collecting comment, including on some of these rulemakings. And so that's that's on our website as well. What are you most excited about for the next couple of years? Like what's coming down the pipe? Anything? Yeah. Yeah.

So, look, we have, you know, a whole bunch of lawsuits that we file that I'm excited for them to go to trial. One of the lawsuits that we filed last month is against a private equity company that rolled up anesthesiology practices in Texas. Wow. And so this has been a broader trend where we've been seeing private equity rollups, especially in healthcare markets. And so we brought a case noting that this, you know, New York based firm basically went and bought out the largest anesthesiology practices in Texas and then ended up jacking up prices in ways that resulted in Texas patients

and businesses paying more. They buy multiple companies, roll them up into one and then they control the area. And, you know, the thing with these more stealth consolidation schemes is that each particular acquisition might be somewhat small. So it might be, you know, $50 million, $70 million, right, kind of below the radar. But in the aggregate, it can still add up to significant consolidation.

And so in the merger guidelines, you know, we note that we're going to be scrutinizing these types of serial acquisitions and roll-ups. And we'll be able to look at them, not just each one in a silo, but look at the big picture, zoom out, say, what is the net effect here? I can't thank you enough for coming on the show to tell us about this. It's again, as someone who spends my career yelling about shit, it's amazing to talk to someone who has yelled and now is actually doing something about it. So, yeah, I hope you come back in a couple of years and just tell us how you feel it all went. Thanks so much for having me. And thanks for everything you do to bring more light to consolidation issues. Oh, I do a 0.01% of what you do, but I'll take it.

Thank you so much. Thanks. Thanks Lena. Well, my God, thank you once again to FTC chair Lena Khan for coming on the show if you want to learn more about her work you can check it out at ftc.gov that's her website because she runs a goddamn federal department if you want to support this show that brings you interviews with people like lena khan support us on patreon just head to patreon.com slash adam khan over five bucks a month gets you every episode of the show ad free for 15 bucks a month. I will read your name in the credits of this show and put it at the end of every one of my video monologues this week. I want to thank Richard McVeigh, Emily Wilson, Lee Dotson, Blamo, wonderful podcast called Blamo and Michael Frasco. Thank all of you for your support.

If you want to come see me do stand up in a city near you had to Adam Conover.net for tickets and tour dates. I'm heading to Chicago, New York, Nashville, Boston, lots of other cities very soon. Head to adamconover.net for those tickets. I want to thank my producers, Sam Rodman and Tony Wilson, everybody here at HeadGum for helping make this show possible. Thank you so much. And we'll see you next week on Factually. That was a HeadGum Podcast.