Why AI Needs Antitrust Intervention — ft. Jonathan Kanter

Ed and Scott are joined by Jonathan Kanter, former Assistant Attorney General for the Antitrust Division of the U. S. Department of Justice, to discuss the evolving AI landscape and why antitrust enforcement is more critical than ever. He also weighs in on the Ticketmaster lawsuit, the rising backlash against capitalism, and why the energy sector is one to watch. Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth" out now Subscribe to No Mercy / No Malice Follow Prof G Markets on Instagram Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

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• 1:29Scott Galloway?

  Today's number 42. That's the percentage of consumers who say they didn't know Lay's chips are made with real potatoes. True story, I'm thinking about starting a boy band with other lovers of potato chips. We're calling it Panic at Nabisco.

• 1:47Ed Elson?

  I like that one. These are my favorite jokes. It's the terrible dad jokes. Those are my favorites. The dad jokes? Yeah, I think we should lean more into that.

• 1:58Speaker 07

  Markets are bigger than us. What you have here is a structural change in the wealth distribution. Cash is trash.

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  Stocks look pretty attractive.

• 2:05Speaker 07

  Something's going to break. Forget about it.

• 2:08Scott Galloway?

  We do things out of order here for some reason, but we just interviewed Jonathan Kanter from the FTC and I literally saw my future.

• 2:16Scott Galloway?

  You're going to be Chair of the SEC, I'm convinced.

• 2:20Scott Galloway?

  And Jonathan Kanter is going to get like five minutes with you every other week over, you know, a Diet Coke or Crystal Pepsi or some stupid drink you drink or whatever, or kombucha, whatever.

• 2:30Ed Elson?

  Such a strange vision that you popped into your head.

• 2:34Scott Galloway?

  Well, yeah, and I'm going to be your driver because you're going to feel sorry for me and you're just going to sit in the backseat and you're just going to sit in the backseat and scream at me that I'm going the wrong way to Dulles. I think you're going to be abusive of me in my senior years. I've, that's, when you're 40, I'll be 74 and I see you just, just humiliating me and I will have lost my, all my money for a third time. And you'll feel sorry for me and make me your driver.

• 2:58Ed Elson?

  I love that.

• 2:59Scott Galloway?

  That's the future I see.

• 3:00Ed Elson?

  I doubt that'll happen. I think I'll be, I think you'll be doing very well. I'll be, I'll be coming over and caring for you.

• 3:07Scott Galloway?

  I don't see that. I think men leave. That's why I should have had, my advice to you is keep having kids until you have a daughter because as I, I wish I'd realized this when I was younger, daughters come home and take care of their dads. Boys take off and find some other woman to rule their lives and they're not allowed to be in your life any longer.

• 3:24Ed Elson?

  That's true. That is very true.

• 3:27Scott Galloway?

  Have daughters, Ed.

• 3:28Ed Elson?

  Yeah, actually my grandma recently made that point. I was visiting her and, and she has this friend and she was saying, I just, I feel like she needs someone to take care of her and the trouble is she doesn't have a daughter.

• 3:39Scott Galloway?

  When I was, when I'm very similar now, when I moved in with my mom when she was very sick, there was at the Del Webb Active Living Community in Summerlin, Nevada. And we got a, a letter saying, it's come to our attention that you are cohabitating with a man who appears to be under the age of 50, which is against the bylaws of the Del Webb Resort Community guidelines. And so I had to march down there and say, actually, I'm her son. My mom's very sick and I moved in to take care of her. And of course they were like very like, oh, no problem. We understand now. And they said, there's a support group for kids taking care of their parents.

• 4:14Scott Galloway?

  And I went once and they had it at the clubhouse and it was me, a gay guy and 12 women.

• 4:22Ed Elson?

  Wow.

• 4:23Scott Galloway?

  There are straight men. I'm, I don't know if I'm, I'm sure I'm committing a hate crime here, but straight men don't appear to be that interested in taking care of their parents. Or at least that's what I took away from this caregiver meeting. Of kids who were involved in their parents' lives at this place.

• 4:45Ed Elson?

  I'm impressed that you decided to do that. I feel like it's very, I don't know, mentally healthy thing to do. Go to a support group and talk about problems. It doesn't seem very Scott Galloway, but it's.

• 4:58Scott Galloway?

  I was hoping I'd meet hot chicks.

• 5:02Scott Galloway?

  Oh my God, he's so sweet. He's taking care of his mother. I'll give him random moral sex. I mean, he seems like such a nice man.

• 5:11Scott Galloway?

  Welcome to Prop G Markets. Today we're discussing antitrust.

• 5:18Scott Galloway?

  Yeah, no, I was, this was how bored I was. I was living with my mom and her rabid alcoholic friend who showed up with a Scottish terrier and 12 bottles of Jack Dan, of Johnny Walker Red. And it used to get so fucking strange. I'd be like, I gotta get out of here. And I read that there was a caregiver support group and that was my best option in the afternoon to go just listen to other people talk about their dad's stage eight, you know, prostate cancer and just like, oh, what cancer does your parent have? But it was, did I tell you about this? Let's talk about me, Ed. During the day, I'd hang out with my mom

• 6:01Scott Galloway?

  and Carson, her friend, and we watched Jeopardy and Everyone Loves Raymond and I'd take my mom for a walk. And I'd manage her healthcare. My mom said that she wanted, you know, her only thing on her bucket list. I asked her when, when we're near the end, what's on your bucket list? She goes, one item on my bucket list. I want to die at home. So I thought, I can make that happen. And then, and then at night, I'd go down to the strip. I'd take a 20 minute Uber and I'd party with entrepreneurs and strippers and I'd get ridiculously fucked up, too fucked up to go home. So I'd, I'd get a room at, I forget what it's called. I think it's called the, the Delano now, but back then it was called something else. And during the week, you could get a room in Vegas for

• 6:42Scott Galloway?

  like 29 bucks. And I'd wake up and I'd go have the buffet breakfast and I'd cruise home to everyone loves Raymond and rabidly drunk Carson, who was fucked up by one or two PM. And at one point I walked in on Carson. I came in to the living room to see what, you know, what was going on. And Carson, the 78 year old woman was topless with one of the maintenance workers on my mom's couch fooling around. And the really strange thing is it seemed almost normal. I was in such a fucking Wes Anderson film at this point. I'm like, okay, here's my mom, 78 year old friend with big fake tits and a guy with his fully clothed with a shirt that said like Manuel on

• 7:27Scott Galloway?

  it, fooling around with her on my mom's couch. And it didn't even seem strange. It didn't even seem strange. Anyways, what's the S and P doing today, Ed? What's the S and P doing? And you wonder why I'm fucked up? You wonder why I'm fucked up?

• 7:42Ed Elson?

  I have a lot more questions that I can't get to because we have to get to this conversation with Jonathan Kanter. We have to talk about this boring thing called antitrust.

• 7:52Ed Elson?

  I want to hear more about Carson.

• 7:53Scott Galloway?

  Let's get on with, this is not CNBC.

• 7:57Ed Elson?

  Okay. Here was our conversation with Jonathan Kanter, former assistant attorney general for the antitrust division of the US Department of Justice. Jonathan, great to have you back on Prof G Markets. Thank you for being with us.

• 8:11Jonathan Kanter?

  It's always a pleasure.

• 8:14Ed Elson?

  So we really wanted to bring you on to get your reaction to what is happening in AI. We've discussed potential antitrust concerns when it comes to AI before. We've been talking about it going way back to when we realized that all of these board directors on all of these different AI companies, they all serve on each other's boards. And then it kind of progressed to these AI companies or these big tech companies investing in AI startups and then swallowing them up and taking their employees and oftentimes taking their profits. We saw that with Scale AI, we saw that with Inflection, and we even saw that with OpenAI. And now we're getting to a point where they're all financing each other through these circular

• 8:59Ed Elson?

  deals where you invest in an AI startup and then the AI startup turns around and spends that investment money on your chips and on your compute. It's all getting a little bit shady is what we would say. And we have a lot of concerns in the community, in the investment community, that we are seeing a bubble. So that's sort of the picture that we're seeing. We want to get your reaction as a preeminent antitrust expert. What do you think of what is happening in AI right now?

• 9:28Jonathan Kanter?

  I think this goes right back to why would the antitrust laws were created in the first place. The trust in antitrust laws referred to the oil trusts and the railroad trusts and the sugar trusts and the like that had these tentacles in all different businesses. So you had these holding companies, these trusts that were invested in all sorts of different industry competitors and rivals, and they were pulling the puppet strings. You can go back, you can see these great cartoons of the day of these, the octopus, the antitrust octopus, who had their tentacles in all these different businesses. And so what did the United States Congress do?

• 10:12Jonathan Kanter?

  They created and enacted something called an antitrust law. And that antitrust law is designed to break up interlocking board directorates. It was designed to- Prevent these holding companies from having their tentacles over all the different competitors. Now, as we sit here in 2025, at the dawn of a new industrial revolution around AI, we have the exact same thing happening, which is a small number of companies led by modern day versions of JP Morgan, JD Rockefeller and others, who are putting their tentacles in all of these different businesses through these circular investments, creating the exact same circumstances that led to the creation of the antitrust laws in the first place.

• 10:56Ed Elson?

  So when you look at the big players here, who would you consider to be the new Rockefellers, the new JP Morgans? Who are those players that you think are the most apt to compare?

• 11:09Jonathan Kanter?

  OpenAI certainly sits at the center of all this. But you have Google, you have Amazon, you have Microsoft, and you certainly have the likes of Elon Musk. And then the other new linchpin in a lot of this is Nvidia. And so if you look, for example, take Anthropic, right? People hear of Anthropic and Anthropic sounds like this nifty, neat independent competitor. But who are some of the largest investors in Anthropic? Amazon and Google. Who are some of the largest investors in OpenAI? Microsoft. And then you now have shareholdings with Nvidia, AMD.

• 11:52Jonathan Kanter?

  And you can trace this out. And what you see is you see an interdependent network of companies who are behaving almost as if they're one business to some degree, when they're supposed to be fierce competitors.

• 12:11Ed Elson?

  What is the danger here with all of this? I mean,

• 12:15Ed Elson?

  Collusion might be a strong word. It sounds sort of like conspiratorial, but what we're describing is these very, very large and powerful companies that are cooperating with each other instead of competing against each other to build market power. They're investing in each other. They're becoming friends with each other and sitting on each other's boards. I think colluding probably describes what's happening here. What is the danger there? Because on the one hand, you've got this, this fear of a bubble, that they're kind of creating their revenue by just going out and saying, oh, we'll invest in you and then turn around and pay for our products. But then on the other hand, maybe this is an effective monopolization strategy. Maybe this is how the Rockefellers of the past built up market power.

• 13:00Ed Elson?

  And ultimately, I mean, those were good investments because generally speaking, investing in a monopoly can work out. I mean, what, where is this all headed?

• 13:10Jonathan Kanter?

  Yeah. So there are a number of different risks. Let's unpack them. First is resiliency risk. Our economy is extraordinarily dependent. A small number of businesses, the magnificent seven or 10, whatever number fits at the moment. But the companies we just mentioned are propping up the US economy and, and markets globally. If they're all interdependent and there is an issue with one of them, or one of them turns out to be significantly overvalued, or if there's fraud, or one fails, there can be this cascading effect on all of the other dependent companies, which are in turn propping up the market and could force us to enter into a collapse. So the resiliency risk, even if you set aside all the competition concerns, is something we should be really focused on as a country.

• 13:55Jonathan Kanter?

  Second is, we are at our best as a country when, and we compete best globally when we have fierce competition domestically. And so we want these companies duking it out to innovate, to do, outdo each other, whether it's in terms of the safety of their foundation models, the accuracy of their models, the innovative nature of their chips.

• 14:30Jonathan Kanter?

  And so forth. And so we want competition to force people to do a better job, to innovate faster, to put more money back into the economy. And this becomes a shortcut, sometimes, this cross-investment, this circular investment. Finally, I would say, we want more money being reinvested back in the US economy. One of the things that struck me when I was at the Department of Justice is just how much money is going back and forth among these companies. Let's take one of our more famous cases, which was the Google search case. At the heart of that case were payments by Google to Apple of over $20 billion a year, right? These are not, this is not money that's being reinvested back in the US economy.

• 15:14Jonathan Kanter?

  It's money that's going to and from these companies. And you see the same thing happening with chips. Compare that to take a company like Apple. It spends substantially more in stock buybacks than it does in R and D. And so across the tech sector, we are not seeing enough money being reinvested back in the US economy. Instead, we are seeing it used to prop up share price, or to spend money back and forth among the other dominant firms. And that is, I think, a risk, and something we should discourage, not encourage.

• 15:54Scott Galloway?

  I agree, these circular deals are kind of a sleight of hand, that the concentration of power creates this anti-fragility. But in terms of money actually going into the economy, you're seeing a lot of people, investors, you would argue, 10% of the population owns 90% of the stocks. There is a lot of, a lot, an extraordinary amount of capital going into CapEx that is going into the economy, right? We're going to spend more on data centers this year than I think on new office building construction, talking about new nuclear plants, redoing the grid. So there is, my understanding is somewhere between one and a half and two and a half trillion dollars that will likely go into the economy.

• 16:38Scott Galloway?

  Um, one, do you acknowledge that there is an extraordinary amount of CapEx that is going into the real economy?

• 16:44Jonathan Kanter?

  So let me start by saying, first, I do very much agree. I'm not anti-AI. I'm not anti-technology. I think these are, um, you know, the US has been the cradle of innovation and these are amazing companies and amazing innovative technologies that are exciting. Um, and yes, there is a tremendous amount of investment. My concern though, however, is a lot of that investment is being distributed among the small number of companies. And so when you think about data centers, yes, they're important, yes, they're necessary, but, um, a lot of that money is going to buy chips and they're not creating lots of jobs back in the US economy.

• 17:25Jonathan Kanter?

  And so the value is being captured by a small amount of folks who also include people who invest in the stock market. But there is also a lot of money still sitting on the sidelines. If you look at, um, you know, the big tech companies, they still, you know, sit on tremendous amounts of cash, a lot of that's offshore, uh, and a lot of money is using for, being used for things like buybacks. What competition is supposed to do is it's supposed to maximize the amount of that money that is being put back into the economy through R and D, through job creation, uh, and through, um, lower prices. And so all of these things can be true at the same time, in my view.

• 18:03Scott Galloway?

  So we're sort of, uh, we, and we've got to educate young, young Jedi, uh, uh, what is it? Jedi, what's the student? Padawan. Padawan, young Padawan, Ed here. We're just older and smarter, Jonathan. That's what I'm trying to say.

• 18:18Jonathan Kanter?

  I agree. See, now we're talking.

• 18:20Scott Galloway?

  There we go. Now we're speaking each other's language. We're about the same age. You were actually at, you were at the FTC in the late nineties, looking at this train wreck. I was in the caboose in the train wreck and, you know, raising money for internet companies. And I remember a bunch of us had a e-commerce startup called Red Envelope where we were trying to get an investment from AOL who would invest 10 million in us in exchange for us spending $10 million in AOL's marketplace.

• 18:48Scott Galloway?

  And they were doing these kind of like, I don't know if you remember Purchase Pro, but it feels very similar, smells like teen spirit, feels very similar again, these round trip related party transactions. And then when the company got in trouble and could no longer make the payments to AOL, and then AOL had to write it down, it took a big hit to their earnings. And then, I mean, it was just like, the unwinding was almost as fast as the downward spiral was almost fast as the upward spiral. When you look back at how the dot com implosion played out, and you try to project, this is what I'm hoping. I think a lot of people see nothing but upside and have trouble actually visualizing the downside. Can you talk a little bit about what happened in 2000 and if and how it relates to what might happen here?

• 19:33Jonathan Kanter?

  I think there are two things that pop out for me. First is valuation rather than profits. And so there, at the time, there was this euphoria, in some degree, rightly so, that the internet was going to change the world, and it was going to create all this opportunity. So what happened is, everybody started, you know, imagining every internet company or every good idea would some way, somehow translate into a very profitable business. And you saw these inflated valuations based on this outsized optimism about what these technologies could achieve. And then there was the rationalization where, you

• 20:16Jonathan Kanter?

  know, a lot of these companies may have had good ideas, but they weren't likely to generate the kind of money that was necessary to justify those valuations. And so I think that's one thing that happened. And, you know, whether we experience that now, it's hard to know, but it certainly does feel the same way. The second is the interdependence, and that's kind of the point I was making at the outset, which is, You know, the companies we're talking about here, again, I don't want to overlook the fact that many of them are great companies and they do lots of great innovative things. But resiliency is an important part of the equation here. And if there are so many dependencies among so many companies that are so powerful and

• 20:58Jonathan Kanter?

  there's one failure, I mean, look what happened with Enron and some of the other failures of that era. It took down a lot of other companies with it. And so I think we want to make sure that, you know, we're not too exposed by having all these connections among various different companies.

• 21:15Scott Galloway?

  Well, I'll put forward a thesis and you tell me where I might have this wrong. Because what I find is, as long as the markets are screaming up and the majority of investors don't really remember 99, it's very hard to create any sense of urgency or concern as long as you keep seeing your 401k going up. But you have essentially, if these companies could get cut in half, Amazon and Cisco went down 90% from 99 to 2001. That doesn't mean they aren't great companies. Amazon since then has gone up 40 or 50x, but they went down 90% from their highs of 99. Say these companies get cut in half. And by the way, if you woke up tomorrow and didn't know what had happened to these companies

• 21:57Scott Galloway?

  the last two years, their run-ups, they wouldn't look cheap, even if they got cut in half. That represents a 20% decline in the S and P, which represents a 10% decline in total market cap globally. That strikes me as no, as almost no way to avoid a recession if in a short period of time, you had 20% of the S and P eroded and 10% of the global market cap go down. Is that, am I overstating the danger here? And what, you know, and then I guess the follow-up question is if you do see a lack of resilience or kind of an economy that's becoming fragile.

• 22:41Scott Galloway?

  Other than, you know, I guess it's do we break them up? What do we do? How do we, how do we rationalize this market for what I would call a soft landing?

• 22:48Jonathan Kanter?

  I characterize it more as resiliency risk. And, you know, let's hope that we don't have a crash. Let's hope that things stay on the steady, right? But, but I do think there are things you want to do to put in, you know, have circuit breakers in your system to help mitigate resiliency risk. And some of those are things like antitrust laws. And the antitrust laws are not just about, you know, penalizing the monopolist or holding a monopolist accountable like at AT&T or Microsoft or Google years later. Antitrust is also about acquisitions used to gain power. It's also about something called interlocking directorates. And it's a little known part of the antitrust laws that we revived when I was at the agency.

• 23:33Jonathan Kanter?

  But you're not supposed to be on the boards of competing companies. It's about cross ownership and investments that help, again, keep independent companies or companies separate from each other. So you don't have these kind of cascading, you know, economic effects that can result in a downward spiral. I do think we need to be responsible about dusting off some of those laws and making sure that we are protecting ourselves. I'll also say to your point, Scott, which I very much agree with, and I've been, you know, pounding the table on this for a while, is we are too dependent on a small number of companies. My view is we need more public companies. We need more companies going public. We need more businesses starting not to be acquired, but to build, thrive, go public,

• 24:17Jonathan Kanter?

  and become the next great U.S. company. And I think we kind of lost our way. And that is a difference between the late 90s and early 2000s. The time, you know, the, the, the path to prosperity and was, was to build a company and then take it public. And I think now the path to prosperity is to build a company and either have it be bought by private equity or bought by a big tech company. And I think that's an unfortunate development. We'd be a lot better off if we had more companies making go of it.

• 24:52Ed Elson?

  We'll be right back after the break. If you've joined the show so far, be sure to give Prof G Markets a follow wherever you get your podcasts.

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• 26:42Ed Elson?

  We're back with Prof G Markets. When I look at these interdependencies, there's a sense in which this is actually beneficial and that this is the way that markets should be headed. How do we draw these lines as to what is actually good competitive behavior? What is...

• 27:02Ed Elson?

  What level of monopolization and the intention to monopolize and to accumulate power, at what point does it become a problem where it actually causes an issue for markets? It's sort of a general question, but how do we draw that line between you are competing in a good way, you're trying to buy up your competitors, you're trying to compete versus you are causing issues in the markets?

• 27:28Jonathan Kanter?

  Listen, those are hard lines to draw, but I'll give you a few things that jump out to me. First, conflicts of interest. If you own a platform and you compete on that platform, then, and you have power, those conflicts of interest are something that should be easy to address. We've done that in financial markets, for example, where you can't be on both sides of a transaction. And so I think for starters, we need to find conflicts of interest and we need to address them, whether it's through regulation, antitrust, or any other legal mechanism or instrument, I think it's important that we do that. The second is competitors should compete. When you start seeing competitors investing in each other and around each other, and you can start drawing all those complicated

• 28:12Jonathan Kanter?

  lines, it should be a cause for concern. The simple rules of the road should be, you know, competitors should try to beat the crap out of each other. That's their job. That's what yields all the great things that flow from competition, including lower prices and more innovation. And so if you see in an economy of intermediaries, if you start to see conflicts of interest, and you start to see interconnecting circular investments, interlocking directorates, those are the kinds of red flags that should suggest intervention.

• 28:45Ed Elson?

  So you left the antitrust division after the end of Biden's term?

• 28:52Ed Elson?

  If you were back at the DOJ and you were regulating what's happening in AI, what would you go after? What would you focus on? How would you solve for these issues?

• 29:05Jonathan Kanter?

  These kinds of moments when we see new technological revolutions are wonderful in many respects. They can be scary, but they create opportunity and they only come along every 20 or 30 years. And so it's really important to maximize this moment, meaning make the opportunity to innovate at a time when the technology is changing available to as many as possible. And so it's much harder to clean up a mess as we learn 15 or 20 years later. And so during the internet era, a number of us in the early aughts and 2010 timeframe were raising red flags about internet companies becoming dominant, the

• 29:47Jonathan Kanter?

  companies like Google and others. And we were told that, oh, we should err on the side of doing less rather than more. And but the result of that was the incumbents exerting a tremendous amount of power. And then when we tried to bring antitrust cases, we were stuck trying to retrofit remedies into markets that had calcified. A little bit of intervention in some of these markets, not a lot, a little bit, can go a long way early on. But it often becomes a very messy exercise if 15 or 20 years later, you're trying to clean up a mess with lots of dominant firms. So my advice would be focus on doing a little bit now. Little things like cross investments, interlocking directorates, aqua

• 30:29Jonathan Kanter?

  hires can help oxygenate a market and mitigate the need for invasive intervention, let's say 10 years from now.

• 30:38Scott Galloway?

  If there's a change in the White House in 28, I can't imagine you would have the opportunity to play a senior role in making these decisions. So as I'm sure you'd do, you would do, you'd immediately call, call me and Ed and say, guys, I need your, I need your insight on potential solutions. And I want to propose a potential framework for a solution and get and have you punch holes in it. So what do we have? We have the private markets have largely been sequestered, institutional investors and private equity funds. And these guys no longer take Google public at 30 billion. They wait till it's worth a half a trillion or a trillion. And I feel like essentially companies. Existing investors take companies public when they only have run out of what I'll

• 31:19Scott Galloway?

  call rational investors. And that is they say, okay, who is willing to continue to bid our stock up? Let's now go to the retail markets. And most of the juice has already been squeezed. Most of the upside has been captured by the private markets, which mostly consist of institutional investors, which only exacerbates income inequality. So we want retail investors to have more opportunity to the, to access the private markets. At the same time, we want to not protect, well, yeah, protect. We want to make sure that there's not a lot of widows and orphans investing in fraud, fraudulent companies. And one of the reasons the S and P trades at such a high multiple is that there are reporting requirements that largely starch out the fraud. There just aren't a lot of Enrons

• 32:04Scott Galloway?

  in the S and P, right? So what about embracing new technologies and doing something along the lines of the following, creating a tokenization of, say, companies doing over 10 or 20 or 30 million in revenue, or maybe smaller if there's a technology or recurring revenue component to it. You issue a token, which is essentially, you know, million tokens equals one million to the ownership stake of it. You put it on the chain and you have AI basically tapping into the APIs of the bank account, the receivables, a bunch of key, key information flows within the company. If you want to do this, you have to let AI tap in and AI, every moment of every day, issues a compliance ranking or smell test

• 32:49Scott Galloway?

  that says, this firm looks very legitimate from everything we can tell using AI as opposed to regulators or reporting requirements or earnings calls, or it doesn't, and give investors everywhere 24 by seven access to this tokenization or access to private companies globally. So tokenization with some sort of AI driven compliance that issues some sort of rating.

• 33:15Ed Elson?

  Well, I don't see why we can't just make it, call it a stock and say, put it on the stock market and say, you know, retail investors can invest in these private stocks. Or just create a market. I don't see why we need the tokenization and the chain and the AI. Why can't we just use the internet and call it a stock? But anyway, look, I would like to get your reaction generally.

• 33:36Scott Galloway?

  Jonathan, this is, this is what I put up with it. My co-host pushes back on me before the guest can push back on me.

• 33:43Jonathan Kanter?

  I like to just sit here and watch with my, grab my popcorn next time. No, I think they're, they're both and, right? Like, so one is a sense of like evolve or die, right? I think when it comes to marketplaces, technology is great and AI and tokens and, you know, will, will allow for greater access to markets, greater monitoring, greater assessments of where you want to invest and hopefully create more opportunities to buy and sell, right? And so, yes, right, all of that should be on the table. At the same time, you know, they should be used to help investors

• 34:23Jonathan Kanter?

  take part in a marketplace, but we can't have a marketplace unless folks are, you know, putting their, their companies on public markets. And so I think they're both true, not to try to make peace here, but I think you're, you're kind of talking past each other more than talking at each other.

• 34:43Scott Galloway?

  Let me just talk, direct me to my little Padawan bitch.

• 34:49Scott Galloway?

  The reason why you'd want a tokenization between stocks is stocks traditionally trade on exchanges, which are open 30, 35 hours a week and also are very expensive to trade. And also, why wouldn't you just put it on something that's 24 hours? It's more efficient and lower costs of transaction and lower gas fees, if you will.

• 35:09Jonathan Kanter?

  Some of the regulatory challenges, some of the overhead barriers to entry of going public, I think in your mind can be addressed through technology, what makes it easier to be on the market, makes it easier to go public, makes it easier to get, you know, full benefit of demand in the marketplace. And so maybe if it's not just about removing regulations, it's about modernizing the system so that more people can participate. You can get more demand, you get more participation in the marketplace.

• 35:38Ed Elson?

  I just want to get your reactions to any other.

• 35:43Ed Elson?

  Important antitrust lawsuits or areas of antitrust that are happening right now. I mean, just some cases we could bring up like the Google ad tech case or the Live Nation case or the Apple case. I mean, so many other antitrust lawsuits going on. Anything that you think is particularly important right now or deserves more attention?

• 36:01Jonathan Kanter?

  Yeah, I think the remedies in the ad tech case are really important, both in terms of accountability and addressing conflicts of interest. I think, you know, we got the, you know, the puck down the eyes by saying, okay, yes, the antitrust laws can apply in a modern economy. They can apply to companies like Google and Apple and others. Now we need, you know, to mix metaphors to complete the tackle and say, okay, not only can we win in court, but we need to make sure that the cost, that antitrust accountability isn't just the cost of doing business, but that it's better for investors, it's better for shareholders, it's better for the company's bottom line to comply with the law upfront rather than violating it and then just, you know, getting a parking ticket on the back

• 36:46Jonathan Kanter?

  end. And so I think meaningful remedies that not only address the problem but have a deterrent factor going to be important. And the Google ad tech case in Virginia is one to watch on that front. I think the Ticketmaster case is really important. It's not the biggest market of our economy, but it's the one, it was like maybe the most popular antitrust case in the history of antitrust. It was an example, I mean, when we brought it, I mean, people coming up to me, left, right and center, you know, practically giving me hugs for having brought the case to break up Ticketmaster. It's a way in which people can relate to the government working on their behalf. They feel like they're feel oppressed by big companies, powerful companies, and Ticketmaster,

• 37:30Jonathan Kanter?

  fairly or unfairly, I think fairly, has become a poster child for that.

• 37:34Ed Elson?

  Could you briefly just like explain the Ticketmaster situation just for anyone who might have forgotten?

• 37:39Jonathan Kanter?

  When I was at the antitrust division DOJ running, we brought a case to break up Ticketmaster, Live Nation. They own the promotions, they own the ticketing, they own 60 of the top 100 amphitheaters. They have, you know, tremendous amount of sponsorship and other revenue that's generated from inside of those arenas, either the ones they own and operate, or the ones they contract with. And they've basically monopolized the entire stack from top to bottom. And you have this opaque system where people feel like they're out of control. Artists don't like it, consumers don't like it. And that was the product of numerous mergers and numerous failures, swings and misses, by antitrust enforcement authorities. And so, part of what we had to do when I got there is we had to clean up the mess and say,

• 38:24Jonathan Kanter?

  "Okay, no more. We're going to bring big cases, we're going to take big swings. And if companies are breaking the law, and breaking them up is the right thing to do, then fuck it, that's what we'll do."

• 38:35Scott Galloway?

  Let me help you out here, Ed, on how it actually impacts people at a ground level, because you don't have kids yet.

• 38:42Scott Galloway?

  So, you go to the Taylor Swift concert. My understanding is Live Nation controls somewhere between 50 and 70% of the tickets by dollar volume of all live events. Is that accurate, Jonathan? It's something extraordinary.

• 38:54Jonathan Kanter?

  It's something extraordinary like that. If, for certain kinds of events, and certain types of arenas, the number's even higher.

• 38:59Scott Galloway?

  So, you go to SoFi to see the Taylor Swift phenomena, and you see every white 15-year-old in Southern California. And as you're leaving the venue, all you see are all these dads in cargo pants, like hundreds of them, on the terrace outside of SoFi, because the tickets are $1,400 for shitty seats. So, the dads don't even go in. They wait outside and they just sit there with their cargo pants, tapping. And then, their parents go to the Oasis concert.

• 39:31Scott Galloway?

  And the ticket, a decent ticket was $2,300. They played 23 songs. So when you're an old man like me and you don't want to deal with traffic, you leave three songs early, which is like giving up $300 because of the monopoly. It strikes me, and I don't know if anyone's done any research here, the inflation around live events has outpaced almost everything. The pricing has just gone absolutely crazy. And my sense is they've used technology to put ticket brokers out of business and capture that additional margin. They've said, all right, we'll, we'll charge $4,000 for a floor seat rather than having people line up for $200.

• 40:12Scott Galloway?

  But where's the backend? Where's the inflation been most severe? Or pricing is a function of concentration of power? Because I think it's, it's hard, it's hard to look at big tech because there's been a concentration of value, but those products are free. What other markets do you look at and think the pricing is just way too goddamn high because of a concentration of power?

• 40:36Jonathan Kanter?

  I'll give you a few examples, although I'll say the advertising side and the hardware side. I mean, look at your phone. Your phone is getting more expensive, not less expensive. And, you know, for an extra megapixel here and there on your camera. But, but healthcare is one. Pair provider consolidation has, is out of control. The other area I would keep an eye on to kind of mix the two questions from Scott and Ed is energy. As data centers consume more energy, it's getting, natural resources are becoming scarce. It is going to get significantly more expensive for families and businesses who need power. And I think the conversation that we're all going to be having five, 10 years from now

• 41:18Jonathan Kanter?

  will be around things like healthcare, but frankly, it's going to be around power and energy. And those are the new frontiers. And so I think we need to, we already see prices going up. And they're going to continue skyrocketing as data centers absorb more and more literal power from local communities.

• 41:40Scott Galloway?

  But how would antitrust fix that?

• 41:41Jonathan Kanter?

  That may be an issue of regulation and competition policy and power, but we need to make sure that our businesses and communities can have access to power. But there are also a bunch of issues around, you know, wholesale and access to energy and grids. And we've seen a bunch of antitrust cases over the last number of years in connection with the ability to have wholesalers and others getting access, the proper affordable access to power. So I think we're going to see a bunch of action around that. But when something gets scarce, prices go up, people will try to make money and people are upset that they're paying more. And that's a recipe for litigation and it'd be nice if we can try to get out ahead of

• 42:26Jonathan Kanter?

  that. Also, we should think about the extent to which these data centers really are, you know, putting, to bring us right back to the beginning of the conversation, more of that money is being reinvested back in the economy. And whether, you know, if we're going to subsidize the creation of data centers, we make sure that there's enough power left for the rest of us. We make sure that there are enough jobs left for the rest of us because otherwise the money is going to be sucked up by a small number of folks and everyone else is going to suffer.

• 42:57Ed Elson?

  I was just going to bring up the CapEx that we talked about at the beginning of the show. It's like, yes, we're investing or the big tech companies are technically invest, reinvesting into the economy by spending and creating the demand for themselves by investing in each other and spending all of that money on the data centers. But I hadn't thought of the other downstream of that, which is, yes, that's going to create more demand on the energy side. I mean, infinitely more demand when we look at the amount that these data centers are going to use up, which is going to drive prices up for the rest of us. And again, it was demand that was kind of created out of thin air because of the size of the balance sheets of these companies and their ability to partner with one another.

• 43:38Jonathan Kanter?

  And what they're saying is the only thing that's keeping us from AGI or the only thing that's keeping us from competing with China is, you know, is more energy and more data centers.

• 43:47Ed Elson?

  Yeah.

• 43:48Jonathan Kanter?

  And even as I was leaving government, I mean, there were, there are, you know, massive government subsidies that go to building out these data centers. And that's, you know,

• 43:58Jonathan Kanter?

  That's taxpayer funded. And so what are taxpayers getting in return for that? I think that's a question, a legitimate question that people should be asking.

• 44:07Ed Elson?

  We'll be right back after the break. If you've joined the show so far, be sure to give Prof G Markets a follow wherever you get your podcasts.

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• 45:57Ed Elson?

  We're back with Prof G Markets. Just going back to the Ticketmaster situation. You mentioned how it's like the most popular antitrust case of all time. I think that that's probably because it's such a consumer specific case. It's like everyone knows, everyone buys tickets to go to stuff and to go to live events and concerts. And it's very obvious to people how it could, how a monopolized economy could result in higher ticket prices. Like, it's very easy to see that link and make that connection. So it's very popular. My question is, how important is popularity when it comes to antitrust enforcement?

• 46:41Ed Elson?

  Like, when people come up to you on the street and they say, oh, my gosh, like, you're the guy who did that Ticketmaster case. Thank you, really appreciate it. Is that important when it comes to enforcement? Like, do you need public support? Does that help your case? Does it advance the case? Like, what role does popular support have in antitrust?

• 47:03Jonathan Kanter?

  People want faith that their government is protecting them. And so, yeah, we brought cases involving agriculture and meat processors. And those are important, really important to our farmers and to our economy. But, you know, we need, we need public support for the work. We need public support for representatives who are going to fund the work. We've had a lot of people, when I was at the agency, trying to squeeze our budget. And, and I, listen, we, you know, right now, there's a crisis of confidence in capitalism. There's a crisis of confidence in marketplace. There's a crisis of confidence in government, right? And, and how do we fix that? Well, you give people more faith in all of those things.

• 47:44Jonathan Kanter?

  You give them faith that markets and capitalism can work because you have competitive markets and companies that behave responsibly. You give people confidence in government so that they know that their taxpayers are being used to address the kinds of things that they're, piss them off, like their concert tickets. And so I think we, as, you know, As government officials, in my case, a former government official, yeah, it matters. It matters a heck of a lot. It doesn't mean we should only do the stuff that is, you know, popular because consumers can see it from, um, from street view, but it, it, it means we, we need to do the work of the people and let them know that we're doing it and why we're doing it and then have them, you

• 48:26Jonathan Kanter?

  know, have faith that people are out there looking for their interests and that markets actually can work if we protect them and we make sure that, you know, bad actors are held accountable.

• 48:38Ed Elson?

  Just on that note, when you look at the rise of someone like Zohar Mamdani and people are not happy with capitalism right now, and then someone like Mamdani comes along, who is a, is a democratic socialist and his view in many cases is that, one, that affordability is a problem and, and I think we can all agree with that. But in some cases, the solution isn't about trying to figure out how to let competition and markets bring prices down, but how to enable government to sort of take ownership and then have government bring prices down. So as an example, the city-owned grocery store, I think that's probably gotten maybe too much attention.

• 49:22Ed Elson?

  It's a pilot program, whatever, but the reality is, his view is, okay, the government will come in, they'll run the grocery store, they'll bring the prices down. And I think that that is indicative of a growing belief among Americans right now that capitalism doesn't work for us and we need to go to more state-heavy solutions, something closer to socialism. Just want to get your reactions to what we're seeing in terms of that trajectory.

• 49:50Jonathan Kanter?

  It's a natural reaction. When markets fail to produce and, and deliver for people, they're going to look to something else. I mean, Donald Trump preyed on this as well, right? I mean, he, he, what he talks about is not capitalism in its traditional sense. I mean, I grew up believing in the American dream. I didn't come from a lot of money. The son of of two school teachers, living in a 1,200 square foot apartment in Queens. But I believed in opportunity, right? If I worked hard, I can own a house, I can own my own business, I could be successful. And that dream is just cut off to too many people. And so in the absence of that opportunity, which I think is exacerbated, if not caused by massive wealth inequality, they're going to look to other systems.

• 50:33Jonathan Kanter?

  Those other systems might not be better, but they, what they see in front of them isn't working. And so how do we, you know, that's one of the reasons why, you know, I went into antitrust and one of the reasons why I went into government is to try to figure out if we can make these systems work. So things that I had access to, which was the ability to go to, you know, state university, earn an education, attend law school, be the first lawyer in my family, make a good living, buy a house, all of those things are available to other people. I think it's a wonderful thing when it works, it's a beautiful thing when it works, it's worth fighting for, but we need to work to protect it. And right now, there are too many people in the country who think it's not working

• 51:15Jonathan Kanter?

  for them and they're angry and I understand that frustration, I understand that anger. And, you know, there, I'd rather see a positive solution to that by reinvesting in marketplaces, reinvesting in markets, reinvesting in the opportunities, reinvesting in education. The worst thing we can do right now is de-invest in universities. It's crazy to think that we are, we are making life harder for the centers of scholarship that have made us such an innovative country. We are going in the wrong direction. And so I don't, you know, begrudge anybody who looks to Mamdani or someone else and says, hey, you know, at least they're talking to me, at least they're giving me a way out. But I do think we need to have a broader conversation about what we want our country

• 52:00Jonathan Kanter?

  to look like and, and how do we get there?

• 52:03Ed Elson?

  But your view is the solution is capitalism, not socialism, but regulated capitalism?

• 52:09Jonathan Kanter?

  That's my view, yeah. I, I think, you know, accountability, competition, markets, basic regulations for safety, security.

• 52:20Jonathan Kanter?

  Um, uh, market failures, um, and, um, and a thriving middle class. But without a thriving middle class, we're going to continue to have these differences. Uh, people are going to continue to hate each other. Uh, they're going to continue to see no pathway to upward mobility. Uh, and they're going to seek out other things, some good, some frankly, bad. And I think that's a dangerous path and we need to do something about it.

• 52:45Scott Galloway?

  Refereed capitalism. That's, I, I think it's, as, as Churchill said, it's the worst, the worst system in the world, except for all the rest.

• 52:54Ed Elson?

  Exactly.

• 52:56Ed Elson?

  Jonathan Kanter is the former assistant attorney general for the antitrust division of the US Department of Justice. Under the Biden administration during his tenure, he brought major antitrust lawsuits against Google, Apple, Live Nation and Ticketmaster, United Health, RealPage, American Airlines, the meatpacking industry, and many others. He also previously served as an attorney at the FTC and founded his own law firm, Kanter Law Group. We really appreciate your time, Jonathan. Thank you so much for joining us again.

• 53:24Scott Galloway?

  Thanks, Jonathan.

• 53:25Jonathan Kanter?

  Thanks for having me. Always good to see you guys.

• 53:36Ed Elson?

  Scott, your thoughts?

• 53:38Scott Galloway?

  I like Jonathan and I, um, I think the concentration of power is, is he's talked about it and the lack of, I mean, he said some really cogent things and that is I have a tendency because of my anger to want to go in and take on the big guys and break up these huge monolithic companies. And the reality is they're so intertwined now to breaking them up. There'd be a lot of kind of what I'll, not technical debt, but there'd be, you know, the surgery would be painful, right? Trying to, you'd be trying to separate Siamese septuplets. It, it, there'd just be some damage. And his, one of his key insights I thought was smaller intervention early on, almost like preventive medicine.

• 54:20Scott Galloway?

  And I thought that was really, um, really interesting. Your thoughts?

• 54:26Ed Elson?

  Well, just responding to what you just said there about the surgery. One thing that's really frustrating to me is.

• 54:32Ed Elson?

  Agreed, preventative medicine is easier and more effective. But what is so upsetting to me is they actually did figure out the surgery. They did identify where to make all the cuts between the Siamese twins, especially with Google as an example and the search division. And they figured that whole thing out. They laid out the plan, they laid out the remedy. And I think one of the craziest things that we saw when it comes to antitrust this year was the judge agreeing that Google had a monopoly. And then when it comes to dishing out the punishment, he sort of backs off, retraces his steps and he says, actually, AI is happening and AI means that Google is going to be

• 55:15Ed Elson?

  competing and they have to deal with this really difficult thing called ChatGPT. So I'm not really going to punish. And that to me was like a giant slap in the face to all of the work that all of these antitrust guys. And to your point, yeah, they spent years and years trying to figure out, how do we make that surgery? They figured it out. And then the guy, all he had to do was just carry the ball across the line and he didn't do it. And now we see like Google is actually beginning to dominate in AI. We did all saw those statistics, it's eating open eyes lunch. So I don't know, I agree with you that this stuff is difficult. It doesn't mean that it's impossible and they proved that.

• 56:00Ed Elson?

  And yet still, our system bent in favor of big tech, concentration of power, monopolization. So I was certainly disappointed about that. I know Jonathan was too. I would like to just get your reaction to the capitalism, socialism discussion that we had at the end there. These are large, very kind of overly generalized philosophical discussions and I generally don't like them because I think they simplify things too much. However, they are having a place in the national conversation now. The question of capitalism versus socialism actually is a conversation that is being

• 56:44Ed Elson?

  had right now because so many people are losing their faith in capitalism. And we are of course seeing a rise of more socialist minded political leaders. And the obvious example is Mandani.

• 57:01Ed Elson?

  I want to get your reactions to that. What did you think of what he said? Where do you land on all of this?

• 57:08Scott Galloway?

  I think the purpose of an economy is to create a middle class. That's the whole point. And in order to have a robust middle class, you have to have incentives for people to work hard, take risks, make sacrifices, innovate. And one of the ways you create incentives is by having exceptionally wealthy people and billionaires. And there's nothing wrong with that. The question is, at some point, when those billionaires garner so much political power and can engage in regulatory capture, where they garner 10, 20, 30, 50% of all wealth now controlled by 26 families, there's just no doubt about it. It's not a growth agenda. It's a transfer of wealth from lower middle income homes to the top 0.1%. And that erodes the middle class.

• 57:53Scott Galloway?

  It erodes faith in America. And for the first time in the history of America, a 30-year-old isn't doing as well as his or her parents were at 30, which to me means America isn't working. And what's so disappointing about that is if you said that were true in Europe, the politicians could blame it on a lack of growth, overregulation, a lack of a technology, a technology investment, a lack of entrepreneurial risk-taking, the rise of China. We have no excuse in the United States. You know, prosperity is here in terms of wealth creation. It's just we have made a conscious decision not to distribute it equally. And one of the ways that there's regulatory capture is this weird form of oligarchy,

• 58:33Scott Galloway?

  cronyism meets socialism, where the president decides, after leaving a trail of unpaid subcontractors and bankruptcies, that he understands business better than anyone. And rather than going through the process of checks and balances to pass laws, he says, no, we should invest in Intel. No, we should have one golden share in US Steel and control it. No, I'm going to write laws unilaterally that transfer wealth from 490 of the 500 S and P to the 10. I'm going to neuter the IRS such that the wealthiest Americans, where there is a tax gap of $600 or $700 billion a year and uncollected taxes continues to go uncollected.

• 59:16Scott Galloway?

  We have all these arguments, these false arguments around left versus right. It's not, it's top versus bottom. And it's also the fact that our taxes would not need to go up if everybody paid them.

• 59:29Scott Galloway?

  The only place the president isn't advocating for AI is AI or in the IRS. Because there is so, there is so much incentive now to skirt tax laws and the tax code going from 400 to 4,000 pages. There is so much incentive for the wealthy to continue to sequester educational certification and housing from anybody else because they already own these assets. That the middle class are being priced out of America. And there's a lack of distribution of wealth. And the unfortunate thing is that America puts up with it because Americans are so optimistic that they believe there's a decent chance that they or the kids at some point will be in that 0.1%. Where it's most apparent is the boring shit.

• 1:00:13Scott Galloway?

  17% of our GDP goes to healthcare, $4 trillion. If we brought those costs down to what they were in the rest of the modern world, we'd save $2 trillion a year, which indirectly would solve our deficit. So we are in late-stage capitalism where the top 1% or 2% are capturing all the gains. And the point of government is to have refereed capitalism and you have to have a redistribution of wealth. And the far-right and incumbents would like to convince people of your generation that there'll be more opportunity and the middle class will heal itself naturally. Bullshit. Throughout history, the middle class doesn't exist. It existed for a brief period in post-World War II Europe and America and in China because

• 1:00:55Scott Galloway?

  of a constant redistribution of capital and opportunity back to the households who are less fortunate. And we have given up on that in America, or we're slowly giving up on it. So it's, you know, the illusion of complexity gets in the way of everything here. There are common sense solutions for all of this. Do you need to cut spending or raise taxes? The answer is yes. Do you need to provide young people with a shot at buying a home? Build a ton of houses, tax incentives to unleash the private sector on building a massive number of houses, reduce regulation? Do you need greater taxes on corporations? Do you need to break up the cartel and the trust of my? Of my industry academia such that kids can achieve certification at a lower

• 1:01:38Scott Galloway?

  price, do you need more tax policies that tax capital, not labor, such that it takes money out of my pocket and puts it into your pocket such that you are more attractive to the opposite sex and can provide for them. And we acknowledge that women want providers and protectors and you can have kids and you can feel good about America and you decide to serve and you decide to run for office and we re-inspire this upward spiral. Instead, we make all of these bullshit excuses for why the rich should get richer and richer and richer. And we elect a strong man because we'd rather have a strong man who's an autocrat than a bunch of weak liberals who have, as Jonathan said, no North Star. There are basic common sense fixes to all of this shit. It just requires political will.

• 1:02:27Ed Elson?

  This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our research team is Dan Shlon, Isabella Kinsel, Chris Nodonahue and Mia Salvario. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Profatory Markets from Profatory Media. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.

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• 1:04:28Speaker 15

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