Pod Insights Pablo Torre Finds Out Meet the Most Feared Person in Silicon Valley About this episode Lina Khan has inspired an unusually bipartisan coalition of allies — and antagonists. As chair of the Federal Trade Commission, she became known as the most hated regulator on Wall Street. As too principled for Donald Trump and Elon Musk. Too bold for Ticketmaster and the NCAA. But Khan isn't done taking on the corporate class — or finding strange bedfellows like Steve Bannon and Michael Jordan. Can her alleged "hipster anti-trust" movement inspire a "standing army" for the people? And could she be our next Supreme Court justice?
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1:41 Speaker 02 I think Lina Khan should have been given more power, should have been able to do more things. I think there's obviously a big problem. I think a big problem in Silicon Valley.
1:49 Pablo Torre? Right after this ad.
1:58 Pablo Torre? Do I call you Lena? Do I call you Chair Khan? How does it work?
2:01 Speaker 03 Whatever you want. I mean, I'm not really a chair anymore, so...
2:04 Pablo Torre? Well, I was gonna say, I don't know if it's like, you know, you're sort of Mr. President forever. I don't know how it works with the FTC.
2:11 Speaker 03 I think we get to set the rules, so whatever you want.
2:13 Pablo Torre? So you're going casual today?
2:15 Speaker 03 We can do that. I mean, it would seem fitting.
2:18 Pablo Torre? Well, look, I've told a bunch of people in my life you were coming to visit our studio today, and I thank you for being here, by the way. And the reactions tend to go into two camps. One of them is, "Holy [BLEEP]!" The other one is, "Who is that?"
2:34 Speaker 03 That's not too surprising. I mean, for a long time, you know, the Federal Trade Commission was somewhat esoteric and arcane. And we really tried to revive it, revitalize it, start focusing on some of the biggest pain points that people were facing in their day-to-day lives. And so I would say that did generally elevate the profile of the agency.
3:00 Pablo Torre? So if you're one of the people who have zero idea who Lina Khan is or what any of this even has to do with sports, which we will get to, I promise, you should know something very important here, which is that there is an almost inspiringly bipartisan coalition of people who hate her guts.
3:21 Speaker 04 Elon Musk, who I guess is gonna be in charge of the federal government soon, stated that the FTC Chair Lina Khan, quote, "will be fired very soon."
3:30 Speaker 05 Lina Khan going over and reportedly colluding with European regulators when she should be standing up for American companies. She's colluding against them, and that's horrible.
3:39 Speaker 06 Why are you harassing Twitter? My problem here today is that you're a bully.
3:43 Speaker 07 Mark Cuban, who has really emerged as a major Kamala surrogate, quote, "If it were me, I wouldn't," asked if she should keep Lina Khan as FTC Chair.
3:54 Pablo Torre? And it keeps going like that. The roster of critics who have called for Lina Khan to be out of power includes Elon Musk and, yes, Republican Congressman Daralissa, as well as Republican Senator Mike Lee and plenty of guys along those lines, but also Mark Cuban and tech billionaire Reid Hoffman and Maryland Governor Wes Moore, these noted Democrats, all of which leaves Lina Khan with one conspicuous and unlikely defender.
4:25 Speaker 02 Look, I think Lina Khan is one of the most important political figures in this country, and I think if she had been listened to more by Democrats, they would have actually been more competitive against us in November of 2024.
4:39 Pablo Torre? Steve Bannon, who said that at a tech conference in April, is, of course, the ideological steward of the Make America Great Again movement. He is also an avowed enemy of Silicon Valley. Which raises one, at this point, relatively overdue question. Just the basic job description of FTC Chair. What does it mean?
5:06 Speaker 03 Yeah, so the Federal Trade Commission, so we were created in 1914 against, again, the backdrop of the robber barons, the industrial trusts, and Congress wanted an agency that would stand up for the American people against corporate abuse and exploitation. The nuts and bolts of that are that the agency is supposed to enforce the consumer protection laws, and so if companies are engaging in unfair or deceptive behavior, that can span anything from fraud and scams to data brokers illegally spying on you, that's a big part of the job. And then the agency is also supposed to enforce the antitrust laws. So if companies are trying to illegally merge to snuff out the competition or are engaging
5:47 Speaker 03 in monopolistic practices, that's what the agency is supposed to take on as well.
5:53 Pablo Torre? And Lina Khan, who has the endorsement, incidentally, of Bernie Sanders but was appointed by Joe Biden, actually did take on Amazon and Facebook slash Meta and has since become a wildly endangered political species.
6:14 Pablo Torre? You're referred to as the most feared person in Silicon Valley, the most hated person on Wall Street. You provoke strong reactions, I guess, is the the brief scouting report on Lena Kahn.
6:27 Speaker 03 The job I had was to enforce the law without fear or favor. And I think for a period, there was a sense that the government's very comfortable going really hard when it finds kind of small ball violators of the law, right? Pickpockets or kind of small time scammers. And it's ready to bring the full force of the government to go after them. But that when you have corporate elites, when you have fancy people in suits breaking the law, time and time again, the government seemed to go much lighter. And, you know, I came of age during the financial crisis, where I think we saw that discrepancy. And it made a big impression on me. And I think has contributed to some of the disillusionment we see across America with government.
7:12 Speaker 03 And so when I came into this role, it was really important to me that we actually be even handed. And even if we found that it was really big corporations breaking the law, that we didn't think, oh, well, we have to go soft here. And I think that did provoke some emotions, some hysteria sometimes from those corners. And, you know, that's just part of the job.
7:33 Pablo Torre? And Elon Musk said after Trump did in fact win that, quote, "She will be fired soon." And so I'm talking to you now. It is June. You left your post as of January.
7:44 Speaker 03 So I left the Federal Trade Commission at the end of January. The last few years had been super intense. So I've been mapping out what the next phase of all of this work will be. You know, for those who are not following it super closely, it was pretty unusual for me to become head of the FTC at age 32.
8:03 Pablo Torre? The youngest FTC chair ever.
8:06 Speaker 03 Yeah, and just more generally, a lot of this work went from kind of a very small number of people, reformers, making arguments about how we had gone too soft on monopolies and corporate lawbreakers, to suddenly be given the opportunity to govern. Oftentimes, it takes decades for kind of reformers on the outside to ultimately be able to kind of get into positions in government and start governing.
8:30 Pablo Torre? So before, it sounds like the focus of the FTC when it came to what they're enforcing, it was centered around this standard of prices. Prices that consumers had to pay, that being the way that we could evaluate whether something needed to be intervened against. But what yours, and again, it's been called neo Brandeisian, but also hipster. What's the term?
8:52 Speaker 03 I think there are a lot of different, yeah, terms running around. I mean, the way I look at it is this is about competition and power, right? And there are lots of different ways that companies can exercise power. Sure, in some cases, companies absolutely use their power to hike prices, to inflate prices, especially when they know you don't have competition, you don't face choice, you're kind of stuck, right? And companies can become too big to care and then just price gouge you, basically. But we also see that companies use their power in other ways, right? And especially in digital markets, where sometimes people are not paying with dollars, they're paying with their data. We've seen, for example, companies like Facebook or Google degrade their privacy policies
9:36 Speaker 03 and dramatically expand the data they're collecting on you. We've seen companies just make products and services worse. I mean, I think a lot of people can relate to Google search just becoming much worse, becoming cluttered with all of these ads. And I think we just see across the board that when companies don't have to compete for your business, where you're kind of stuck with them because there aren't other options in the marketplace, they don't just, they just don't have to try that hard.
10:02 Pablo Torre? But even more to the point, and you're referring to a thing, I don't know if you co-sign this term, but in shittification is the term that I always go back to, whether the McDonald's ice cream machine works.
10:13 Speaker 03 Yeah, well, we fixed that. The last administration did, so.
10:17 Pablo Torre? I feel like you should be proud. I forgot to mention that up top in this episode.
10:21 Speaker 03 So, one trend that we've seen has been that manufacturers can make it really difficult to fix products, be it tractors, you know, be it ice cream machines. And the FTC was pretty active in this area, requiring that companies not artificially make it difficult to repair your own product. And that could mean either allowing you yourself to be able to kind of go in and tinker or give you the free Freedom to not just go get it fixed by the manufacturer, but actually go to an independent repair shop. Right. And so we ended up filing a lawsuit against John Deere because we had heard that they had been making it very difficult for farmers to get their equipment fixed in a timely way, which if you're a farmer can be really devastating. If you're find out, hey, you're in a like four month queue
11:06 Speaker 03 and you need your tractor now in harvest season. So that was something we did. But we also provided support to the copyright office, which was, you know, looking at some of these rules that ended up affecting things like the McFlurry machine. And they ended up making a ruling that would make it much easier for those machines to be fixed.
11:22 Pablo Torre? You made America McFlurry again.
11:26 Speaker 03 You know, it seems like something that people could really do with right now.
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13:58 Pablo Torre? So now I imagine that you might be wondering how Lina Khan became the youngest chair in the history of the FTC in the first place. And if you've listened to PTFO before, you probably remember that I personally dreamed of going to law school and wound up becoming this journalist. Lina Khan is kind of the opposite.
14:21 Speaker 03 It was a kind of childhood dream to be a journalist for me. And I, you know, in high school, spent my summers working at local newspapers. I was worked on the high school newspaper, the college newspaper, and just happened to graduate in 2010. You know, still, the financial crisis was very raw. It was pretty difficult to get journalism jobs.
14:41 Pablo Torre? Yes.
14:42 Speaker 03 And so ended up at a think tank, doing kind of research and, you know, some journalism and reporting, but not a traditional news outlet.
14:51 Pablo Torre? And she kind of loved it. And by the time she was offered a traditional job by The Wall Street Journal, the gold standard, to be a commodities beat reporter, this was some years later, Lina Khan turned it down.
15:04 Speaker 03 By that point, had become really interested in this issue of consolidation of economic power and was really confused by how it was that we, on the one hand, had these really strong laws on the books that were designed to check monopolies and take on concentrations of economic power. And yet, in industry after industry, it seemed like we had just allowed so much consolidation. And so I was just really intrigued by that gap and thought we were on the cusp of really needing a renewed anti-monopoly movement and decided to go to law school to figure out how I could be part of that.
15:40 Pablo Torre? And in 2017, at Yale Law School, would-be Wall Street Journal reporter Lina Khan found out how. She published a 95-page article for the Yale Law Journal that became a seminal text in the so-called hipster antitrust movement, which renewed the work of former Supreme Court Justice Louis Brandeis and also drew the attention of the future Biden administration in the process. And the article, with the byline "Lena M. Khan," was titled "Amazon's Antitrust Paradox." So you turned down this job at the Journal. And are you, I presume, in the abstract, you're aware of how much you've been covered by the Wall Street Journal as a result of
16:24 Pablo Torre? that sliding doors choice? Do you have the number, the number of pieces that, again, mostly op-eds and editorials, that the Journal has published about you?
16:34 Speaker 03 I don't have that number.
16:36 Pablo Torre? 124. Feels about right?
16:39 Speaker 03 Yeah, in the ballpark, for sure.
16:43 Pablo Torre? And just in case you were wondering, the Journal editorial board is not a fan.
16:50 Pablo Torre? So the idea that one of your biggest fans, your most outspoken fan, is Steve Bannon, who is a guy who, and for people who somehow don't know who Steve Bannon is, former chief strategist for Donald Trump, helped get Trump elected, ran Breitbart News, one of the chief architects of the whole MAGA movement, went to federal prison because of his role and his refusal to cooperate with the government after January 6th. I'm just curious, the first time that you realized that Steve Bannon was going to be a stan of yours, that he would be a Lina Khan simp?
17:18 Speaker 02 I'm a Lina Khan fan. You're a Lina Khan fan? A hundred percent. Break 'em up, break 'em up. I would be a huge supporter of Lina Khan, remaining, and I would love to see Lina Khan given more power. I think Lina Khan is, uh, should have been given more power, should have been able to do more things. I think there's obviously a big problem. I think a big problem in Silicon Valley.
17:36 Pablo Torre? Do you remember that? Do you remember your reaction? How you, how you even discovered that?
17:41 Speaker 03 Uh, I don't remember the precise moment, but, uh, it's unusual. It's, it's surprising, it's unexpected. And I think it just reveals just more generally how strange it is that on this issue of taking on unchecked corporate power, there has been this strange bipartisan alliance, uh, where there were certain cases filed against companies like Google and Facebook that were filed under the first Trump administration. Uh, we saw then those be continued, built upon, expanded during the Biden administration. And now we're back in the Trump administration, and I think there's a big question mark about what's gonna happen. But we do see a real factional fight in the Republican Party between, say,
18:25 Speaker 03 the kind of corporatists, the oligarchs, and the populists, or the people who think that we do actually need to enforce the law against powerful law-breaking corporations. And I think we see, uh, a troubling set of signs, including, for example, the shutdown of the Consumer Financial Protection Bureau, uh, one of the government agencies that was on the front lines of standing up for Americans against corporate abuse and predation. So dismantling the government, dismantling the law enforcers that are supposed to stand up to this predation is not a great time.
19:01 Pablo Torre? The strange bedfellows aspect of this, though, does speak to something that is so glaring in its otherwise conspicuous absence, which is what does cut across the aisle these days? And insofar as there is this rainbow coalition in which it's you and Steve Bannon and a bunch of other people, I'm curious how much of tech is the glue there, in your view?
19:25 Speaker 03 It's true that some of it started around tech in kind of both parties. I think especially with the 2016 election, there was a, you know, revelation for people about how a very small number of tech giants held huge sway over key information channels, could potentially even contribute to swaying elections. And I think that was a real wake up moment for a lot of people in both parties. But this is something that's much broader. I mean, at the FTC, you know, we were filing lawsuits against companies like Facebook and Amazon. But we were also taking on hospital monopolies. You know, we were also taking on big pharma companies who have been using some of these patenting tricks to make it much more expensive for Americans.
20:09 Speaker 03 We're trying to just buy, say, prescription medicines. And so this is something that goes much beyond just tech.
20:16 Pablo Torre? I get the sense that you have seen the inside of various places that a lot of, again, everyday Americans have not taken the time or had the access to really examine. Was there something that really kind of startled you? Is there something that you think of where it's like, even I am surprised that they are this brazen?
20:36 Speaker 03 We found that asthma inhalers have been around for decades. But for some reason, people were still having to pay out of pocket as much as $500, $600, $700, even though asthma inhalers are as cheap as, say, $7 in other countries. And we tried to figure out why this was. And we found that some of the big pharma companies were using patenting tricks to have patents on things like the plastic inhaler cap or the piece of it that counts the dosages, nothing to do with the ingredients, the drug ingredients. And so we called them out on this. We said, you know, this seems illegal. And within a few months, three of the four big inhaler manufacturers
21:20 Speaker 03 said, okay, we're going to cap how much people pay out of pocket to $35, down from hundreds of dollars. And on the one hand, that was a, you know, big win for people. But on the other hand, I'm like, how many years and how many billions of dollars were these asthma inhaler companies able to extract from people just from these illegal patent tricks? And candidly, why was this not fixed until, you know, 2023, 2024?
21:48 Pablo Torre? Right.
21:48 Speaker 03 These authorities have been on the books. And I think that's another component of this. Sometimes there are all these legal authorities that agencies have that have just gone somewhat dormant, that people have not been using assertively. And that was another thing that we really tried to change is once I came in, we kind of read all of the laws that Congress had passed that gave us powers and authorities and said, okay, what does this provision do? What does this provision do? Oh, this hasn't been used in a few decades. Why is that? What can we do with it? And I think you really need that full canvassing of what an agency's authorities are and make sure you're actually using all your tools.
22:22 Pablo Torre? Yeah, the more I think about hipster antitrust as the label, the more sort of darkly ironic it is that actually what you're doing is harkening back to the before times when there was a more aggressive way to, uh, yeah, enforce the need for this country to have competition. It feels like your revolution is almost a throwback as much as it is something that, you know, is very Williamsburg or whatever the f** people think hipsters are now.
22:48 Speaker 03 Yeah, it's, there is a real conservative orientation.
22:51 Pablo Torre? Dare I say even conservative, Lena?
22:53 Speaker 03 There we go.
22:54 Pablo Torre? Yeah.
22:55 Speaker 03 And, you know, one thing I did at the FTC was made a big effort to travel across the country. I think in DC, there can sometimes be this tendency to kind of just fall into these pretty narrow feedback loops where you're over indexing for a lot of kind of elite punditry and commentary that's pretty removed from what the vast majority of people in this country are thinking and feeling and experiencing. And so we tried to really mitigate those blind spots by going to places like Baraboo, Wisconsin, or Kansas City, uh, meeting with independent pharmacists and figuring out, you know, what are the biggest pain points that people are seeing in their day to day lives? And I was just struck time and time again how This is not a partisan issue.
23:38 Speaker 03 I think people feel like a lot of their daily choices are being constrained by big corporations and that all too often, they're not able to get a fair shake in our economy. And, you know, for most people, a lot of how they end up interacting with power in their day-to-day lives is less directly with the government, but more with their commercial relationships and economic transactions, right? If you're trying to switch cable companies and you're trying to call your cable company and you have to wait for three hours on hold and then the call drops. They're just all of these day-to-day frustrations that people feel when navigating what should
24:22 Speaker 03 be the most simple of transactions. And I think people just feel this basic indignity to that in big and small ways.
24:29 Pablo Torre? Yes.
24:30 Speaker 03 We got enormous support and we would get letters and comments from people who would say things like, "I'm a lifelong Republican. I'm a hardcore free-market capitalist, but what this FTC is doing in, say, taking on non-compete clauses, which trap you, or in requiring that companies make it as easy to cancel a subscription instead of sign up."
24:51 Pablo Torre? Some of the best stuff that you guys did was just like the click-to-cancel rules, which is, again, we all know how unbelievably annoying it is to try and cancel like a streaming service or some subscription product. And why? Why is it so hard? Is a thing we've all yelled into our laptop screens or phones at one point.
25:12 Speaker 03 When the FTC would investigate some of this, I think we were stunned to see just how deliberate a business strategy it is.
25:20 Pablo Torre? I think people sometimes are willing to be generous to just the monolith of corporate bureaucracy because it's just like the way, of course, a big company works. But you're suggesting that we need to understand that these patterns are not accidental.
25:36 Speaker 03 That's right. I mean, I think one thing we've seen over the last few years accelerated during the pandemic is that there's been a huge surge in subscription-based services, right? So previously, there'd be several services that you would just go out and buy and then own the thing, right? Even with things like printers, that now there are all sorts of subscriptions associated with it.
25:56 Pablo Torre? Everything wants to be a subscription.
25:57 Speaker 03 Everything wants to be a subscription. And firms have identified this as, you know, a key revenue source. And they've noted that to fully monetize that, they need to make it as easy to sign up and as difficult to cancel. And unfortunately, we saw when we were investigating companies like Adobe, for example, or Amazon with Amazon Prime, that there was explicit strategies to make that happen. Amazon even had a name for the cancellation process. It was called Project Iliad, after the kind of epic tale of the war.
26:35 Pablo Torre? As in, canceling Amazon is as hard as reading the entirety of the Iliad, or even yet, yeah, going on an odyssey, sometimes, a literal odyssey.
26:45 Speaker 03 Nobody should be stuck paying for a subscription that they either never signed up for or want to cancel. And so the FTC did finalize a rule that says companies have to make it as easy to cancel as it is to sign up. So if you can sign up online with one click or two clicks, you have to be able to cancel with one click or two clicks. This rule was actually supposed to be in effect already. It was supposed to go into effect last month. Unfortunately, this new FTC, for some reason, punted out the date, so it's not going to come into effect till next month. I really hope that sticks, because, you know, this is hurting people.
27:21 Pablo Torre? Why does all of this take so long? And I mean that not merely in the way of trying to cancel a subscription, but also just like the gears of change when it comes to antitrust stuff. How should we feel about that?
27:35 Speaker 03 Yeah, it's a great question. And I think there's an antitrust-specific version of it, where you're absolutely right. It just sometimes takes too long. These cases take too long. I mean, the Facebook case was originally filed in December 2020.
27:48 Pablo Torre? Right.
27:49 Speaker 03 The Dutch then tossed out the Trump administration's complaint. We've refiled it, kind of fixed some of the deficiencies. And it only went to trial a couple of months ago.
27:59 Pablo Torre? You are the person who got Mark Zuckerberg to testify on the stand in this landmark case of
28:06 Pablo Torre? FTC v Meta. And you brought this, the government brought this, thanks to you, I should say. The six-week trial just wrapped up. It now sits with a judge, as you were alluding to. And the government, just to do the brief recap here, the government accused Mark Zuckerberg and Meta of acquiring Instagram and WhatsApp in a "buy or bury" strategy to secure his monopoly.
28:27 Speaker 03 So that is an accurate summary. I mean, it really goes back to Facebook watching the switch from desktop to mobile. I mean, Facebook had become pretty successful in the desktop market, but as people started using smartphones more, it realized it needed to pivot. And it tried, you know, all sorts of features and apps that just wouldn't take off. And it saw mobile-native apps like Instagram and WhatsApp do really well and grow really quickly, grow exponentially. And we have documents and communications showing that Zuckerberg and other top executives feared being lapped and being left behind, where Facebook would just be a desktop service and not really be successful in mobile.
29:12 Speaker 03 And they realized that that was really existential.
29:15 Pablo Torre? Phones, it turned out, would be important.
29:16 Speaker 03 Exactly. And instead of being able to compete with Instagram and WhatsApp, Zuckerberg decided to just go out and buy them up. And this ended up being harmful for people because, just to take an example, WhatsApp at the time had the distinction of not selling people's data, right? You could pay as little as $1, and there were a lot of privacy protections that people would have on WhatsApp. And then they were bought by Facebook, and you know, Facebook is a behavioral ad-based business model, so they monetize people's data. And so there were a lot of privacy protections that people ended up losing, and kind of one of the main privacy messaging apps was suddenly taken off the market.
29:57 Speaker 03 I think more generally, we've seen that, to go back to your earlier point about incentivization, you know, historically, a major vector of innovation and of products and services getting better for people has been when companies have to compete, right? When even the biggest giants have to look over their shoulders. And say, oh, you know, I need to go faster and make my services even better. And when companies are able to just buy out the competition, we see they can get lazy, right? They don't feel like they have to try as hard. And that is something that the antitrust laws are supposed to prevent. So this case, you know, just wrapped up in terms of the trial. There was a lot of evidence that the FTC put forward showing both that these transactions were anti-competitive,
30:42 Speaker 03 but also that there's been a real cost for people, including with things like the ad load. So for example, Facebook's been able to get away with increasing the proportion of ads that you see on apps like Instagram relative to organic content.
30:59 Pablo Torre? We've noticed.
31:00 Speaker 03 Yeah, and that's a tax, right? You're not paying higher dollars, but it's a degradation of the service. And ultimately, this is also about what is going to be the future of innovation in some of these markets? And are we going to allow a company like Facebook to monopolize? So I wish this case would have been able to go to trial even faster. But I think this is a government-wide challenge. One thing we saw at the FTC was there had been a lot of procedures and red tape and bureaucracy that the agency itself was handicapping itself with. And this is actually a legacy of the Reagan administration, right? I mean, they came in with a very deregulatory view. They wanted to weaken agencies, handicap them. And one of the mechanisms for doing that
31:45 Speaker 03 was just handcuffing agencies in their own red tape. There was so much process and bureaucracy that when we came in and said, hey, let's, you know, do some of these rules, like the click to cancel rule. Some people were like, well, that's going to take at least five years, maybe closer to 10. And we were like, what? That's wild.
32:02 Pablo Torre? It's like the problem of click to cancel also applied to the literal thing that enabled click to cancel.
32:10 Speaker 03 Yeah.
32:10 Pablo Torre? How can I cancel bad government?
32:13 Speaker 03 And so we looked at those procedures and we said, wait, these are not even required by the law. These are just discretionary and it seems like a legacy of some of this Reagan administration. And so we streamlined those. We eliminated the unnecessary red tape. And so instead of it taking at least five years, we were able to do some of those rules in two years. So we had the click to cancel rule. We also had a rule that prohibits fake reviews. And I think one phenomenon we've seen is just this total pollution of the online reviews with either paid reviews that are not being disclosed, or sometimes companies were actually paying people to go write bad reviews on their rivals' websites. And so
32:56 Speaker 03 just really distorting the information ecosystem. I think we've seen with influencers sometimes just a lack of disclosure around what's really an advertisement versus kind of an organic review. And so we're hoping that will just promote more honesty and transparency in the system. So that was a rule, along with the click to cancel rule, that we were able to do in closer to two years. We also just finalized a rule that has now gone into effect that bans some of these junk fees. So if you're buying like an online ticket, I think a lot of people have had the experience that you see a ticket, it's maybe $75, you check out, and then all of a sudden, it's like $130.
33:34 Pablo Torre? Yeah, suddenly I have to put my kid up for adoption.
33:36 Speaker 03 Yeah.
33:36 Pablo Torre? I don't know where I agree to that, but I guess I have to do so.
33:39 Speaker 03 And you like squint and you're like, this service fee, a convenience fee, like, what are these fees? What am I paying for? And suddenly, there's just this bait and switch. So we finalized a rule that says companies can't do that. They have to be honest about what the price is upfront. They can't do this slow drip, drip, drip of these fees just when you've checked out. So that's now in effect with live event tickets and with short-term lodging. And we just saw companies, including like Airbnb and others, that have already switched to this more honest pricing model. So, you know, hopefully, these are some ways that people's lives will be better because of what we were able to do.
34:18 Pablo Torre? Every time I have a guest here who has in any glancing way a thought about artificial intelligence, I just gotta poll them on like, where are you on the Doomer scale? And even more relevantly, perhaps, to your point of view, what does scare you the most about AI and also its rollout in the context of competition?
34:39 Speaker 03 The Doomer question is an interesting one because I think it somehow assumes almost this inevitability, right? The AI is just on this trajectory.
34:47 Pablo Torre? We've already lost.
34:48 Speaker 03 That we've already lost, that we're just subjects to whatever is going to happen. And I really reject that assumption, right? I don't think there's any inevitability here. I think there's a lot of decisions, policy decisions, that are going to determine what is the ultimate trajectory that these technologies take. And I think one of the big red flags for me right now is the enormous concentration of control and power. The number of companies or even individuals that are right now getting to call the shots on a lot of how these technologies develop is pretty small in terms of who controls the ultimate inputs, be it at the level of the chips, be it with these hyperscalers.
35:32 Speaker 03 And I think, you know, having sat down with founders and startups in Silicon Valley, I think there could be some really beneficial uses here. But in order for that to happen, we're going to have to make sure that companies actually have a fair shot. I think the other thing that I've been troubled by is what does the landscape look like for the creation of content and information and art if we're in a world where all of these inputs can just be ingested by a model?
36:01 Pablo Torre? Mm-hmm.
36:02 Speaker 03 And talking to creators, many of whom did just wake up one day to find their life's work ingested by this model and now competing with it, I mean, I think there are kind of basic fairness questions there, but also who's going to invest in the organic production of some of this art or information or content if there's not really a monetization play there? I think that's a big thing to solve for, too.
36:26 Pablo Torre? Formal government accounts in this administration, we're posting this Studio Ghibli OpenAI art stuff. And I guess it's telling and indicting that you refer to it by the proper name of the actual artistic entity that is responsible for that aesthetic, for that creative sensibility. And yet, it's not them. It is them ingested into the OpenAI system and then spat out without any recognition or payment, apparently, for the originators of that work.
36:57 Speaker 03 Yeah, I mean, I think, you know, the other component here is a lot of this requires just an enormous amount of of energy, right?
37:06 Pablo Torre? Literal.
37:07 Speaker 03 Literal energy and, you know, that that layer of the resources question, I think, is another one where we just need to make sure that there is public accountability and that we are getting to make some of these decisions as a public rather than, you know, a handful of companies getting to call the shots.
37:24 Pablo Torre? I was gonna ask you, as a user of stuff, as a young person, do you buy things on Amazon? Do you use ChatGPT? Do you use some of the stuff that, of course, also you are compelled to take this view of?
37:39 Speaker 03 I've used ChatGPT to contest a medical bill.
37:43 Pablo Torre? That's a good use.
37:45 Speaker 03 Yeah.
37:45 Pablo Torre? A good use case.
37:46 Speaker 03 It was. But, look, you know, I think so many of these technologies have now become essential to navigating day-to-day life.
37:56 Pablo Torre? Yes.
37:56 Speaker 03 Right? And so, you know, I don't think whether people are using them or not using them is gonna be a mechanism really of major accountability, right? Just given how enmeshed these companies have become.
38:09 Pablo Torre? Yeah, they don't need you on Amazon Prime, but I am curious, do you remember the last thing you bought on Amazon?
38:16 Speaker 03 Uh, I, I, so I'm not a Prime member, I don't use it very often. Uh, you know, I had a kid a couple of years ago, and I think, uh, probably the last thing I bought was probably a year ago when he started kind of eating more and, um, I got really freaked out about choking. And there's like this device you can buy and have at home in case like your kid chokes. So I think that was probably, uh, the last thing I bought.
38:42 Pablo Torre? I, I, I bought the thing where you have to like, uh, use your mouth and suck on a tube to get the like boogers out.
38:49 Speaker 03 Yes.
38:50 Pablo Torre? I don't know if you ordered that one, but we got, we got one of those.
38:53 Speaker 03 Those things are actually really effective, like, the kids hate them, but they're, they really work.
38:57 Pablo Torre? Five stars. Our review, Lina Khan and Pablo Torre give five stars to the suck boogers out of your kid's nose device.
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39:52 Pablo Torre? So I don't know how much sports ended up being on your docket when you were Chair of the FTC, but please enlighten me. I don't know if it did.
40:01 Speaker 03 Yeah, it wasn't a big area where we were very involved, but there has been some really interesting developments in kind of sports and antitrust over the last few years.
40:12 Pablo Torre? Yeah, what are you noticing?
40:13 Speaker 03 So there was a big case several years ago that got to the Supreme Court relating to the NCAA and student athletes and whether some of the restrictions, Alston, the Alston case, whether some of the restrictions on kind of education-based benefits were legal or anti-competitive. And the court said they were anti-competitive. And I think more generally just validated this idea that these student athletes could be subjected to anti-competitive constraints, right? The NCAA was not somehow exempt from the antitrust laws, that there needs to be kind of fair competition for the labor that these student athletes are providing. And so that case has led to a whole ripple of additional cases where some of the student athletes are arguing that other forms of restrictions are also illegal.
41:03 Pablo Torre? But this is where I do just need to jump in to point out that just days ago, in fact, we got the latest ripple, as Lina Khan just put it, that stems from the NCAA's legal wipeout.
41:14 Speaker 05 There is a big change coming to college sports. Friday, a US district judge gave a final approval of the House versus NCAA case, allowing schools to start paying athletes directly.
41:26 Pablo Torre? Is the only future college sports model that could hold up, in your view, under the antitrust laws as you see them? Would the only one to pass that test be a completely unregulated market? Or can there be these structures and impositions?
41:43 Speaker 03 I mean, there's no inevitability here, right? And kind of laws and rules can structure fairness in any type of market. It's been really interesting to see, I think it was the Dartmouth basketball team that unionized.
41:56 Pablo Torre? Yeah, the men's basketball team.
41:57 Speaker 03 The men's basketball team. And the NLRB, the National Labor Relations Board, kind of came out and said that student athletes can be employees in some contexts. So that could end up being another vehicle for student athletes being able to assert their rights and making sure that there is fair treatment, fair compensation.
42:15 Pablo Torre? Now, you may also recall that we have already spent four episodes on Pablo Torre Finds Out, covering the domino effects of this historic case, House v NCAA. But allowing these schools to pay college athletes directly is also just one antitrust case among many. Last Tuesday, for instance, PTFO also published a deep dive about Trump and golf and Saudi Arabia, where we quoted Lina Khan on the monopolistic potential of a merger between the PGA and Live Tours. And a little over a week ago, we also just got an update in another high-profile antitrust showdown, this one involving the owner of 2311 Racing,
42:59 Pablo Torre? a franchise which competes in the NASCAR Cup Series. And that owner's name happens to be Michael Jordan.
43:09 Pablo Torre? Look, I am, I'm all in. I'm all in. I love it.
43:12 Speaker 06 You know, it replaces a lot of competitiveness that I had in basketball. But this is even worse, you know, because I have no control. If I was playing basketball, I have total control, but I have no control. So I live vicariously through the drivers and all, you know, crew chiefs and everybody. So, I mean, I'm very happy for 2311, 110%.
43:32 Pablo Torre? So please walk us through the Michael Jordan case.
43:35 Speaker 03 Yeah, he filed against NASCAR claiming that basically NASCAR had illegally monopolized Premium Racing Series through a set of tactics, including illegal acquisitions, including acquiring racetracks, including through using some of these non-compete clauses, and basically saying that NASCAR's dominance is not reflective of its just superiority, but instead is reflective of these tactics that they've taken to block out competitors. And then that's resulting in undercompensation and worse terms for these teams that have no choice but to only really compete in NASCAR. So that's a case that's still proceeding. They actually won a preliminary injunction at the district court stage that I think
44:20 Speaker 03 is now being appealed. But just anything goes to show how relevant antitrust can be at all sorts of corners of the sports world.
44:26 Pablo Torre? Yeah, I didn't have Michael Jordan, Lena Kahn, and Steve Bannon somehow hanging out together on one side of the aisle, but I found out quite a bit today. It does feel like sports is just another case study in the ways in which we've inherited over time, these assumptions around the way things are. One concept that I just wanted to just see if it passes the smell test for you is just the concept of a draft in sports. So the idea that you leave college and you are entering, let's say, the NFL draft or the NBA draft. And to be very clear about this and almost pedantic about this, so players are required to sign with the team that drafts them according to a formula that regulates their salary
45:11 Pablo Torre? that they have no say in determining because they're not a member of a union yet. So they can't really be categorized as working according to the collective bargaining agreement. And yet they do not have freedom of choice when it comes to how they enter professional sports. Why is that legal?
45:29 Speaker 03 It's a great question. And I mean, there are just so many anomalies and idiosyncrasies in a lot of markets. If you are going out and getting multiple offers for employment, you then have negotiating power to make sure you're able to negotiate what your compensation is going to be, what the terms are. You're able to pit those employers against one another and use your leverage. And, you know, we definitely see all sorts of ways in which that dynamic is just not allowed to play out in the context of sports in ways that, you know, seems sometimes unfair to athletes.
46:01 Pablo Torre? Yeah, I mean, your FTC did, I believe, explore regulating, again, non-compete clauses and potentially like name, image and likeness stuff for college athletes, right?
46:11 Speaker 03 Yeah, we finalized a rule that would ban non-compete clauses in the vast majority of contexts because these are clauses that prevent people from being able to freely switch jobs. They affect people in all walks of life, right? They may have started off in the boardroom, but now they've expanded to affect fast food workers, janitors, security guards, people making close to minimum wage. And when we put out this rule, we got 26,000 comments from people all across the country, including from, I remember, a sports journalist who worked in sports broadcasting and had a non-compete. And so it was stuck because they worked in a small town. And if they wanted to go work for a rival, they wouldn't
46:52 Speaker 03 be able to. I remember we got a comment from somebody who was involved in designing athletic shoes, who had kind of a new design idea, but because of this non-compete was prevented from being able to go make it out on their own. So, yeah, I mean, these non-compete's can affect athletes, but also all other corners of the sports world.
47:12 Pablo Torre? Yeah. Counterpoint, according to Mark Cuban, you are hurting more than you are helping.
47:18 Speaker 03 Well, look, I think ultimately, the number of wins that the FTC got for the American people was pretty astounding and something that I was really thrilled we were able to do. I, of course, wish we had had more time.
47:32 Speaker 03 But I think it really set a model for how government can use all of its tools to really fight for people and make life better for them, even when it means standing up to powerful corporations. And sometimes that's going to trigger hysteria and a lot of emotions from some of those lawbreakers, but that's just part of it.
47:50 Pablo Torre? I've never known Mark Cuban to be hysterically emotional, so that doesn't sound right.
48:12 Pablo Torre? And so this is where I should point out that Mark Cuban and Elon Musk and Senator Mike Lee and this coalition of Democrats and Republicans and the Wall Street Journal Editorial Board all got what they very loudly demanded when it comes to Lina Khan. Because our guest today, after four years in charge, is no longer Chair of the FTC. And just last week, in fact, the same week that House v. NCAA was wrapping up, and the same week that huge swathes of America decided to protest against the rise of oligarchs
48:51 Pablo Torre? and autocracy in our country. Something else was happening in Washington as well. One of Lina Khan's lieutenants, FTC Commissioner Alvaro Badoya, officially resigned from his post also, which formalizes his firing earlier this year by the Trump administration, as well as the dissolution of this renewed governmental movement that Lina Khan was trying to lead.
49:22 Pablo Torre? I'm looking at the stories coming out of the current FTC. And by the way, yes, it is also being chaired by a young person, a 38-year-old who is steeped in the Donald Trump agenda, who is talking about fighting back against the trans agenda, also investigating a media company that Elon Musk also happens to be, I believe, totally coincidentally be suing. How do you describe the sensation when you are watching what your former part of government is up to now?
49:49 Speaker 03 I mean, if you step back and make a list of what are the biggest pain points that the American people are seeing in their day to day lives that the FTC could have a job in fixing or addressing, none of the items that you just mentioned would be remotely in the top 10 or 20 or 50. So it is pretty striking and disturbing. And I would just hope that the zeal with which we see the FTC pursue some of these topics, they would bring to really addressing the pain points that regular people are facing in their day to day lives.
50:23 Pablo Torre? Right.
50:24 Speaker 03 Like high drug prices, high grocery prices, you know, that sort of thing.
50:29 Pablo Torre? And so for you in the present tense, what are you up to? What's going on?
50:34 Speaker 03 So I'm going to be teaching antitrust law in the fall and also going to be, you know, making sure we're figuring out how do we continue to build and expand this movement, especially among young people.
50:43 Pablo Torre? Mm hmm.
50:44 Speaker 03 I get, you know, emails like every week from people, including from high schoolers, who are like, hey, I read about what you were doing at the FTC and now I'm doing my school project on Ida Tarbell and I want to be a trust buster. And so I'm trying to figure out how do we harness that energy and enthusiasm so that if there is another opportunity to govern, we have more of a kind of standing army that's waiting, that's able to kind of come in and help us do all this.
51:10 Pablo Torre? Yeah. Are you interested in electoral politics personally?
51:14 Speaker 03 Not personally, but I do think we need to make sure that we are carefully focusing on what are all the tools and authorities that the government currently has. And in the way that we were able to kind of go in and revitalize the FTC, how do we make sure that that's, we have a game plan to do that across all of these other agencies, especially given that these, some of these agencies are going to look very, very different at the end of this administration, just given how much dismantling we are seeing. So that's going to be a key set of my interests is not just the kind of how does the Democratic Party win elections, but how does the Democratic Party govern? And how do we make sure that we're being smart and effective in that governing?
51:54 Pablo Torre? Yeah. If I were to tell you that I looked into my crystal ball and I saw a Supreme Court nomination for you, how would that feel?
52:06 Pablo Torre? You've been mentioned. I am sure you've heard your name bandied about in some of these very nerdy precincts, but bipartisan candidate who has principles, who has a clear legal background. How does that feel to be on someone's hypothetical list?
52:23 Speaker 03 It's very flattering, to be sure. You know, I'm focused more on the near term and the kind of coming months and years. So we'll see.
52:31 Pablo Torre? Well, that is a very political answer.
52:33 Speaker 03 I did work in DC for several years. So I have a two-year-old and so I find that, you know, playing with him ends up being a really good distraction and, you know, he's very active. So we go to the playground a lot and it's a good break.
52:51 Pablo Torre? Yeah. Now that I think about it, manually sucking boogers out of your child's nose, not a terrible metaphor for what you might have been trying to do with the American economy.
53:03 Speaker 03 Yeah. I mean, he's really into cars and trucks and is really into kind of making them race. And so we try to create, you know, a fair competition between the different cars.
53:13 Pablo Torre? You made the joke before I got there. Lina Khan, in a world of staggering insidification, thank you for trying to find a, yeah, a reasonable path forward.
53:25 Speaker 03 Thanks so much for having me.
53:34 Pablo Torre? This has been Pablo Torre Finds Out, a Meadowlark Media production. And I'll talk to you next time.
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