FTC Chief Andrew Ferguson on the Trump Vision for Antitrust

When Donald Trump won in November, one of the things that Wall Street was excited about was an expected liberalization of merger rules. There was a popular view that under Chair Lina Khan, the Biden FTC was overly stringent about what deals it would let go through, and that the new administration would give the greenlight more often. But at least so far, reality hasn't proven to be so simple. There hasn't been a big merger wave yet. And, in fact, the FTC under new Chair Andrew Ferguson has decided to keep the merger guidelines that Khan put in place. So does this mean continuity? At a live episode of the podcast taped in Washington DC, we spoke with Ferguson about the Trump administration's vision for antitrust. He talked about his philosophy of keeping corporate power in check and the tests he's using to preserve a competitive environment. He also walked us through the long history of the FTC and the notion of consumer welfare, plus why he thinks a more expansive interpretation of the term (beyond just lower prices) is in keeping with the history of conservative legal thought. Read More: New DOJ Antitrust Chief Builds Team From Prior AdministrationsTrump’s FTC Moves Ahead With Broad Microsoft Antitrust ProbeOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

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• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

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• 2:34Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:39Tracy Alloway?

  And I'm Tracy Alloway.

• 2:41Joe Weisenthal?

  We got a special episode for listeners today.

• 2:43Tracy Alloway?

  We do, a very special episode. We had a live event over in Washington DC. It was a very cool event, Joe.

• 2:51Joe Weisenthal?

  It was really fun. It's been a while. You know, we do live events. We do live recordings from time to time. It'd been a while since we like put on a full evening of programming, a full, a full show, if you will.

• 3:02Tracy Alloway?

  Also, our first show in DC.

• 3:04Joe Weisenthal?

  And our first live public show in DC. We'd been wanting to do one for a while. We had a bunch of great guests. I actually really like going down to DC.

• 3:14Tracy Alloway?

  Yeah, and it was a great crowd as well. I think we have the only audience that would devote two and a half hours on a Wednesday night to listening about the Jones Act and antitrust policy.

• 3:24Joe Weisenthal?

  Yes, that's right. It was sort of a late night, too. It was sort of awkward timing because it was sort of dinner. So people had to skip.

• 3:31Tracy Alloway?

  But there was popcorn included with the tickets.

• 3:33Joe Weisenthal?

  It was popcorn. Anyway, so you're all, we're going to release all of the conversations that we had on that evening as episodes. But to start, we had a conversation about antitrust.

• 3:44Tracy Alloway?

  We spoke to Andrew Ferguson. He's the new chair of the FTC for the Trump administration. Obviously, there's a lot of curiosity about how much continuity there may or may not be between antitrust under the Biden administration, under Lina Khan, who we've also spoken to on the podcast, and what this new era might look like. So it was really interesting to sit down with him and get a better sense of it.

• 4:06Joe Weisenthal?

  That's right. And it's got pretty interesting implications, really for multiple reasons. I mean, if you recall, one of the themes, sort of when the election happened, was a lot of excitement on Wall Street because of a perception that there would be, a lot of mergers and deals would get a green light, that they would be going forward, the new era of deal making activity. Incidentally, the new chair, Andrew Ferguson, kept the merger guidelines that were put in place under his predecessor. But there are clearly going to be differences. There are areas of alignment. There are areas of differences. And so we, we talked to Andrew about sort of what a conservative or what a MAGA vision of antitrust might look like.

• 4:46Tracy Alloway?

  MAGA M and A was my suggestion, I think. And he took it. So, all right, here it is, our live conversation with the new FTC chief, Andrew Ferguson.

• 4:56Joe Weisenthal?

  Thank you so much for coming. I'm really annoyed, actually, because one of your lawyers gave me like the perfect first question for the podcast today. I was like, oh, this is amazing. And then you sort of walked it back. I don't exactly know what happened, so that dulled it a little bit. But anyway, apparently, in court today, one of your lawyers said, we need a pause for this case against Amazon because we don't have the resources and we can't pay for transcripts. Like, oh, this is an amazing first question for Andrew. And then you walked back. Is there a constraint, though, between this impulse, and we'll get into it, you know, in terms of headcount, and your desire for what, you know, is, looks like going to be

• 5:40Joe Weisenthal?

  a sort of vigorous, new antitrust enforcement approach?

• 5:45Speaker 06

  Thank you for having me. Lot to unwrap there.

• 5:48Joe Weisenthal?

  Yeah.

• 5:49Speaker 06

  First, on constraints, no.

• 5:51Joe Weisenthal?

  Okay.

• 5:52Speaker 06

  I've got the people I need to protect Americans from monopolies, to protect them from fraud, and, you know, no, I don't think anyone in Washington has taken sort of the threat that big tech poses to American consumers more seriously than I have. When President Trump announced my appointment, this is one of the things he said he really cared about, was taking the threats that big tech posed to American consumers very seriously. I will throw every resource the agency has at prosecuting cases against big tech that we've got going. So unequivocally, no, there are no resource constraints on protecting Americans from monopolies and fraud.

• 6:27Joe Weisenthal?

  Can you explain what happened today?

• 6:29Speaker 06

  I think a lawyer had a bad day in court. He was wrong. He filed a letter almost immediately after saying, I was wrong. We don't have resource constraints, and we are ready to prosecute this case on whatever timeline the court wants for us. So we're ready to go.

• 6:41Joe Weisenthal?

  Okay.

• 6:42Tracy Alloway?

  But presumably, there is this broader drive to streamline some agencies, yours included, at the same time that you have these really lofty targets that you're trying to reach. I just saw the very good Bloomberg story out today about the Microsoft probe. This is a huge company that's going to take a lot of effort, a lot of resources. Again, presumably, you're doing this with less resources than you had, say, a year ago at the FTC.

• 7:07Speaker 06

  I would not presume that. Look, the Americans voted for major reform. President Trump ran on major reform, and he's giving it to them. And government should not be bigger than is necessary to deliver the services that Americans need to protect Americans from the problems that Americans have. The FTC, we are engaged in the streamlining process. The goal is to maximize Americans' returns on their taxpayer dollars. When they send their money off to Washington, they expect their government to do a lot with that money, and that the government shouldn't be any bigger than is necessary to do those tasks. And so at the FTC, we've got the resources we need to protect Americans from fraud and monopoly. And look, you know, no government official in history has ever said, "No, I want fewer

• 7:50Speaker 06

  resources," which is why the president's efficiency agenda is so important, because government will always keep sucking up resources. The goal here is to maximize the return on investment for American taxpayers, and that's what we're doing at the FTC.

• 8:02Tracy Alloway?

  Okay, so what does Trump actually think about antitrust? Because he has a lot of opinions. Sometimes it's hard to get a handle on what exactly those opinions are. Sometimes he seems to contradict himself. You know, a lot of people think he's pro-business, but at the same time, he has talked about antitrust and competition and the power of the big tech platforms, as you just mentioned. What does he tell you about how he thinks of all of this?

• 8:26Speaker 06

  I think President Trump is pro-innovation, pro-growth, and in that sense, he is pro-business. But I'm going to push back a little bit on the way you framed the question. I don't think that there's any inconsistency with being pro-business and favoring vigorous antitrust enforcement. Those two have to go hand in hand. Look, I, like most Republicans, and I think like most Americans, am pro-free markets. Antitrust is how we keep our markets free. Markets that are infected with monopoly, that are infected with collusion, that are infected with foreclosure, these are not free. They move value from consumers, from innovative businesses, to giant monopolies, who then are focused mostly on protecting those monopolies rather than innovating, rather than growing,

• 9:11Speaker 06

  rather than coming up with the next great idea that changes Americans' lives. So I, you know, I think President Trump is pro-American markets, he's pro-business, but that is easily reconcilable with favoring vigorous antitrust enforcement. And President Trump, you know, he's been president For four years before this, we sort of have seen what President Trump's antitrust agenda looks like, and he favors vigorous enforcement, he favors following the law, and he favors clarity and certainty for people who have to participate in these markets.

• 9:40Joe Weisenthal?

  All right, this is a live recording, so that's not gonna...

• 9:44Speaker 06

  Hold on, hold on, hold on.

• 9:46Joe Weisenthal?

  No, this is a live recording, it's a live recording.

• 9:48Speaker 06

  President Trump spent four years as the victim of endless lawfare. He's President of the United States. Yeah, all right. It's DC audience, I get it. He has spent the last several months picking people in his cabinet or in agencies like mine who are focused on enforcing the laws as they are written and carrying out this agenda.

• 10:10Joe Weisenthal?

  All right, let me ask you, all right. You mentioned streamlining the FTC. One way that you could imagine streamlining from a government's perspective is that we don't need an FTC. And obviously, you have your counterparts at the Department of Justice. You yourself have talked about the sort of philosophy of the sort of disputing the premise of sort of these independent agencies. Why do we need two separate antitrust enforcement agencies?

• 10:41Speaker 06

  So I think the, we can get to independence in a minute, but I think the FTC sort of adds value to the enforcement regime because it combines the consumer protection and the antitrust enforcement program in a single agency.

• 10:55Joe Weisenthal?

  Okay.

• 10:56Speaker 06

  And those two can cross-pollinate, and they protect consumers more fully than, you know, just a singular antitrust enforcement necessarily would. And the, you know, the two missions sort of like learn from each other. The antitrust people, when they're doing investigations, they can find problems that violate the consumer protection laws, and then the FTC can continue those investigations with the other side of the House. So I think there's some benefit to that. But, you know, there's also, I think, some benefits in certain circumstances to having multi-member agencies with people from both parties. I mean, look, if you have an agency that is exceeding the law, abusing the companies that it purports to regulate, it's helpful for markets, for courts, for litigants.

• 11:38Speaker 06

  For government transparency to have people on the other party pointing this out and saying in a dissent, like, you know, I wrote 400 plus pages of dissents during my time as a minority commissioner, I think that that adds value. But I think that the FTC's particular value add is you combine the two missions, consumer protection and antitrust in a single house, and they both sort of like help reinforce the other.

• 11:59Tracy Alloway?

  I know it's early days, but one of the things you've done so far is you said you were going to maintain the merger guidelines from the Biden administration. And some people were really surprised about that. You said that you thought stability is good for enforcement agencies. I think maybe some people are confused because this doesn't necessarily seem to be an administration that is obsessed with stability or continuity. Walk us through the thinking there. Why did you commit to those particular guidelines, especially given that, you know, they got a lot of criticism from multiple sides of the aisle?

• 12:33Speaker 06

  Yeah, so we've had various iterations of the merger guidelines dating back to the 60s. And then when the FTC and DOJ started doing it together in the 1980s, you know, we tend to have guidelines for pretty long periods of time. Sometimes there are sort of iterative changes made to those guidelines over the course of time, but a complete rewrite of the guidelines relatively rare. And it happens, you know, we had the guidelines rewritten in 2010. But the general principle has been presidents of one party maintain the guidelines from the previous. They may add here and there. They provide commentaries on those guidelines to sort of explain to business how, you know, that current administration understands the guidelines, but a complete read vamp is rare. And if we get into this

• 13:16Speaker 06

  process where every single time a new administration comes in, they jettison the guidelines, two things happen. First, the agencies spend all their time writing the guidelines. I mean, the previous administration jettisoned the 2010 guidelines and spent like two years having to write this one. They were only effective for barely a year of the last administration. If we get into this process where every four years we're yanking and rewriting, it's all the agencies are going to do, number one. Number two, the guidelines will become basically meaningless if they just are like one party's statement of its view of antitrust policy. Won't follow them anymore if they think that they're just openly partisan. Regulated entities won't rely on them to plan. You know, businesses can't just plan in two-year cycles, they have to plan longer than that.

• 13:58Speaker 06

  And if you're of the view that every election runs the risk of the guidelines being yanked, the guidelines just become meaningless. And third, you know, there definitely were parts of the guidelines that were, you know, departures from the 2010 guidelines, but they generally are relatively well-aligned. They're built on case law, they preserve a lot of the principles from previous guidelines. And I think just throwing them all out all at once means, A, the agencies are going to devote tremendous resources to rewriting them, and B, everyone will remain very uncertain about how the agencies feel about it. And finally, you know, a lot has been written about the sort of effects of the guidelines. They're guidelines at the end of the day, they aren't law. There's supposed to be explanations to the public about how the agencies generally understand the merger program going forward.

• 14:42Speaker 06

  But the most important feature of antitrust enforcement in the United States isn't the guidelines, it's the commitment of particular antitrust enforcers to following the law as it's written, providing certainty and clarity about how they understand the law. And then when you go to court, bringing the cases that you think that you can win, and when you can't win the cases, get the hell out of the way and let the mergers close.

• 15:18Speaker 00

  What's next for virtual assets? I'm Jacob Greece, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 15:34Speaker 07

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high-frequency traders and that sort of thing, and folks who service institutional clients.

• 15:43Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reece Merrick of Ripple says.

• 15:51Speaker 08

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite here. I think also what you'll find is that. Regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80 year old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 16:10Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 16:20Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and

• 17:02Speaker 01

  hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote must be willing to work extended hours and weekends as needed. One major perk for all that hard work? Employees access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 17:43Joe Weisenthal?

  So one of the things that obviously came up during under the last FTC chair, this idea of like, okay, there's more than the consumer welfare standard that should be evaluated. One nice thing about conceiving of consumer welfare narrowly in terms of price, A, well, people like cheap things, but also, you know, it creates a certain law, it eliminates a certain subjectivity. You could Plug, okay, this is what's going to happen to market share companies. You can plug in them into some economist model. I don't know if those models actually work or not, but theoretically spit out some answer. We get lower prices and then it's like, okay, this is, this is good or bad.

• 18:23Joe Weisenthal?

  When you start broadly defining consumer welfare, rethinking that, like, first of all, what is that term? What do you, when you hear the consumer welfare standard, what does that mean to you? Does it mean more than prices? For one thing.

• 18:37Speaker 06

  In order to talk about this, I want to get a little bit into the history of

• 18:40Joe Weisenthal?

  Sure.

• 18:40Speaker 06

  The antitrust laws.

• 18:41Tracy Alloway?

  We like history.

• 18:42Speaker 06

  Yeah, so you said, so Congress passes its first competition law in 1890, the Sherman Act. I don't know how many of you read the Sherman Act, but the operative provisions of the Sherman Act, Sections one and Sections two, it's like 50 words. Like, the most important provisions of American antitrust law are 50 words adopted in 1890 that Congress has not changed effectively since then. Then in 1914, they passed the FTC Act, which both creates my agency and also creates a new antitrust provision that prohibits unfair methods of competition. And then a couple of months later, it passes the Clayton Act. And the Clayton Act is really important because that's the law that prohibits mergers that promote, tend to create a monopoly or injure competition.

• 19:25Speaker 06

  So by 1914, and then with an important amendment called the Robinson-Patton Act in 1930s, our antitrust laws are basically set. Like, the operative provisions for merger purposes of Sections seven of the Clayton Act and Sections one and two of the Sherman Act are basically unchanged since they were originally adopted. For decades, courts kind of cast about for a theory about how to apply the antitrust laws. So we know that the antitrust laws are about competition and protecting competition. But it doesn't tell you a whole lot. Does that mean, like, making sure that there are a particular number of competitors in the marketplace? Does it mean competitors have to do particular things and we don't care how many there are? Does it mean that we care about the economic effects of monopoly? Does it mean we care about the political effects of monopoly?

• 20:10Speaker 06

  And this can matter because you can imagine, you know, the existence of some monopoly somewhere that ends up keeping prices low or of a duopoly but wield unbelievable economic power. Or you can imagine businesses that aren't true monopolists, but they have tons of economic power or political power, I'm sorry. And so courts up through the 1950s and 60s were just sort of casting about looking for some standard they could articulate about when the antitrust laws are violated. And by the 50s or 60s, it was very difficult for anyone to predict what any given court was going to say about any given transaction or conduct. You had as, you know, you could have premised it on what the judges were having for breakfast when they were deciding the cases, and that was as likely a predictor of outcomes as anything else.

• 20:54Speaker 06

  Then this guy who, you know, a lot of people in this audience, if, you know, it's as sort of wonky as you guys say it is, have probably heard of for other reasons, who's a professor at Yale, his name is Robert Bork, and he writes a book called The Antitrust Paradox. And the, you know, the subheading of the book is "A Policy at War with Itself." And the position he articulates is the courts are using antitrust to accomplish all sorts of things that don't have anything to do with economic injuries. Politics, labor unions, all sorts of stuff that just don't have anything to do with it. It's basically a choose-your-own-adventure legal regime. It makes no sense and it's actually injuring economic growth. The only thing the antitrust laws should care about, Judge Bork said, are the welfare, is the welfare of consumers.

• 21:39Speaker 06

  So he articulates this view in the 70s, and by 1975, in this famous case called Ryder, the Supreme Court is citing Judge Bork and saying the antitrust laws are a prescription for consumer welfare. Okay. When Judge Bork writes about consumer welfare, he says, "Look, low prices, that's important for consumer welfare. High output, that's important. Other things are important too, like the promotion of future competition, the protection of innovation." Product quality, all sorts of things sort of fit within consumer welfare. But what we care about are economic injuries inflicted on participants in marketplaces, not about stuff that isn't related to sort of economic welfare of market participants. At the same time this is happening, something else is happening in our system.

• 22:23Speaker 06

  We have this sort of like economic libertarianism on the right that sort of attaches itself to the consumer welfare standard, and it has certain like ideological suppositions about markets. Markets always correct themselves is one of the suppositions. Professor at NYU, Daniel Francis, Bright Young antitrust scholar, has written a lot about this, I highly recommend him, that government intervention is almost always worse than anything happening in markets, even monopolies. And so we should always preference against government intervention, even if it's to correct market failures and monopolies. And a strong deference to C-suite decision-making on the view that they understand what should work best in a marketplace and government ought to be hands-off and deferential to C-suite decision-making.

• 23:06Speaker 06

  These two things ride alongside each other. And so by the 1990s, consumer welfare has basically been reduced to two questions. Is the transaction or conducted issue likely to increase price in the shorter intermediate term or reduce outcome in the short or intermediate term? But that isn't really what consumer welfare is about. Consumers can suffer all sorts of injuries that aren't just about short-term prices or short-term output. A loss of innovation is a huge injury to consumers. A loss of product quality, huge injury to consumers. But a lot of courts have started to shift away and focus on the extremely qualitative question about price and output, which also led to a deference to econometrics and to economists and antitrust cases.

• 23:49Tracy Alloway?

  Sorry, you made quantitative.

• 23:50Speaker 06

  Quantitative, I'm sorry, thank you, thank you, that's right. Quantitative, which also ends up making antitrust cases very expensive because everyone has to hire an army of economists to talk about the case. Makes it very difficult for judges to decide these cases because the way these often go is each side has their own army of economists. Identically trained, identical schools, fancy credentials on both sides, making exactly opposite arguments about the same number, often predictive arguments, and a judge, untrained in any of this, I mean, you know, I don't know how much, how many lawyers are in the room, but the average federal district judge in the United States was like a local prosecutor, or a local defense attorney, or a member of the local bar, has probably never dealt with antitrust in his or her life before that case. And now you've got

• 24:33Speaker 06

  MIT and Stanford-trained economists having a really vicious dispute about identical facts, and the judge is supposed to decide, the judge kind of goes, I don't know, it seems like a wash, but it makes these cases long and expensive. And so that is, you know, in my view, the consumer welfare standard encompasses injuries to participant, economic injuries to participants in marketplaces. It includes consumers, obviously. It also includes laborers. The Supreme Court has understood the antitrust laws to protect laborers as sellers of labor, to the same extent it protects purchasers of goods. You know, the sort of fixation on short and intermediate-term price and output effects isn't actually what

• 25:16Speaker 06

  consumer welfare was ever understood to mean. It was supposed to encompass a broader range of injuries to marketplace participants, but it got shrunk largely because of ideological views about markets.

• 25:27Tracy Alloway?

  Thank you for that history. That was useful. And Joe and I keep joking that we need to, we need to add a Bork klaxon to our monopsonic library. But I guess...

• 25:40Speaker 06

  Well, actually, I didn't really answer your question, because the question was more about like, yeah.

• 25:44Tracy Alloway?

  I was building up to that. I was trying to think how to ask it politely. But yeah, go ahead.

• 25:49Speaker 06

  So then we get to President Trump's first administration. And I'll just give a little background on myself. I was a private practicing lawyer. I clerked off law school and was a private practicing lawyer here at DC firms, doing antitrust work. And my parents, back in rural Virginia, used to joke that I was a pro-trust lawyer because I represented the businesses who were resisting antitrust suits. And then I went and clerked on the Supreme Court for Justice Thomas during the 2016 election, and I would bike into work from Old Town and listen to the news or podcasts on the way in, and was doing this as sort of a, like, lawyer who had thought a lot about antitrust as a practitioner, but very little about antitrust as a policy. You know, when you're a practicing lawyer, you think about doctrines, how can I help my client with these doctrines? You don't

• 26:32Speaker 06

  go one step up and sort of think about the policy. And as I'm driving into work, I'm listening to President Trump calling for more vigorous antitrust enforcement, you know, pretty vociferously on the campaign trail. And I'm writing in, I'm going, what's happening? Like, A, we're talking about antitrust in a presidential campaign. This is very strange. And two, a Republican calling for more vigorous antitrust enforcement. And so when President Trump takes office, he's not calling for a revolution in the consumer welfare standard like some of his successors did. He wasn't saying, you know, get rid of the consumer welfare standard, but he hires antitrust enforcers who take seriously the idea that consumer welfare isn't just about price and output

• 27:13Speaker 06

  and what a bunch of economists say. It's about consumers' participation in marketplaces and protecting them from short-term and long-term injuries and laborers as marketplace participants. And so, you know, a lot of folks have talked, not incorrectly, about the Biden administration bringing lots of lawsuits against Big Tech. A lot of people have talked about the Google search suit, which is in the remedy phase right now, where the United States is asking to split Chrome off of the rest of Google. President Trump brought that case. President Trump brought that case in 2020, and it was litigated during the Biden administration, but President Trump brought that case. The biggest attempted block of a vertical merger in American history up to that point was brought by President Trump in the AT&T Time

• 27:54Speaker 06

  Warner case. And the Meta case that's going to trial in my agency in just a month that says that Meta's acquisition of Instagram and WhatsApp violated the antitrust laws was brought by President Trump's administration. So, sort of the reconsideration of consumer welfare to encompass a broader range of consumer injuries than just price and output starts with President Trump. Now, President Biden comes in and picks my successor, who is, you know, an extremely talented antitrust thinker, but was of the view that the consumer welfare standard ought to be discarded entirely and ought to be replaced with a far more open-ended understanding of the antitrust laws that protect what she calls the competitive process,

• 28:37Speaker 06

  but is more than just economic injuries to laborers and consumers. It's, you know, the political effects of consolidation, all sorts of downstream, non-economic effects. And that consolidation itself is the enemy, even irrespective of the relationship of that consolidation to sort of economic injuries on market participants. And that was basically a proposed revolution. A lot of people call this neo-Brandeisianism. Brandeis was a very famous Supreme Court Justice who articulated a sort of anti-consolidation view of the antitrust laws in the first half of the 20th century. And they proposed sort of ripping the antitrust laws out of the consumer welfare standard and

• 29:20Speaker 06

  opening up a much broader range of interests. I think sort of two things to think about there. The first is, this is basically go back to the 50s and 60s before Bork's book. The rationale was that price and outpart are too narrow a consideration on which to base an antitrust regime. And the answer to that is, it's true, but Bork didn't actually say just limited to price and output. He understood consumer welfare standard to encompass consumers in all of their aspects of participating in markets, including how things will happen further in the future with innovation and product quality. And, you know, I think if you measure the previous antitrust regime by whether it achieved its neo-Brandeisian revolution, the answer is it definitely did not.

• 30:05Speaker 06

  Every court in the country still applies the consumer welfare standard.

• 30:08Tracy Alloway?

  I prefer hipster antitrust to neo-Brandeisian. But, I mean, what should we call your brand of antitrust? Give us like a catchy name, like hipster antitrust, like anti-woke antitrust, like MAGA, M&A? Like, give us something.

• 30:22Speaker 06

  Yeah. You can call it MAGA antitrust if you want. I think there are two things, two things I would say. The first is, it's conservative antitrust in the sense that, you know, we aren't beholden to sort of libertarian ideology about markets. We take markets actually as they actually are. We take consumers as they actually are, how they actually participate in markets. We take laborers as they actually are, and we take very seriously that, you know, consumers and laborers suffer in markets short of things that just affect short-term price and output. And that the loss of innovation, even if you can't measure it the way, or the loss of choice or product quality, even if you can't measure it the way that an economist would

• 31:02Speaker 06

  measure price and output, still matter to consumers and still matter to antitrust. And I think the second is, you know, I really do see my view as just like a cop on the beat. You know, I think the other thing that was unusual about the previous administration was that it had a really hardcore focus on ex-anti regulation. You know, the FTC under my predecessor passed a record-shattering number of ex-anti rules for an agency that doesn't pass very many ex-anti rules. Including competition rules, which it had not done in a long time, arguably had, in my view, had never lawfully done. And, you know, the only one that we passed has been vacated by the courts. But, you know, it was not just a sort of neo Brandeisian revolution, it was an emphasis

• 31:47Speaker 06

  on ex-anti regulation. And my view is, as a cop on the beat, if we really vigorously enforce the antitrust laws, we avoid the need for regulation. Because regulation is what you have to do when monopolies have totally consumed a market. I mean, all of us live in some form of a utility monopoly. Grew up in Virginia, we have a giant electric utility monopoly. It is heavily, heavily, heavily regulated directly by the state legislature. But if you vigorously enforce your, and, you know, utility monopolies, they're a little different because of the sort of space constraints on wires and cables and things like that. But if you take the antitrust laws very seriously, and you really vigorously enforce them, and you don't pull your punches because of ideological suppositions about markets, you can avoid

• 32:31Speaker 06

  the need for ex-anti regulation. Because vigorous market competition ensures monopolies do not rise, antitrust enforcement ensures vigorous market competition, and if you have market competition, you don't need heavy regulation because you don't have giant monopoly problems.

• 32:45Joe Weisenthal?

  So, I take, I understand this point, that you don't need as much regulation if you take antitrust seriously. There does seem to however be, maybe you dispute this, this tendency towards centralization in the modern internet economy. And, you know, like, it's very helpful that everyone, you know, more or less goes to one place to share photos, something like Instagram, or one place to review books, etc. Like, this is just seems to- One place to troll. One place to troll on Twitter, like I do. How do you, like, actually, that's a joke, I never troll. Sorry. I slipped, I slipped there. Tracy, Tracy caught- I'm so sorry I made you do that.

• 33:29Joe Weisenthal?

  Hey, I slipped for a second. I do not troll on Twitter. But how do you, like- I guess what I'm trying to understand is many people on both the right and the left feel this intuitive sense that there's a tremendous amount of power being accrued in these gigantic tech platforms. And to your point, like antitrust and the FTC seat specifically, how do you measure when something is uncompetitive in a deal? Because again, the nice thing about prices, etc. is like, you can measure it. So like, what does it actually look like to have a sort of more competitive internet?

• 34:05Speaker 06

  Yeah. And the additional layer of complication for a lot of the internet platforms that we all use is that we use them without exchanging money for them.

• 34:14Joe Weisenthal?

  Right, right.

• 34:15Speaker 06

  Like, you know, Facebook, X, not premium, Google Search. You know, we don't, we don't hand over money in exchange for using those services. That doesn't mean that there aren't ways to measure a loss of competition. So like, you know, I'll just use an example about the position that the commission has articulated in Meta, which is, you know, purely, purely public. But one of the ways you can measure a loss of competition is if product quality is degraded without a meaningful competitive impact to the company that's degrading product quality. So for example, the FTC has alleged, and you know, we've got a trial coming up on this, but the FTC has alleged in Meta, for example, that Facebook was able to massively increase the ad load on Facebook without losing any consumers, which meant that they were able

• 34:59Speaker 06

  to degrade the quality of their product and consumers didn't have anywhere else to go, and so they just sort of stayed. And that, you know, the antitrust laws and a sort of fully formed understanding of...

• 35:11Joe Weisenthal?

  But I guess the, the question, I guess, and I, that makes a lot of sense to me. On the other hand, how much is that about some prior failure of antitrust versus this tendency on the internet for everyone to be where their friends are and the sort of natural centralization?

• 35:29Speaker 06

  Network effects.

• 35:30Joe Weisenthal?

  Yeah, the network effects, exactly.

• 35:31Speaker 06

  Yeah, yeah, so, you know, network effects are sort of a natural part of the internet environment.

• 35:35Joe Weisenthal?

  Yeah.

• 35:36Speaker 06

  And the, the antitrust laws do not actually forbid monopoly itself. They don't. The courts have gone out of their way over and over for decades to say the acquisition... ...of a monopoly naturally and lawfully does not violate the antitrust laws. You know, if someone is just really good at something and way better than everyone else, they sort of will naturally develop a monopoly in that because people will prefer that product or service. What you can't do is maintain your monopoly from things unrelated to your skill or the quality of your product or sort of dumb luck. And, you know, in terms of like, you know, failures of previous antitrust regimes, let me just touch on that a minute.

• 36:13Joe Weisenthal?

  Sure.

• 36:14Speaker 06

  Let's just take Google Search, for example. A lot of, the Google Search case is a very traditional Section 2 case. It's tying, it's ordinary monopolization conduct. It doesn't propose breaking sort of our standards. It's a very normal thing. And this case, the idea for this case has sort of sat around for a long time. But there were political decisions made by antitrust enforcers and previous administrations not to do it. But those are political decisions. Those are political economy decisions driven either by some combination of ideology or a prudential, you know, preference against government intervention, even if you think you can win the case because, you know, you don't want to be the guy that kills the goose laying the golden egg. But, you know, I think we need to be realistic about it.

• 36:58Speaker 06

  There were moments during the creation of the Internet and during the sort of rise of these platforms where they made decisions that even under ordinary antitrust theories would have said, hey, this is potentially a problem. I mean, for example, the FTC's theory in Meta was that the acquisition of Instagram was an antitrust violation, but the FTC, you know, did not block the merger. My own view is, I don't think that we should say if a monopoly arose in any market, in any market, Internet platforms or any of the other goods and services we use every day, we shouldn't let, you know, enforcement declinations in the past that led to the creation of monopoly

• 37:39Speaker 06

  be a reason not to confront the monopoly today because that's basically just the sunk cost fallacy. It's like, oh, well, we already did this once, like, you know, they have the monopoly now, it is what it is. My view is, no. If we have monopolies and they're being maintained illegally, no matter how they were formed, no matter who was asleep at the wheel when their formation came about, my job as an antitrust enforcer is to do something about that if I think I can win in court. And if I don't think I can win in court, I need to leave them alone.

• 38:22Speaker 01

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• 39:45Tracy Alloway?

  Okay, so, since we're on the topic of the internet, big tech platforms, one of the things you've talked about is potentially going after censorship on these platforms. Can you connect that to, you just gave us a great history of the consumer welfare standard and how it's changed through time. Connect that to the consumer welfare standard, whether it's, you know, a Bork-esque definition or something more broad?

• 40:07Speaker 06

  Sure. Can I resist your premise slightly? Of course. I don't want to go after censorship. Okay. The government is not supposed to go after censorship for censorship because we're not the speech police. I do care about market power. And if market power enables a business to mistreat its consumers or to degrade the quality of its product by, for example, throwing people off of their platform and suffering no competitive consequences whatsoever, that antitrust cares about, not the censorship itself, the market power that makes it possible to mistreat consumers without suffering competitive consequences. I just give you some background on this. 2020, I am Mitch McConnell's lawyer. I'm sitting in my Senate office. The George Floyd protests are sort of at their peak.

• 40:51Speaker 06

  And I start getting calls from the GCs of giant Fortune 100 businesses and business groups. And I pick up the phone and they say, hey, cops are really racist. We, the business community, want you to pass a bunch of police reform bills. And, you know, I was a sort of like conservative that had relatively strong deference for markets and for market actors and people making decisions in those markets. And I was shocked by this. And my response was, why are you calling me about this? You're supposed to make widgets at low prices for Americans. Why are you calling me about police reform? What the hell does this have to do with you? Leave the political debates to Americans and to voters. Stop calling me about this. And if anything, don't you want more police

• 41:35Speaker 06

  to protect your businesses? And they're like, no, it's really important to us. Like, we want this done. And I remember sitting in my office and going, it's weird that these big businesses with all this economic power are leveraging that economic power to accomplish social and political objectives. And then, 2020, we have this censorship crisis. People want to question the efficacy of masks. You're not going to be on a platform. You want to question the safety of vaccines? You're not going to be on the platform. You want to question whether it's like fair to change voting laws in the middle of an election? You're not going to be on the platform. You want to question whether there's something at Hunter Biden's laptop that we should know about? You're not going to be on the platform and we're not going to let you publish it. But it wasn't just censorship.

• 42:17Speaker 06

  Like any consumer in 2020, you couldn't watch TV, you couldn't go online, you couldn't shop in a store without having nakedly political messages, almost exclusively the platform of one party being thrown in your face. And as a consumer, I said, how can it be that there are all these businesses who are willing to alienate huge swathes of their consumer base with these messages that they throw in our face and suffer no economic or competitive consequences at all? And I started to understand sort of the critique of the very narrow understanding, the consumer welfare standard and the libertarianism that had sort of glommed onto it, which is, large businesses with market power will sometimes leverage that market power to injure consumers

• 43:02Speaker 06

  and sometimes do it in politically motivated ways. And we should really care about the market power that makes that sort of mistreatment possible. But that's the thing I care about is the market power that makes the treatment possible. I don't want to police people's speech, but I do want to police market power.

• 43:17Tracy Alloway?

  But do, okay, I guess my question is, do people have a right to be platformed? And then secondly, I mean, I would really like an Hermes Birkin bag. Hermes will not sell it to me because I do not buy thousands and thousands of dollars worth of luxury goods every year. They have the option whether or not to sell me and they are famously very exclusive in their decisions to do that.

• 43:38Speaker 06

  Yeah, so I don't think that anyone has a right to be on any particular platform, but you do have a right to participate in a market that isn't infected by monopoly. And you do have a right not to have the quality of the product that you want, including speech on platforms, be degraded by someone who will suffer no competitive consequences from doing that. For the same reason, Hermes does not have to lower its prices to sell you a Birkin bag.

• 44:03Tracy Alloway?

  I think they should, but yeah, okay.

• 44:05Speaker 06

  But what they don't have the right to do is engage in conduct that maintains a monopoly where they can charge you higher prices than they could otherwise charge you in a competitive marketplace. Yeah, of course, we're going to have luxury goods, but we don't want a market and we shouldn't have a market. And it isn't a free market. For anyone who cares about free markets like I do, a market isn't free if monopolists get to charge you higher prices, degrade your product quality, deprive you of innovation because of their market power.

• 44:32Joe Weisenthal?

  How do you know, in the case of sort of the world of algorithms, right? So there are certain instances where, okay, the platform is saying, if you talk about X, you are gone. And in some cases, there are emails and very clear trails about stuff like that. There are other cases where it looks like there is a dial that gets turned from time to time where suddenly, oh, I'm starting to see a lot more people talk about this perspective versus that perspective. Do you have a way of measuring whether, outside of like, say, emails, whether companies are degrading their consumer experience with respect to those consumers' ability to speak freely?

• 45:16Joe Weisenthal?

  Is there, like, do you feel confident in your way, in your ability to know whether the company is serving their customers well in that respect?

• 45:25Speaker 06

  Yeah, that's a, that's a good question. And, you know, I'm not going to, we anti-trust enforcers are sort of taking seriously the anti-trust problems of the big tech companies for the first time. I mean, 2020 is sort of the watershed moment when President Trump brings the Meta suit and the Google search suit. I litigated the Google AdTech case alongside the Biden Department of Justice when I was the Solicitor General of Virginia. I'm not going to pretend like applying the anti-trust laws to new contexts doesn't come with some difficulties, including potentially the difficulty you're describing. What I'm saying is that for a long time, especially in the 2010s, There was a strong preference before President Trump became preference for saying,

• 46:06Speaker 06

  "This is difficult, it's new, it's novel, let's not bring the antitrust laws into these contexts." And my view is that that sort of ideologically-driven, hands-off, laissez-faire approach created a system where we have super-large, super-powerful platforms that, in my view, there are instances where they were quite obviously degrading their product quality in a way that would surprise me in the presence of real competition. And I also want to, you know, address the, you know, in some instances, there were emails where it was like, "Oh, get this person off." Look, I mean, I was involved in the Murthy litigation, the Missouri against Biden litigation about alleged either coordination or collusion between the government and big tech platforms during 2020. It was more than just a couple emails.

• 46:51Speaker 06

  This was rampant, it was systematic, and it was terrifying, the relationship between the big tech platforms and the government about who was going to get to speak about what. And, you know, I think this leads me to another important point, and it's one I try to make to my libertarian friends who think some of what I'm saying sounds extreme, which is, if you are a libertarian and you care a lot about personal liberty, you ought to really care about monopoly, because it is way easier for the government to control all of our lives if they only have to coerce a small handful of suppliers. If you have a wide range of options for consumers, it's harder for the government to pick up the phone over and over and over and be calling executive after executive and say, "We need you to do this to that person and this to that person."

• 47:35Speaker 06

  But if it's just a handful, that gets real easy, real quick. And I think we saw that in the Murthy litigation. It's just a couple platforms, you need a handful of government officials who call and berate platform people to kick consumers off. That's harder if there are more suppliers, if there are more choices for consumers. And so even if you are sort of libertarian and you have this ideological sort of predisposition, predispositional view that markets correct themselves and government intervention is always worse than monopoly, my response is, you don't want a tiny number of suppliers because the government can coerce them real easily, and if the government can coerce them, they can coerce you.

• 48:12Tracy Alloway?

  So, just on the content issue, I mean, is part of the problem the advertisers as well here? Because we've seen this happen where advertisers will say, "I don't want to put money into this particular business because I think there are a bunch of people saying racist or unacceptable things." And then, secondly... I mean, you've pressed for Section 230 reform. I think this is something you're interested in, and that's always an interesting thought experiment to think what the world would look like if we never had Section 230. But, I mean, that exists, that currently exempts internet platforms from a lot of liability here, but if you were to reform it, surely that would come into conflict in one way or another with content and censorship.

• 48:57Speaker 06

  Let me talk about 230 really quickly. So, as a state enforcer, which is what I was before I was at the FTC, trying to protect Virginians, the amount of time I spent trying to come up with complaints that had to plead around Section 230 was like shocking. Section 230, on its face, seems to care mostly about protecting tech platforms in the early 1990s from the liability for torts committed by people who are speaking on their platforms. And it has, over the course of years, been interpreted basically to immunize tech platforms from anything relating to content moderation. In my view, that isn't what Section 230 says,

• 49:38Speaker 06

  but that is what the courts have done. My own view about Section 230 is that it's very difficult to justify immunizing the biggest companies in the history of the world from state and federal enforcement actions, and the FTC has tried to enforce Section 5, our preeminent statute, against online platform companies, and we have lost cases because of Section 230. Where private businesses, large private businesses, are interposing Section 230 between the government and trying to protect Americans through government enforcement actions. In my view, that just categorically cries out for reform. But I don't, I don't think that that runs into conflict with censorship in the following sense. One of the, some

• 50:20Speaker 06

  of the Section 230 cases that have troubled me the most are people who were alleged that they were thrown off of a platform in violation of the platform's terms of service. It's just a contract claim, like, hey, I entered into this relationship with you, the platform, and I did so on the basis of what you had in your TOSs, which governed You know, the kind of things I'm allowed to say, the kind of conduct in which I'm permitted to engage, et cetera. And you kicked me off in violation of your own TOS. And the platforms have been able to interpose Section 230 between consumers and say, it doesn't matter what our TOS said. We kicked you off. That's a content decision. Therefore, you don't get to bring the lawsuit. And my view is, you know, consumers can protect themselves better

• 51:02Speaker 06

  from censorship if they're able to at least hold platforms to their terms of service. And one of the questions that we've asked consumers to provide us info on in our own tech platform investigation on this issue is, give us examples, if you have them, of times that you think that you were deplatformed, or shadow banned, or whatever, in violation of the terms you agreed to when you got on the platform. And, you know, so on Section 230, I do think it has been interpreted wildly beyond what anyone thought was going to say, and that at the very least, you know, the Trump administration proposed these changes in 2020, it should not provide immunity from government enforcement actions that are designed to protect Americans.

• 51:43Joe Weisenthal?

  Andrew Ferguson, FTC chief, thank you so much for coming on Odd Lots Live.

• 51:48Speaker 06

  Thanks for having me.

• 52:07Tracy Alloway?

  That was our conversation with FTC Chair Andrew Ferguson. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 52:14Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at TheStalwart. Follow our guest, Andrew Ferguson. He's at AFergusonFTC. Follow our producers, Carmen Rodriguez at CarmenArmond, Dashill Bennett at Dashbot, and Cale Brooks at CaleBrooks. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have all of our episodes and a daily newsletter that you should sign up to. And you can chat about all of these topics, including regulation, including deals, including politics, in our Discord, discord.gg/oddlots.

• 52:44Tracy Alloway?

  And if you enjoy All Lots, if you like it when we do these live recordings, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

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