Jonathan Kanter, Assistant Attorney General, Antitrust Division, U.S. Department of Justice
Interviewer: Alan Murray, FORTUNE


Brainstorm Tech 2022: A New Era In Antitrust 

Conferences

Brainstorm Tech 2022: A New Era In Antitrust 


Jonathan Cantor, thank you so much for joining us virtually at brainstorm tech. Well, great, thank you so much for having me. I'm delighted to be there, I'm sorry, I can't join you all in person, but I hope to do that in a future event. Well, I I hope you do, and I wish you could be here in person, because when I come to this conference each year, one of the things that impresses me is there's so many entrepreneurs building such cool companies, uh, unicorns achieving unicorn status, investors who want to throw huge amounts of money at them. And and the question it raises in my mind is it's, it seems we have the most robust tech ecosystem in the history of the world here in the United States, so why is there a competition problem? Great questions. So, first of all, um, we want an opportunity for those entrepreneurs, those investors to succeed to compete um beyond the scope of our imaginations. And interestingly, um, the stakeholder group that we probably hear from the most are smaller companies, investors, entrepreneurs who are dependent on intermediaries and platforms and who want the opportunity to compete in an open competitive environment, not one where winners and losers are pre selected, but one where opportunity, um, innovation uh and um are, are the deciders of who ultimately will succeed. And um, and so a marketplace that's working is what we hear the industry wants the most. Uh and we understand that in order to do that, there need to be certain rules of the road and that's where the antitrust laws come into play. So for the last five or six decades, for most of my life, the standard by which antitrust was judged as I understand it, you're an expert in this. I am not, but as I understand it, the standard by which antitrust was judged was not. What does it do for competitors? It was. Does the consumer benefit or is the consumer harmed? What's wrong with that standard? It seems like focusing on consumers is a good place to begin. It's focusing on consumers is an extremely important part of antitrust law. Consumers are an important constituent. Ultimately, we believe that competition in the competitive process can generate a wide range of benefits for all aspects of many aspects of our societies. Consumer being key among them. And so consumers can realize the fruits of new innovations and access new technologies, but it's not just consumers, workers, employees, it can be, um, investors, entrepreneurs, uh, it can be when you're dealing with tech and media can be our democratic values that are at stake in terms of the free flow of information, something that, you know quite well. Um, and so those are all attendant benefits of competition. But first and foremost, what we want is a healthy competitive process. The healthy economy that provides opportunity and the rivalry that flows from competition is what we yield this wider range of benefits, including for consumers, but that's a change, right? That's not the way antitrust law has worked in this country for the last 50 years. Well, that's debatable, right? So, you know, there's been discussion of something called the Consumer Welfare Standard, but there's, they often say, if you ask five antitrust lawyers what the Consumer welfare standard means, you'll often get six different answers. Um, and so there's a question about whether consumer welfare and economic terms means the welfare of consumers or it means something broader than that. I think what we're trying to do is go back to first Principles, which is why do we have the antitrust laws in the first place? And the reason is because Congress who wrote the laws determined that competition. The competitive process is what generates benefits, including benefits for consumers. And so whether that's a change or not, I think is debatable. But from, or perspective we are focused on competition of the competitive process. Well, the reason I focus on that is because as, as, as Mahal pointed out at the beginning, these antitrust cases, you know, far better than I do are complicated. They take a long time to put the case together to bring the case and then you end up in the court system. And if you have a court system that isn't viewing antitrust law the same way you are, could you be spending years to bring cases that are just going to be knocked down in the courts. Yeah, the antitrust laws have existed over 100 years. And I remember law school seeing my antitrust book and you flip through the history and year after year, decade after decade. You see how the law evolves some degree. There's a long game, which is, are the laws that we have in place fit for a modern economy. The only way to determine whether those laws are fit is to make use of them to bring cases to court to present fact patterns and that reflect the realities of a modern economy and then give courts the opportunities to rule. If Congress decides that, um, that the laws need to be augmented, that the laws need to be supplemented or changed, then Congress can do that. But ultimately, what we have today are our broad ranging, reaching, rather antitrust laws that have the capability to address modern economy. So long as we are bringing the cases, the courts giving courts the opportunity to weigh in. Um, if we don't use those muscles will atrophy and we won't have, um, um, courts with enough giving us enough of a framework to understand how antitrust laws relate to realities of a dynamic modern economy, that whether economic realities were confronting, you know, on a daily basis, Um, are vastly different than what we saw. Um, forget 100 years ago, we saw 20 years ago. And the rules of economics have been turned on their head and it's important that we present fact patterns to court so that we can understand how those rules apply today. So you're, you're okay with playing the long game, we have to, we have to use the tools that congress gave us and we have to bring cases to courts and we're looking to have an impact quickly as we can. And so if we see in a competitive conduct and we believe that, um, the law necessitates intervention, we're going to intervene and we're gonna use the tools in our toolkit to make sure that we can have an impact as quickly as possible, um, whether that's in challenging a merger or bring a case to address specific action, getting injunctive relief, there are a number of things we can do, but antitrust law is also going to play out over a longer period of time, and we also recognize that the law needs an opportunity to evolve. Ultimately, Congress is also considering a range of new laws and um, we've come out in support in particular in support of a broad ranging bill that would address non discrimination in the tech space, and that's an example of Congress potentially weighing in with, with more specific rules perhaps to have an even more immediate effect. Yeah, I want to open it up to questions in just a minute. So please, if you have a question, raise your hand and we'll get one of the, uh, one of the microphones to you, but, but before you do that, before we do, there's a question I'm really, uh, dying to ask you. Uh you know, Adam smith famously famously said that whenever you get two people of the same trade in a room, uh there wouldn't be much time that passed before they started colluding to fix prices. The question is, can a I do the same thing inadvertently. Can technology do the same thing? Do you envision a world, you talk about keeping up with technology where you'll have to police algorithms uh that are colluding in ways that are inappropriate. Yeah, the short answer is, yes. So in the antitrust laws were first enacted, we had the proverbial smoke filled room where um folks would sit in the basement smoking cigars and coming up with agreements to fix prices. I think, you know, in the last 20 or 30 years we have seen that evolve to um um email and text messages, but we're at the dawn of a new era when um when companies are pricing and trading programmatically not just um in traditional manner, and to the extent that you're developing algorithms and Ai and um that has the machine learning, um we've talked openly about the need for there to be compliance on the front end to make sure just as you train your employees before they got into the um into the work force to make sure that they understand the ground rules. It's going to be important to make sure that before you start training your Ai that they understand. Um and that that Ai has appropriate mechanisms in place to ensure that it doesn't go into areas that can violate the trust, fascinating. I'm gonna open up for questions. I take it as a given that you aren't going to talk about individual cases. So I would encourage you not to waste our time asking him about individual cases, but you're obviously free to ask whatever you want. Richard, I think that that's me. Hi Richard from you dot com and you search engine, I just heard not asking about specific cases. So let me ask in general about the search engine space, um, and the antitrust progress that you expect in that. So for instance, the european union has a choice screen already when you install a browser or a new operating system. Do you think something like this will come and what time frame? Thank you. Yeah, So thank you for the question. And and unfortunately I can't discuss specific matters or cases, but what I can say is that we're eager to hear from industry to understand, um, um, where they see, where you all see competitive chokepoints and what kinds of remedies can help restore competition? What works? What doesn't, um, but ultimately, what, there's no one size fits all. Um, and it really depends on the specifics of the industry, uh, and um whether what remedy in terms of what remedies will work or not. Well, I'm sure Richard will be would be happy to spend more time with you and and fill you in on that another question. Hi, it's Gene Munster from Loup. And you said three times, don't ask about specific companies. The question before was alluding to google. So I'm gonna ask about google and some of the uh recent news and when you see the headlines about this negotiation that went on, did it surprise you? Um do you think it sets a precedent that some of the other big tech companies are having similar conversations with antitrust? I would just love stream of conscious when you see those stories. Yeah. You know, go ahead. No go, no, no. Stream of conscience deliver. Yeah, no, I think that's, I think in my line of work I've uh you know, often will see stories and stories will, without commenting on the specific story or specific investigation. It's important for us to keep our head down and focus on doing the right work and reaching the right outcomes. And so I'll leave to others to prognosticate to determine what's accurate or not accurate. But from our perspective, it e antitrust division Department of Justice, we have to focus on keeping our heads down uh and achieving the outcomes that we believe are appropriate in terms of law enforcement Mark. Oh, I'm sorry, go ahead. You have a quick follow up, Just a quick unrelated follow up is that there's this general overarching theme around ensuring that tech is moving more back towards the US that there's a need for greater reliance on some of big tech, given some of the political dynamics globally. And I'm curious if the antitrust department thinks about that. Do we want strong big tech for national security? Yeah, thank you for asking that question. I think, you know, our belief is that we're a market based, um, democratic capitalist economy and we're strongest when we play to our strengths and our strengths are our competition, innovation choice. And from our perspective, we are going to be most competitive as a nation when we have domestic, um, competitors, uh, and um, domestic opportunities to succeed. Um, and when we are providing market opportunities across the broad range, including, um, including US based companies, but not excluding others. And so I think that the idea is that we believe, um, well, I believe personally that competition um helps generate opportunity in our country and in place our strengths, Mark, uh, Mark johnson Cto stand together. Um, My question is about creative destruction cycles that are moving very quickly. So if you look at, uh, previous technology platforms like the, the telephone and the government supported telephone monopoly that lasted for decades. After that you've had Wind tell, um, you've had google, but then you have been come out, you have new platforms like social networks being built on top of old platforms. And it seems to me there's this very, very fast cycle of innovation um, in technology, how does that cycle of creative destruction play into, um, antitrust? Sure. So, you know, our goal in antitrust is to review it as law enforcement, not regulation. And so our goal is to understand whether, um, that there are firms out there who are engaging in conduct, whether it's a merger or other kinds of conduct that prevents the market from functioning in a competitive open and and, and, um, um, manner. And so it's really not. It's really about that. It's about, you know, if if if there are participants in the market, we're trying to stifle, um, market based competition by putting up impediments, engaging in exclusionary conduct, choking off nation competitive threats to mergers. Then our job is to intervene and make sure that those issues are addressed so that, um, that firms can duke it out in the marketplace, but there is a kind of a mismatch there. That mark refers to between the rapid pace of innovation that we see among the, the companies in this room and the slow pace of, of antitrust law that you were talking about earlier. How how do those things work together? Right. This is something that we think a lot about, and I think, you know, part of the challenge that I've identified um, in the past is that we haven't used the antitrust laws enough. Um, and over the last 20 or 30 years in terms of monopolization cases. And so we don't have the kind of ground rules that perhaps existed when the antitrust laws are being enforced with greater regularity. And so part of what we're trying to do is is make sure that we're bringing enough cases to court, helping develop the law so that the rules of the road are clear, uh, and compliance, um, um, you know, has more bright lines in terms of how companies behave, but, but, but we're, you know, we're, you know, again, if you don't use those muscles, it'll start to weaken and, uh, and there won't be as much certainty or clarity. Well, that's a really interesting point. So you are less likely more reluctant to do settlements, which might happen more quickly. But don't establish the law. You, this gets back to playing the long game. You really want to play the long game to establish some new rules for tech companies in the modern economy. I think we have to write because if you look at a lot of the decisions that are most common in the antitrust based right now, or precedents, they're based on economic realities that no longer exist. They're based on, um, you know, smokestack industries. Uh, and that's not the world we live in the economics, the incentives that drive competitive behavior are dramatically different. Today, I talked often about how the changes that we've experienced over the last 20 years are on par, with if not exceeded the significance of the industrial revolution. And so the rules have been turned on their head and if we're lying on antitrust cases that were brought 40 50 60 70 years ago, some of them might still apply and should. But understanding how they apply in an economy where incentives have shifted, it's something that we have to understand, we only can understand by, by testing, by giving courts the ability to weigh in and by making it clear that the antitrust laws still operate and I think that's incumbent on us to make sure that we are um, enforcing the law as it's been written as it exists and has existed for over 100 years. Well, Jonathan Kantor, thank you for joining us from an undisclosed location. Are you, are you going to share with us where you are? Are you going to keep us in? I am, I'm in spain today, so it's uh, it's, it's um, um, fresh off a siesta and ready for dinner. Great, well, well, we hope you have a great dinner. Thanks for spending the time with us. All of us. Look forward to seeing you in person at next year's brainstorm tech. I look forward to that as well. Thank you so much for having me and thank you to everyone for the thoughtful questions