FTC Chief Andrew Ferguson on the Trump Vision for Antitrust

24:43But yeah, go ahead. 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 D.C. 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 lawyer who had thought a lot about antitrust as a practitioner but very little about antitrust as a policy.

25:22When you're a practicing lawyer, you think about doctrines, how can I help my client with these doctrines? You don't 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, 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.

25:58He 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 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 the rest of Google.

26:34President 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 Warner case. And the Metta case that's going to trial in my agency in just a month that says that Metta'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.

27:12Now, President Biden comes in and picks my successor, who is 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, 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 opening up a much broader range of interests.

28:18I 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. Their rationale was that price and out part are too narrow a consideration on which to base an antitrust regime. And the answer to that is, that's true, but Bork didn't actually say just limit it 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 It definitely did not.

29:00Every court in the country still applies the consumer welfare standard. I prefer hipster antitrust to neobrandeis. 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. Yeah. You can call it MAGA antitrust if you want. I think there are 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 as they actually are. We take consumers as they actually are, how they actually participate in markets.

29:37We 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 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-ante regulation.

30:19You know, the FTC under my predecessor passed a record shattering number of ex-ante rules for an agency that doesn't pass very many ex-ante 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 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.

30:55I 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 utility monopolies are 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 the need for ex-anti-regulation because vigorous market competition ensures monopolies do not rise.

31:33Antitrust 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. So 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... One place to troll?

32:13One place to troll on Twitter like I do. How do you like... Actually, that's a joke. I never troll. Sorry. I slipped there. Tracy, come on. I'm so sorry I made you do that. 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, et cetera, is you can measure it.

32:56So what does it actually look like to have a sort of more competitive internet? 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. Right, right. like Facebook, X, not premium, Google search. 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 I'll just use an example about the position that the commission has articulated in Meta, which is 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.

33:40So, for example, the FTC has alleged, and 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 to degrade the quality of their product and consumers didn't have anywhere else to go. And so they just sort of stayed. And the antitrust laws and a sort of fully formed understanding. But I guess the question, I guess, and 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?

34:25Network effects. Yeah, so network effects are sort of a natural part of the Internet environment. And 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. 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.

35:02and in terms of failures of previous antitrust regimes, let me just touch on that a minute. Sure. Let's just take Google Search, for example. The Google Search case is a very traditional Section 2 case. It's tying, it's ordinary monopolization conduct. It doesn't propose breaking 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 informers in 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 preference against government intervention, even if you think you can win the case, because you don't want to be the guy that kills the goose laying the golden egg.

35:51But I think we need to be realistic about it. 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 be a reason not to confront the monopoly today.

36:38Because 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 antrust 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.

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39:32Can 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 a Bork-esque definition or something more broad. 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, 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.

40:11Not 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. 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 I was a sort of like uh conservative that had relatively strong deference for markets and for market actors and people making decisions in those markets 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 to protect your businesses?

41:14And they're like, no, this is really, 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 in 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?

41:45You're not going to be on the platform. You want to question whether there's something in 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. 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 swaths of their consumer base with these messages that they throw in our face and suffer no political 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, we'll sometimes leverage that market power to injure consumers and sometimes do it in politically motivated ways.

42:41And 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. But 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.

43:15Yeah, 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. I think they should, but yeah, okay. 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.

43:52Yeah, 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 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.

44:39Do 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. Do you feel confident in your ability to know whether the company is serving their customers well in that? Yeah, that's a good question. And, you know, I'm not going to... We antitrust enforcers are sort of taking seriously the antitrust 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 Ad Tech case alongside the Biden Department of Justice when I was the Solicitor General of Virginia.

45:26I'm not going to pretend like applying the antitrust laws to new context 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 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.

46:08And I also want to 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's more than just a couple emails. This was rampant. It was systematic. And it was terrifying. the relationship between the big tech platforms and the government about who is 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.

47:00If 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. But if it's just a handful, that gets real easy, real quick. And I think we saw that in the Murphy 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.

47:41My 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. 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.

48:19But 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. 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.

49:04And 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, but that is what the courts have done. My 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.

49:48In my view, that just categorically cries out for reform. But I don't think that that runs into conflict with censorship in the following sense. Some 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.

50:21And 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 consumers can protect themselves better 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.

51:00And, 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. Andrew Ferguson, FTC chief. Thank you so much for coming out. Thanks for having me.

51:44that was our conversation with FTC chair Andrew Ferguson I'm Tracy Allaway you can follow me at Tracy Allaway and I'm Joe Weisenthal you can follow me at the stalwart follow our guest Andrew Ferguson. He's at afergusonftc. Follow our producers, Carmen Rodriguez at Carmen Armand, Dashiell Bennett at Dashbot, and Kale Brooks at Kale Brooks. For more Odd Lots content, go to bloomberg.com slash oddlots. We have all of our episodes in 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 slash oddlots.

52:21And if you enjoy Odd 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.

52:51Thank you.

53:26How many vendors does it take to meet all your organization's food needs? Just one. EasyCater, the workplace food platform that lets teams order from a huge variety of restaurants, over 100 ,000 nationwide, all through a single vendor. In addition to all that variety, EasyCater also gives you full visibility of your organization's food spend with invoicing, centralized reporting, and seamless integration with expense management systems, all on one platform. EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. I'm Barry Ritholtz, inviting you to join me for the Masters in Business podcast.

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