BONUS: FTC Chair Lina Khan Talks Amazon, Anti-Trust

Right now, though we are monitoring our DC bureau as our Peggy columns get ready gets ready to sit down with the head of the FTC.

Lead a Coon. Let's take it to DC.

FTC Chair, thank you so much for your time today and for joining us.

Thanks for having me.

And it's actually fun fact for all of you. It's the one hundred and ninth birthday of the FTC today, So happy birthday.

Yes, joyous occasion.

So Chair con let's start with the news, because there's a lot of it out there today. Just hours ago, the FTC dropped a case against one of the world's biggest companies, Amazon, and in the case, you allege that the company is monopolizing the online marketplace in a way that's harmful for consumers and for sellers on the platform. But Amazon's already come out and said it's going to fight you in terms of challenging the case, and that the case is a radical departure for the FTC from

So, if this is a case about a set of unlawful tactics that Amazon has used to maintain its monopolies, we note in the complaint both a set of anti discounting tactics that Amazon uses to punish any seller or retailer that dares to discount, and ultimately these sets of tactics deter sellers and retailers from lowering prices and closes

So one of the things in the complaint is this phrase structural relief that you're seeking structural relief in this case, which implies a breakup. What would that look like?

So at this stage the complaint is really focused on the issue of liability. We lay out a scheme that we believe violates the US antitrust laws. What we note in the complaint is that these different aspects of Amazon's scheme have an aggregated effect, so the harm is accumulating, there are feedback loops between the harms, and so the

So, just staying on the issue of remedy for a minute there, what do you think the company should be doing differently?

So the complaint lays out a set of tactics that we believe are illegal and that are illegally elevating and inflating prices for the American people. So at the very least, any relief would require that the company halt those tactics. But as I noted, effective relief also needs to be restoring competition to this market, which we'll be asking the judge to do as well.

And when you think about the prospect for winning the case, how would things change for consumers and sellers if you do, in fact win.

So this case is ultimately about competition and competition that has been foregone because of Amazon's unlawful tactics. As the complaint lays out as a result of that, people are paying higher prices right Consumers are paying more than they otherwise would. Small businesses are having to pay a fifty percent Amazon tax right now, and so ultimately the complaint is seeking to restore the law promise of competition. Greater competition will mean lower prices, better quality, better selection, and

So Amazon will say that it's providing a platform that has a mix of products on it, but also when it comes to merchants on its platform, it's offering more and more services to them, shipping, delivery, advertising. In terms of why they're like the charges that they have, how do you respond to that?

So the complaint really goes in some detail about the different ways that this tax effectively has been increasing steadily and the way that that can be evidence of direct evidence of monopoly power. Interestingly, at various points, Amazon did experiment with giving sellers more leeway to use seller fulfilled prime, but once Amazon recognized that would threaten its monopoly power,

And you mentioned just a bit ago paid advertising that Amazon's doing more of this, and that comes up in the complaint as well. What concerns you there?

So, look, ads can be useful, ads can be relevant. What the complaint surfaces is that Amazon has used ads in ways that actually degrade the experience for shoppers, that make it more difficult for shoppers to find relevant search results, and that actually steers shoppers to higher price products. So that's actually a degradation of service that we claim is

What do you say to critics who say, by doing these types of cases, these big swings that you're actually getting the way of business and the free markets.

So this case is entirely pro business. It is you know, tens of thousands of businesses that are dependent on Amazon to reach shoppers, that increasingly are paying one out of every two dollars, as well as being subjected to all sorts of you know, arbitrary tactics. So we believe that this lawsuit, if we're successful, will actually entirely restore the

If you are successful, Just going back to that question about structural relief, could you see a world where Amazon is, you know, not one big company, but has you know, different parts of it and in terms of breaking it up and having different parts of the business soul entities.

So look, we'll want to get to the question of remedy when we get there, but ultimately the key is going to be making sure we understand what's required in digital markets to fully compete and what the aggregated harm has been in these markets through Amazon's unlawful conduct and how do we make sure that competition is fully being restored.

So a lot of people will point to this paper that you wrote in twenty seventeen about Amazon, and they point to that as rooted in your approach to antitrust and what you've brought to the job. Do you feel like today by dropping this case, you actually have come full circle from that paper in twenty seventeen.

Look, in this job, I'm a law enforcer. It took an oath to really enforce the laws, and this case is the results of really meticulous, careful work by our staff over many years. We really followed the evidence where it took us and is the complaint details. We believe there are facts that show Amazon is violating the antitrust laws, and that's what the case is really about.

So this is actually not the first case that you brought against Amazon. I believe it's the fourth, and one of the others was more focused on Prime services, and earlier this month you actually added three executives to that complaint. In terms of the charges are alleging that the company has duped consumers in terms of signing up for Prime services, but also made it really hard to cancel. What was what a message were you trying to get across by adding those three Amazon executives to the case.

Look, these are decisions that we always make on a case by case basis. There's a legal standard you have to meet in order to show that individuals you know, had the direct ability and authority to participate or direct the conduct. And so you know, the the amended complaint really lays out why we believe that's the case. We want to make sure that we apply the law in an even handed fashion and are not just going after fraudsters and you know, fly by night scammers while ignoring

We move on from Amazon. Because you've been very busy at the FTC. So there's other things we want to get to. But what's the most important thing you want consumers to take away from how you're approaching Amazon because it's so much of a part of different people's daily lives.

So, look, this case is about the competition that has been lost because of Amazon's monopolization and their unlawful tactics. And consumers should be entitled to lower prices, to more competition, to more innovation. Similarly, sellers should be entitled to greater competition. And this alternative universe of greater competition, greater innovation, lower prices, better quality has been lost because of these taxs, and that's what we're really trying to get justice for.

So one of the other things we write a lot about in addition to big tech at Bloomberg is private equity. And the Amazon case that came out today is a landmark case, but you actually have a case that came out earlier this month that involves the private equity industry, which is the first of its kind as well. And in that case, you're really looking at the practice of roll ups in the private equity industry, where they're buying multiple companies in the same industry. What concerns you there.

So this was a losses that the FTC filed last week against USAP and Welsh Carson, the private equity firm, And as the complaint lays out, you know, there was this scheme here to roll up the market. There was a concerted scheme to do serial acquisitions by a whole set of anesthesiology practices and then after buying them, raising the price, raising the price for Texas patients, for businesses, and so those are the practices that were going after.

So you also indicate that this is an area that you're looking at and will continue to look at. And actually one law firm out there said, you know, it's required reading for investors in private equity firms that are doing the practice of buying multiple companies in the same industry. So if you're in the private equity industry, where can they expect you to look at next?

So look we follow where the facts take us. This investigation in case was in the context of anesthesiology, but to no a secret. There's been a lot of reporting about other areas where we may have seen these types of roll ups, and so we want to make sure you know we're scrutinizing where there may be the most harm.

So in the past these type of acquisitions have gone through, how hard is it going to be for you to convince people to change course? And maybe, you know, look at blocking some of these type of acquisitions in the future.

So the FTC recently, alongside the Justice Department, rolled out proposed merger guidelines that lay out the kind of analytical tools and frameworks that we'll be using to assess whether mergers or acquisitions violate the US anti trust laws. In those guidelines, we note that serial acquisitions can also violate the anti trust laws, and when enforcers are looking at a particular transaction, we may look at that transaction not just in a silo, but as a part of an

So, as I said, FTC has been very busy of late. One of the cases where you actually had a loss and courts pushed back was the Microsoft activision case against that deal. What is one of the lessons that you learned from that experience.

So, look, I'm not going to be able to talk about that matter because it's still in pending litigation. But anytime we suffer a set back in the courts, we always look at that very closely, as you know, and appeal is pending and so we're hopeful about next steps.

Another area of renewed focus for you is the issue of labor. So we're seeing strikes across the country right now, from Hollywood to Detroit, and your agency announced collaboration or further collaboration with the Department of Labor recently to look at labor market and antitrust issues there, Can you tell us a little about what you're looking at there and what concerns you.

So overall, we want to make sure that we're enforcing the antitrust laws to protect everybody. That means protecting consumers, but it also means protecting workers. There's been a whole set of empirical work over the last decades showing that markets can be highly concentrated in ways that harm not just sellers, but concentrated in ways that harm labor, harm workers, and the monopsony power may be more prevalent than we had previously realized, So that's something that we've been scrutinizing.

And what conserned you most in terms of labor with some of these trends that we're seeing, especially since the pandemic in terms of wages, and where the FTC may be able to help there well.

Overall, we want to make sure that we're understanding what monopos any power looks like, and so in our draft merger guidelines, we for the first time lay out how we're going to be assessing whether a merger may undermine competition for labor and for workers. You know, switching jobs is different from buying a toaster, right. There are search frictions, there are other dynamics that are unique to labor markets.

Another area that we write about a lot of Ploomberg is AI. How are you thinking about AI in terms of antitrust and the mission of the FTC in terms of making sure that you protect consumers?

So this is top of mind for us across our work. We've noted on the consumer protection side how this is already providing a lot of concern in the ways that AI can be used to turbocharge fraud and scams, in that these tools can really allow fraudsters to disseminate of, you know, fraud and scams much more cheaply, much more quickly,

When you look ahead to the next year, we're going into twenty twenty four, there's a presidential election. Things could change. So when you think ahead to potentially you know, the last year of the Biden administration or maybe not, but either way, what are your top priorities for twenty twenty four.

So look, we have a very full agenda underway. We have a whole set of rules, both on the anti trust side but also on the consumer protection side that we want to see through. We're hoping to be able to finalize our merger guidelines and then continue the lawsuits we already have underway and be able to move forward with ones that are currently being investigated in house.

So I want to make sure to leave time for questions. But one criticism that people have of your approach to the chair position at the FTC is that you've been taking some of these big swings, like we've talked about about Amazon, and even reports are out there that some hedge funds are betting against you that you'll be able to be successful in some of these big swings because maybe they're unrealistic. What do you say to people who doubt your approach on this front.

So, look, we've been enormously successful on the merger front. We've had around twenty abandonments where parties have walked away after the FTC has filed a lawsuit. We're generally, you know, the way I think about efficacy as deterrence, and we hear a lot from people about how we're having a deterrent effect right and in a situation in which you're seeing fewer illegal deals make it out of the boardroom, is really proof of concept in terms of how you