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Welcome to our Bloomberg TV and radio audiences around the world. A recurring theme of recent tech m and a has been deals to bring in talent in so called aquahiers. The Federal Trade Commission is taking notice. One member of the FTC worn Thursday that these quote creative deal structures could raise antitrust concerns. Let's discuss and delighted to welcome Andrew Ferguson, Chairman of the FTC, to the program. We cover the topic of aquahiers on Bloomberg Tech regularly. It
was a mainstay story in twenty twenty five. When does a talent deal stop being a talent deal and become more than that, become a merger? What are the rules based approach that the FTC would take chairmen to look at that.
Yeah, so we are examining.
Looks have been around, especially in the sort of startup founder space, for a long time, and they've gotten bigger basically in the last ADMIN and a lot of people were of the view that these things were sort of being constructed in these big deals to try to escape you know, Hart Scott Rodino Review, which is pre merger anti trust review in the United States because the Biden administration was trying to block all deals, and I think generally they were that isn't you know, necessary anymore.
We don't need.
Clever workarounds for around anti trust review anymore because at the FTC under the Trump administration, you get a fair shake.
I'm not saying your deal will go through.
I've sued to block several deals this year, and I've won those cases. But if your deal's not illegal, we get out of the way and sort of let the market take care of things. So we are beginning to examine that the HSR Act has a provision that says you're not allowed to structure deals in order to escape pre merger review, and so we are beginning to examine the exactly to make sure that they aren't an attempt to.
Get around HSR review.
But the message I want to send sort of Silicon Valley and to the M and A infrastructure generally is you don't need to structure deals as a clever, you know, attempt to get around pre merger review. You'll get a fair shake at the FTC. Deal may not go through, but if your deal is legal, I will get out of your way very quickly, and if it's not, I'll take you to court and I'll fight to win there. We're not going to let the process be the punishment anymore.
But Jem, you know it is important to us to us to.
Make sure that people aren't going to use clever deal structures to get around pre merger review.
The language of clever or creative deal structures that I cited at the beginning of our conversation was from your colleague and fellow Commissioner Mark made Or Right, who is speaking at a conference in California yesterday. I think what the industry hopes to understand from you is what the threshold is, or what the set of rules.
Would be where a hiring.
Proposal situation should be reported to antitrust authorities. It should be Yeah, as simple as that. It should be by right reported.
Yeah.
And you know, we are beginning to examine how these deals work. Aqu higher deal structures vary from deal to deal, and so there wouldn't necessarily be sort of a one size fits all rule. But we are beginning to examine these big aqui higher deals that raise a lot of attention so that we can understand when an aqui higher is in fact an acquisition that might be covered by the pre merger review laws and when it's not, and we need to understand them before we're sort of out
there telling people what the rules are. But this is you're right, this has become a big enough deal that we are beginning to look very closely at how these things work, including you know, determining whether we need to promulgate additional guidance here in the coming months about how we understand these acquires.
Is there a fact that that matters is more to you, you know, the number of employees hired, or putting a value on the intellectual capital or the competitive advantage that such a transaction would give the aquira.
So the value that matters for HSR is set by the statute.
That's not really here or there.
But the HSR Act applies to deals where assets or stock are being purchased, and that's what triggers HSR review. And so what we need to understand, which is why we're beginning to examine this question now, is when does an acqui hier you know, involve the sale of the acquisition of assets or stock in a way that would
trigger the statute. Look at the end of the day, I'm a lawyer and a law enforcer, and I enforced statutes, and those statutes have texts, and so it's my job to understand whether things happening in the marketplace trigger the text that Congress has actually passed for us.
But that's what we're looking at.
We're not trying to set sort of we wouldn't be setting like aqui hier rules. Generally, we would be looking at deals and trying to understand, you know, does this in fact involve the acquisition or sale of assets or stock and are is anything being structured as an attempt to circumvent review. But you know, I'm not here to say this is what the rules are. There will be you know, hard and fast, clear rules. There aren't even for the ordinary deals. We've got the you know, the
HSR Act and the HSR rules. But deal structure is even an ordinary in then a very widely, and so we have to apply the text that Congress actually wrote to specific deals. But aqui hiers have become frequent enough and large enough that we are beginning to look at the appropriate way to apply the law that Congress actually adopted to aqui hires.
I don't It's not my job.
As an enforcer to sort of fit square pegs into round holes. But it is my job to make sure that the will of Congress, which is the will of the people at the end of the day, is being followed. And that's what we're here to try to do. We're trying to figure out how that applies in the case of acquay hires.
CHAM and how common is this in the field of oftficial intelligence or how often is this particular scenario arising and crossing your desk from the AI industry.
We've seen a couple in the last twelve months.
My understanding is that the act we hire sort of structure, if you want to call it that, where you know, a firm acquires a lot of the talent and another firm is pretty old. Has been going on for a long time, but it often involves very small firms, and I think the reason that a lot of people are starting to notice it is because now it involves much larger firms and the sort of price being attached to obtaining the talent into licensing IP is in the billions.
So I've definitely seen a couple in the AI space this year, which is why has attracted a lot of the attention, and it's why we're beginning to try to examine how are these working and how does the law that Congress passed governing pre merger review actually apply here as well as the provision in the pre merger review law that says you can't structure a deal in order to try to escape HSR review. So that is what we are trying to understand now. But certainly, I mean
you are reported on them. You can read them about them on the Wall Street Journal. It's definitely true that there have been a couple of these big ones in the AI area.
You're alive with us on Bloomberg Television, Bloomberg Radar around the world. Were speaking to Andrew Ferguson, Chairman of the FTC. I think the biggest case study of late which just to give an example of the structure, is Nvidio and GROC Because you know what in Vidia CEO Jen Mung told me a couple of weeks ago is they hired about four hundred engineers, but it also included the licensing of the core technology at a twenty billion dollar value.
But over a set time horizon, Grock exists as a company still but with a focus on one of its business lines, that hiring and licensing technology fullmats. Is there anything specific that Shaman?
Yeah, so I can't talk about specific deals or specific potential investigations. As a law enforcer, you know, I have to maintain a lot of confidentiality about the work of the commission. But I mean, you know that particular structure of the aquahier was different from example, from the one that Meta conducted earlier in the year. These things vary pretty wildly. The terms of the aile I'm sorry of the software and IP licensing can vary, the number of
employees obtained in the transaction can vary. So we're trying to understand these things, first of all, because the last thing I want to do is sort of blindly charge ahead with a bunch of you know, sort of pre determined assumptions and start trying to apply the law to something we don't understand. But it is very important to me, because it's very important to Congress that people not try to come up with ways to attempt to get around pre merger review.
And that's what we're looking at. And again, it's just not necessary.
I get why people wanted to do this in the previous administration, where the anti trust enforcers tended to use the process as a way to block deals rather than you know, sort of being a lot more honest about it than taking people to court. But under the Trump administration, we are either going to get out of your way very quickly or we are going to take you to court. We're not letting the process be the punishment, and so people don't need to try to come up with ways to get around HSR.
You will get a fair shake at the FTC.
Chevan, there's a lot of interest in the FTC and consumer protection and what the FTC's remit is in the domain of AI.
It's an example.
I know you won't comment on specific cases, but x and Elon musk s XAI and Grock have been in the news because of the use of the tool to generate non consen sensual sexualized images. Does the FTC have a role in regulating from a consumer protection standpoint that domain?
Yeah, I mean the president.
Congress passed and the President signed in spring of last year that Take It Down Act, which is seminal groundbreaking legislation to protect people from artificially generated non consensual intimate images. The criminal component of that law that the Department of Justice enforces is already in effect. The part that we enforce, where we have to compel platforms to take down these images and then bring enforcement actions that they fail, will take effect in the spring.
We are getting ready for that.
I have been meeting with the elite child protection prosecutors and investigators at the Department of Homeland Security to make sure that we're synced up on that mission. This is relatively new to the FTC, and I want to make sure we hit the ground running when the authority takes effect.
Right now, we are hiring.
Specialists, prosecutors, lawyers, investigators, and IT experts to enable us the second that this thing takes effect to start bringing enforcement actions wherever these things are happening. And I don't care what kind of company you are, if you are a platform, whether you're a legacy social media company a burgeoning AI company, I don't care. If you are violating to take a down Act, you are going to hear from us, and we are going to be ready to
do it. This is incredibly important legislation. I'm really excited that the FTC has a role in this. I lobby Congress very heavily to make sure that we had enough money to get this program off the ground when it takes effect in the middle of this year.
You're getting that money and we will be ready, Chairman.
President Trump has nominated David McNeil to the Commission. Our audience have asked me to ask you your thoughts on that someone perhaps without antitrust experience, legal experience, the Commission experience, and somebody, you know, frankly with high net wealth.
Your thoughts, please look.
I am generally of the view that Washington has too many lawyers. I think it is great that the President has decided to nominate someone who isn't a lawyer, who doesn't sort of think in the pathways that lawyers always think. I think it's great that the President has nominated. You know, I've never met mister McNeil. I've talked to him a little since the nomination. The man is a true American patriot.
He's created thousands of jobs in this country. He has been one of the most outspoken proponents of manufacturing here in America. That has been one of the President's principal economic priorities is to make sure we make and build things in America.
David McNeil has done that.
He has been successful in doing that, and I think it's great that there is going to be sort of someone with that perspective who isn't coming at this like I am from fancy law schools with a long sort of litigation.
And law enforcement background.
He's coming at it as a job creator, as a wealth creator, and as one of the most outspoken proponents of manufacturing in America that there is in this country. You know, is it an unconventional pick, Yeah, of course it is. But part of what has made President Trump so successful is that he doesn't always think in the conventions that governed DC. And I think that this is a really really good idea to bring someone with mister McNeil's perspective here to the Commission chairman.
The major concern to the consumer right now is affordability. What is the TC able to do on pricing pressure, bringing prices down? Addressing that consumer concern?
Yeah, I mean it's one of my main concerns too. We're doing a lot on this front. On the merger review front, my first two merger enforcement actions were in the healthcare space. We just won one of those healthcare enforcement actions last week and several months before, the judge denied our injunction, but only because after I sued them, they offered to divest the assets that were.
The problem, so that was a win for the Commission as well.
Another merger enforcement action I brought is about industrial adhesives that are used to build homes. We have a real home building crisis in this country. Although under President Trump, home sales went up last year for the first time in a while, we still have a home affordability crisis
in this country. And I have focused intently on the competition side, on making sure that we are active in markets grocery, healthcare, homes to try to bring prices down to consumers and to make sure that all Americans get the advantages that come with vigorous competition. On the other side, I sued ticket Master and a groundbreaking lawsuit charging them with having basically inflated all the prices of tickets in
violation of multiple federal laws. Americans have been complaining justly for a long time that it has become almost impossible to take your family to a ballgame or to a concert without having a fork over the value of a mortgage payment to do it. We have been very active in the ticketing space to make sure that those prices are going to come down. We have been bringing actions
on the consumer protection side in the healthcare space. We've also been bringing a lot of consumer protection cases and competition cases to protect the value of wages again non competes against job scams.
The FTC is a little agency.
Our budget is even half a billion dollars, but we have returned literally billions of dollars of wrongfully taken money just in the last year back in the pockets of the American consumers. We are doing everything we can within our little remit to try to bring down prices and to make this country a more affordable place to live, which is exactly what President Trump has been telling us to do.
Chairman.
Very quickly, Bloomberg's reported that the White House is considering you for a DOJ fraud role. What would that entail and legally would it be possible for you to take on that role while remaining chair of the FTC.
I can tell you definitively, I'm not leaving the Federal Trade Commission and I'm not going to the Department of Justice. This is an important full time job that the President entrusted me with to try to help the American people that just voted in their tens of millions to make Donald Trump president. That's what we have done. We've sent billions of dollars wrongfully taken money back to Americans, and I'm focused on fighting fraud and protecting competition right here at the FTC.
Andrew Ferguson, the FTC Chairman, thank you for your time here on Bloomberg Tech. Okay, coming up, Jermaina Alaman of Prometeer joins us to discuss the future of banking within AI.
That's next.
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