DealBook Conference 2019
November 6, 2019, New York City, United States
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What Should Be Done to Rein in Big Tech? | DealBook
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About speakers

Makan Delrahim
Assistant Attorney General of the Antitrust Division at U.S. Department of Justice
Andrew Ross Sorkin
Columnist & Editor-at-Large at New York Times

Iranian-American lawyer who serves as Assistant Attorney General for the Antitrust Division of the U.S. Department of Justice.

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Sorkin is an award-winning journalist and author. He is a financial columnist for The New York Times and a co-anchor of "Squawk Box," CNBC's signature morning program. Sorkin is also the editor-at-large of DealBook, a news site he founded in 2001 that is published by The Times.Sorkin is the author of the best selling book, Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves, which chronicled the events of the 2008 financial crisis. The book was adapted as a movie by HBO Films in 2011. Sorkin was a co-producer of the film, which was nominated for 11 Emmy Awards.Sorkin began writing for The New York Times in 1995 under unusual circumstances: he hadn’t yet graduated from high school.

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About the talk

Topic: Business

U.S. Department of Justice Assistant Attorney General Antitrust Division Makan Delrahim talked to Andrew Ross Sorkin at the New York Times DealBook Conference on November 6, 2019.

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Thank you. Thank you for being here making you know at the very end of today. I introduced you are ready to the audience as I think singularly the individual who may be responsible for deciding how those headlines ultimately play out about big Tech and where we are and it feels like we are in a moment and antitrust has become a not just talking point but a real issue in America as you know, so very well. My mother is here. My father is antitrust litigator. So I drew up my whole life sitting around the dinner table

talking about whether Microsoft to be broken up and watch it happen to various companies. So he's thrilling to have this conversation to privilege for you to be here is also here today co-founder of Facebook and see you wrote this in the New York Times. Percent of American Industries from Airlines to Pharmaceuticals that experience increased concentration and the average size of public companies has tripled the result of a decline in entrepreneurship growth and higher prices and fewer choices for consumers.

You agree with that? Why thank you. Thank you for inviting me to be here. And your father is one of the best antitrust lawyers in the country for many years. With concentration, so there's two ways to look at concentration. There's industry concentration to a 2016 report that firm in another's and put out about and looking at General metrics of Industries and then there's antitrust markets and we would we look at our specific economic markets that has rigorous testing. We have not seen the evidence necessarily in the antitrust markets for product

markets. Of course, it's hard to deny that there's been a lot of friends actions. A lot of time for transactions can be very pro-competitive for the consumers, you know, you either eliminating certain margins when you're combining different parts of the supply chain or year of creating no greater scale to be able to be more competitive. Our job is to look at the antitrust markets and ultimately decide there's been too much concentration. So let's talk about Big Tex because that's where so much of this exists today. You have an ounce Public investigation going onto into

many of these big tech companies. I know you can't talk about the Pacific. Where are you? So some of the friends that some of the investigations are further along than some of the others as you know, we announced believe it was in July our review in this. I think one of the companies has the through their SEC disclosure says announcement that we have sent them civil investigative demand and there is an existing of Investigation. We have met with the number of complaints sometimes competitive

sometimes customers sometimes folks who try to enter but failed at so we have been meeting with a lot of folks who have an interest now, it is our job and it's a difficult job to separate those who have tried and failed for other reasons a competitor as opposed to a harm to competition that is removed the instead of for somebody to internet And if I told you that there was a company that had a 80% market share in something but did it and let's call it legally what day they got their legally

and they're not they're not even using their power to maintain their Monopoly illegal either. Do you think four Society that's still a good thing or an okay thing? It could be okay, as long as the barriers to entry into that space still remain and what they're doing to remain big is to innovate provide better product better has 80% market share just to pick a number and then are nose couple of them that you have in mind. Hypothetically. I know you won't talk about specific company. So I thought I'd try

and a big part locations out there from complainants and others is have they gotten big through a dumpster and activities that may not be kosher or maintaining that monopolies and I was a big issue in Microsoft going to be our it's a big task and that is going to be our job to decide that. Now whether antitrust ultimately is the solution and I believe it. It's an important tool our job is to make sure the markets are free. But that should be policy reasons. And when I markets have failed Congress has stepped in

and created these Regulatory Agencies. I hope we don't go there regulations should be a option of Last Resort in our economy, but hopefully antitrust will be able to address any chance. I can better ask you a question in this age of technology is Microsoft Netscape cases that is it for the classic example of this put so much of technology today is about integrating products. And so, you know Apple coming out or just as last week with Apple TV service and there's been evidence that some of their after over the years. I've been advantage on

their iTunes platform or other App Store over competitive competitive apps if you will, what's the right answer and I have a portable platform and their people who are going to sell other things on my Platform but I also sell competitive products. How does it have to work to be legal? Well, you know to be legal as a complex question and I don't want to take away from any lawyers rights to learn a lot of billable hours to do that. I'll leave it to them. I'll tell you what could be the illegal instead and it is when you take action for example in A1 condition

of anti-competitive activity could be you know, you cut off a competitor from an input that they have been receiving and it makes no economic sense other than to reduce competition. That's the you know, I cannot make sense test that we have posed and we will see if that is but you know, I'm aware of spotify's complaint in the European commission. This is about Apple pay is about about how you actually pay for the service using Apple pay and they didn't 30% they take and so alone and there's been private action. You know, what I do all the way up to the Supreme Court for it for a technical

side. Just there last year and a 5-4 decision. The court said the lawsuit can move forward. There might be more activity just on the private side here without commenting on what we're doing. How do you make of the idea of though these quote-unquote platforms? And by the way, it could be even large retailers Amazon would be one of the digital space where you can think about the Amazon or Walmart sees that batteries are selling really well and maybe we should white label batteries and this has been going on for 4 for all the time. But when you get to a place where all of a

sudden the retailer if you will or the platform is now selling a product by the way using potentially some of the data to understand the market to then compete against those people on the five on this by the way is true of Google Barry Diller we've been at this for a conference many times. He commented advertising dollars to Google and now Google or the past couple years now if you type in an airline flight they have the wrong service. And what that mix is supposed to look like. There's a lot packed in that question. But I

think it at the core of it gets to data and how do you know a lot of these companies how they operate and the information they're getting from let's say that you don't sell her that was on that platform is the type of data that might be very important. There's no question that is part of our review in the Federal Trade Commission and the European commission and others. We are examining the role of data data is an asset for companies in and of itself is not anti-competitive, but just like any other asset can give you Market power data can give you Market power and its abuse would be a

violation of antitrust law. So we would have to take a look sometimes the use of that data collection and use could violate the promise to company made to that customer or business partner and that could be the anti-war the unfair competition and consumer protection that the Federal Trade Commission enforces which they recently didn't Facebook. If you were in office back when Joel Klein was in your role would have you brought the case against Microsoft. So I left Private Practice to go work in the Senate Judiciary Committee as the antitrust canceled

to as a as a Young attorney to help Orrin Hatch with those hearings on in there. I don't think there's a lot of political activity back then trying to cut off the antitrust division something that Orrin Hatch as the Republican chairman protected. So I think that will tell you where I was and where the chairman was on that. I absolutely up in that was a place to bring and looking the important thing of that and there's a lot of there was a lot of debate that was wrong headed and unanimous DC Circuit Court of Appeals led by then chairman. Ginsberg who had my job in the Reagan

Administration rules that they violated the law. Let me ask you another question about just where we are which is for so long and I trust has been looked upon or at least Transactions have been looked upon what the price is going to cost the consumer right that that's it and end in so many of these faces. It's either brought cost down or there's been what's been freely. However, it's not nothing's free nothing spring in life. And so how did you think there needs to be a different language around the world antitrust today? Something to Consumer it is and I think we're

seeing a little bit of a change people are a little bit more and I'm in a lot of that is the Congressional hearings and and some public attention paid to this is more and more consumers are concerned about what is happening with their dad in are these companies creating a digital voodoo doll of us a not so much because of what we have done was try to predict what we will do which seems a bit creepy and that gets into other policy issues. We need to take a look at is that the consumer have the choice will the consumer have the ability to

move around there is nothing that is free of consumers think they're getting any service for free, you know, they're being misled on Facebook. One of the leaders of Facebook has recently asked what did they ever do a paid service at the company and they said no. What does that say to you? Well, I think it depends on when in time that there was still some studies and then again 10 years ago a consumer may have a different view than they do today or 10 years from now and you know, there's a great Economist University of Chicago Samuelson who I think won a Nobel prize for the theory of revealed

preference and I think it's time goes on consumers of will determine whether or not they have the choice to move around and that in and of itself will create a market that we can evaluate. You know, I'm not on Facebook my wife spent enough time on bad for all of us in the family, but I would probably join the Facebook if I would pay happy to pay five bucks a month. What do you make of the Privacy issue the free-speech issue that seems to be a cloud or at least involved in this and I don't know if you think they are connected or not. But when it comes to

Big Tech that seems to be part of this going to talk, I see David Marcus here we can talk about that a little later. Add Facebook, but when you think about privacy when you think about free speech and I'm by the way, I think if there's an op-ed in New York Times by to Columbia Rd spring the kind of Monopoly influence over politics that the framers of the Sherman Antitrust laws were concerned about by refusing to stay out too many zooz on the political issue Facebook using a fact building the case for its own break up. I know you can't speak to again directly to the company, but you're

seeing this in this is across the board of all sorts of different companies in the technology landscape into the antitrust. Prism is That Yo Choice the consumer's choice or the quality of the service at does a company's market power prevent the choice of different qualities that a consumer would want. So that's how it would otherwise, you know, I think privacy another we have the number of regimes out there and Congress and White House another hurt debating. Should we Havoc General regime for data privacy. We have so many rules for privacy already in this country

Financial privacy Healthcare privacy driver's license privacy, but should we have that for this? And I think that's one that should be reserved for a public but it can't play if you're limiting quality or choice to the consumer. Have a different question and it's a political question for you. You have talked. I haven't been getting out of those lately. You have talked a lot about how you don't like and don't think that I don't want the public to have perceptions of your office being political that it is it creating mistrust if if they believe your

office is political and yet as you know, so very well there has been a lot of questions and skepticism around some of the murders that have been approved or not approved as a as a relation to your boss President Trump. This was true at least AT&T Time Warner and then people looked at that and just a post it against the fox Disney deal. I want to read you just for a second Jonah Sarah my former colleagues within your tonsils. No Bloomberg broke the following. He said the rule of the Bedrock principle in the US until Trump came along. It was part of the air we breathe and the

water we drank we barely ever had to think about it trying to involve himself in antitrust. Many of these deals publicly is one of a hundred ways. This President is a road in our faith in the rule of law not knowing if we can count on it is disorienting. It makes it difficult to even have discussion about Amazon's dominance because of the fear that any such discussion will be hijacked and corrupted by the president. What do you think of that? I think Joe has the First Amendment right to write anything. He wants with his opinion. I think he's wrong. You let me explain why

these debates have gone on for sometime the previous administration. No think it was reported at least half every other page of a staff memo in Google done at the Federal Trade Commission that had recommended bringing a lawsuit does a lot of discussion back then maybe it wasn't a popular to criticize the president. There's a lot of discussion that are over forty Google Executives were in the Obama Administration and the political leadership did not bring that case because of that now AT&T put that on steroids when the AT&T Time Warner transaction

was challenged or parts of dad and all I think folks strategy does a public relations strategy might get that Recommended him or or demanding that he would sell CNN. In fact when he offered it to spell as part of the settlement. I rejected it or issue was really with TBS TNT and the others because Sports rights were locked up till I think 2030 or so. Thanks for a great executive Levy that they used to have their but you don't look all they had to do was take a look at what our arguments were and it would fall on his face. I remember writing a

letter to the Oscars when last year they were going to change the rules to prevent movie like the Irishman today or Netflix or an Amazon movie Reed Hastings thanks you for that letter that you sent me out there and he said he was very clear that he never asked me to send that. That's what we do. We read the papers and sometimes will inquire and we wrote that if you change these rules better than the antitrust laws. Well, it was a whole 15 minutes segment on one of the channels that said that why that was done for political reasons because the president paid my rent

Hollywood or something to do with the justice department, but let me tell you that it's all you have to look is is who that letter benefited Amazon Jeff Bezos and Netflix. Can you tell me if there is a fans or the patrons of the president and president? How are we to believe and I asked you this genuinely that the president is not trying to influence you on these issues. And the reason I say that is you know, you can look on Amazon obviously not publicly declared war often times on on Jeff Bezos, but there was a book recently written when the

speechwriters for Mattis who said that the president called and said we got to figure out a way to screw Amazon and get the make sure they don't get this Pentagon deal. And so How how to reset you don't want the office to be politicized. How do you protect it while we do? What would we do look we have to wear the law enforcement agency at the end. We have to go to court it is all transparent what we do in AT&T that you know, they demanded my communications with everybody in the White House. They got all of that but they didn't get the judge put a stop to

White House communications with the Bureau of Prisons and the environment Edition and everything else. They wanted now look there's there's checks and balances in place of Congress that oversees us. There are specific rules that had existed since judgment Casey was the Attorney General Eric Holder. We still operate under the holder memo about how you communicate with the White House. When I was in the White House counsel's Office Don mcgahn issued a new rule about who it can communicate with the justice department has

never won a deal has been pending. Have I discussed that it could but you don't take these jobs because my life is easier. But luckily Senator Senator Warren Senator Blumenthal every transaction should not have the right to comment and now it's our job to make sure that we don't look AT&T Time Warner. I think I had 19 Democratic senators at the same time. Discuss that while it was pending. So what our job is to make sure that it is now I can't control what you know, right and get clicks for I got a different one for you at you at answer this from

centralizing. I'm sure it's just goes back to those that the public trust issue. So, you know, what hotel is across the street from your office. And a lot of Executives have said to me straight up and down we stay there in large part because not only convenient but on the margins of somebody in the mystery, but they don't stay at the Trump Hotel. I would I would prefer that they don't stay at any hotel because they think it influences a law enforcement official or a regulator that would be wrong. But surely he asked me said, you know that they came

there. I don't know they spent it was reporting The Washington Post thousand dollars if that's what it is. I don't know you have to go ask them why they stayed there I could take a guess. It's one block away from but I still wouldn't you prefer that they don't. I will leave it to them. Look it's a phenomenal Hotel. It's got a great restaurant in there. I have been there because it's really a blocked the question on one block away. I don't recommend it to folks who might be offended of going there. But that's a

free choice. And again, it's a it's a it's a great hotel. I think people love to make things out of absolutely nothing. Okay Sports recently announced that that before you get that can also say we have not changed our merger forms to ask people where they golf or where they're staying at their hotel that is just an idea. Just chilling and I hope people don't think and write about that around paying or at least there's been a huge issue around Sports and antitrust and whether these leagues are cartels to begin with what do you think of this change?

And and are you going to be writing any letters anybody soon? So the NCAA threatened California when they passed the legislation that they would boycott the California schools. I'm an old UCLA Bruins. So I had a real interest in this thing. And I thought that as a horizontal, you know organization of a number of competing universities if they actually engage in the cartel, that would be a real problem and I'll let those views be known. I was heartened that they are going to change the rules to allow for that but they said they're going to begin their change and

of the of the rules process consistent with rules of amateurism and we would have to take a look. I know are they going to be living in competition? I think what California did on a unanimous basis and I give credit to Gavin Newsom for that it is I think a change of completely change the Dynamics and NCAA is no I think stranger to the antitrust laws over the years because you have made such news. And I'm sure if I would have asked you Chris, but also if you have if you want to throw one back to make it as well. Whether you think this has gone

far far enough not just in the world of technology, but I know that you've been thinking a lot about the broader and adjust landscape. Well, it's actually the question also that I have firm Macon night to see you. Thanks for having all this here today. Have you guys been meeting in private by the way. I was invited in to talk to the FTC and one conversation over the summer which was really helpful. And at least at least to me. I hope it was helpful to you guys.

And but my question that I came away from your comments today that conversation and a lot of other remarks that you've given is around price and around cost, you know, a few years ago. People said there's no way you can think about antitrust scrutiny of Facebook or Google cuz they're free. They don't they don't cost anything to the people and now it seems like we're in a different era and even you know, the the question today suggests that we're harking back to a time when antitrust was about a lot of things. Competition how it affects producers consumers

investors the community and how the political and economic power affects our democracy, but wonder if you would characterize this is a shift in the field of a step forward and specifically how Tech complicates the conversation around around price. So as far as a shift in the law, it is not a shift in some attention to factors other than price. It probably is a part of that is because a lot of cases it's easy to quantify and a lot of the economic analysis that is

run around antitrust focuses in on the price effects of any transaction, but look for 40-50 years or however long we've had broadcast television is that free, it's technically free to the consumer somebody is paying for that and we have looked at murders in some of the best antitrust cases the ABC and other And we would have had a big enforcement action into a lot of things 7 broadcasters who were sharing information about advertising capacity. So there is a lot of antitrust activity around products that are open at least three that was a big argument than Microsoft as well. They

were giving away the internet browser Internet Explorer for free. So how could it be a violation of antitrust laws recognize a number of factors that could be into indicia of a violation price quantity quality Choice Innovation, and those are all factors that we're looking at and it's the burden is on us to challenge ourselves to not just take the easy route and only enforced in areas where there's a price effect, but take a look and develop the theory is consistent with the law. I have a thank you for your input is Noah Phillips from the

FTC places for him, but I wanted to know how do you think an Instagram little bit big companies today that then by small companies? At the time when they buy the small company unclear whether they're ever going to succeed, right this is from the case with Instagram. But the reason I asked the question is because now we're looking at these types of transactions and whether you think the rules should change about what a big company can even buy today, even if it's a little minnow over here right now. I don't

know that the rules need to change but consistent with what the Assistant Attorney General just said, I think there's a change in Focus. I think that all of us is antitrust enforcers. We follow the research. We follow the media and when we hear about a transaction maybe of a small company, but maybe with the potential for growth we're focused on these kinds of questions part of the challenge. I will say is that if we want to block a deal if we have reason to believe that a deal is anti-competitive. We don't just press the button right? We don't use

but we have to go to court which means we have to convince the judge and we have to use evidence to do that and judges can sometimes be skeptical of the evidence that we deduce. The big change at least for me is that we are thinking about this issue. And look trying to look at companies through additional lenses than maybe we were before. Do you guys think you're working well together cuz I think you guys keep eat at some level you like that competition. You know, this is a great old FTC competition is fantastic and all places except for the enforcement

of competition luck. We've had a history of working. Well, we work really well together recently at a senate hearing with the chairman Joe Simon's I said look most of the press right about the plane crashes not the safe Landings. There's a hell of a lot more safe landing for every crash and you know, it's interesting to write we have classes every now and then and then I'll look. If we were going to design the government system for antitrust enforcement today would we have 52 enforcement agencies in one country to 2 at the federal every state AG

probably not and it sometime maybe Congress should take a look at does this all makes sense. Final question for me and it is close to home. I'm curious how you feel about the government using its power over companies unless it is supposed to home. Here it is. As you know, President Trump has directed all government agencies to cancel their subscriptions the New York Times and to The Washington Post and I want to know whether you think there's a good Restraint of trade case to be made. You know, that's a great question. I'll leave it to your lawyers to decide or does it cause of

action against the federal government as a as a purchaser?

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