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Antitrust: FTC has ‘presented really strong complaints,’ expert says

Charlotte Slaiman, competition policy director at Public Knowledge, and Rebecca Allensworth, law professor at Vanderbilt University, join Yahoo Finance Live to discuss reports that FTC’s Lina Khan is battling to rein in Big Tech, Microsoft’s acquisition of Activision, antitrust concerns, and the outlook for the FTC.

Video Transcript


- When President Biden nominated Lina Khan to be the next chair of the FTC, it was clear he was installing a big critic of big tech to a pivotal role. Her first meeting took place in public, breaking years of precedent and signaling changing times. In the past few months, the agency has been scrutinizing some high-profile deals, filing a lawsuit against Microsoft in an attempt to block its takeover of Activision Blizzard and looking to stop Facebook parent company Meta from purchasing fitness app Within.

Are the battle lines ahead too little too late or just about time? Joining us to discuss is Rebecca Allensworth, Vanderbilt University law professor. And also with us is Charlotte Slaiman, Public Knowledge competition director.

Charlotte, let me start with you because there's something I've been wondering. We expected Lina Khan to be aggressive in taking on this role. But what do you see as the downside risk in the FTC moving forward on such high-profile cases? What happens if they don't end up victorious in these cases?

CHARLOTTE SLAIMAN: Well, there are a few different ways to lose a case, right? It could be. Of course, I think that they have presented really strong complaints. And so we are mostly focused on the upside benefit of bringing these cases.

But if you lose, you can lose small or you can lose big. Letting the merger go through or achieving a settlement that isn't as strong as you might have hoped for are some disappointing ways to lose. But another goal of bringing these types of cases is to clarify and improve the law. That effort can also lose. So we could end up with antitrust law being in a worse place than we started.

- And Rebecca, you say that basically in the case of the Microsoft potential merger and with Meta as well that these can be very hard to win these sorts of antitrust cases. Why is that? What are some of the factors that make it so difficult?

REBECCA ALLENSWORTH: Well, both of those mergers are essentially vertical. They're not mergers between two companies that are currently competing head to head, selling the same products in the same market. And for years, antitrust has been interpreted, especially the merger law, to be about side-by-side competitors. So Kroger and Albertsons would actually be a good example of a head-to-head, horizontal merger.

But as for the tech ones, we know that a lot of mergers and a lot of very anticompetitive mergers happen in a vertical relationship. And it's just a hard case to make out. And I think it's very purposeful that Chairwoman Khan and the FTC is going after these kinds of edgier cases.

- Yeah, in the case of Microsoft and Activision, Rebecca, I mean, how strong is that case? That's been an interesting one to watch because in many ways, Microsoft has been able to sort of elude that public criticism at least, while those like Meta, as well as Google, Alphabet have taken the brunt of the hit.

REBECCA ALLENSWORTH: Yeah, I mean, in my circles, we talk about the big four. But really, it should be the big five. Microsoft deserves to be in that conversation, along with Google and Apple and Amazon and, of course, Facebook, Meta.

How meritorious is the suit? The biggest problem they're going to have is the fact that it's vertical. However, there is increasing recognition not just at the FTC, but in policy circles, at Congress, that these vertical relationships can be very, very damaging to consumers. When somebody controls not just the platform, but the content that's going on the platform, that can be really bad for consumers.

- And Charlotte, to Rebecca's point, it does seem to not just be a policy shift. It really does seem to be a holistic approach to enforcement in this space. What do you think in terms of this going beyond just merger enforcement? What is the end game here?

CHARLOTTE SLAIMAN: Yeah, I think it's really important that this includes more than just merger enforcement. I was also really heartened to see the FTC's Section 5 statement, talking about how they intend to bring strong cases against ongoing anticompetitive conduct in a variety of industries. What we're doing with merger enforcement is just trying to maintain the status quo level of competition and prevent the losses of competition. But we're already dealing with a very uncompetitive environment. So I do want to see the FTC doing more, bringing those conduct cases.

And, as Rebecca mentioned, it's incredibly important for Congress to get involved here. So I have also been really heartened by Congress's interest. We're hearing that senators are angling for antitrust legislation to go into the omnibus that Congress is trying to get done before the end of the year. That's how we're going to actually advance procompetition policies. And that's what we need as well.

- And Rebecca, I know you wanted to weigh in there as well. What's your take?

REBECCA ALLENSWORTH: Well, I agree with Charlotte. And I think another thing that's worth mentioning is she was talking about winning big or losing big. One way that you could lose small or maybe win and lose is you lose the lawsuit, but you raise attention to these problems in a way that makes the political actors a little bit-- it sort of smooths the path for them to pass the legislation. So I'm glad that she brought up the congressional angle, too. And I think we could see that being a part of this.

The other thing I'll say about merger law is that the FTC has a lot of authority over merger law. And maybe that's why we're seeing them being aggressive here. But even though it's different areas of law-- monopolization, agreements, mergers-- the policies and the analysis is very similar. So if you're able to make changes in merger law, those might spill over into the other areas of antitrust.

- Charlotte, last question to you. We make so many of these comparisons between what's playing out now and what Microsoft, for example, went through in the late '90s, early 2000s. And the story that has emerged from that time has been that Microsoft fell behind on search. It was about other competitors coming into the market, mainly somebody like Google, who was able to emerge as a result. If it is about increasing competition, have we actually seen that competition increase as a result of at least the threat of some kind of lawsuit being brought forward by the FTC?

CHARLOTTE SLAIMAN: So I do think companies are on notice. It's been very clear that Chair Khan is interested in aggressive antitrust enforcement. It's been very clear that Congress is interested in aggressive antitrust enforcement and even expanding the antitrust laws. And I think the question now is just how specifically that's going to happen. So it's not at all surprising to see that may have been impacting companies' decisions.

We're also seeing antitrust enforcement and new antitrust laws abroad. Already some of these big tech companies are changing their policies in response to the Digital Markets Act in Europe. And so we may start to see some benefits from that.

But ultimately, I am still very concerned about the level of competition that we have today, which is not enough. And so we are going to need some real action in addition to the impact that the broader conversation is already having.

- Well, a big thank you to both of you for joining us with your insights. Rebecca Allensworth, Vanderbilt University law professor, and Charlotte Slaiman, Public Knowledge competition director, thank you for joining us this morning.