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How Lina Khan will impact big tech

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U.S. Representative Pramila Jayapal (D-WA), joins Yahoo Finance Live to discuss Biden’s pick for FTC chair and the antitrust legislation on big tech.

Video Transcript

ALEXIS CHRISTOFOROUS: President Biden named Lina Kahn, a prominent critic of big tech, as the chairwoman of the Federal Trade Commission. It's a sign that the agency is likely to crack down even further on the industry's tech giants. Joining us now to discuss this is Congresswoman Pramila Jayapal.

Congresswoman, thanks so much for being with us. We appreciate your time. Let's start with that appointment of Kahn, now in the driver's seat at the FTC. What do you think it means for change in the tech industry? How might her appointment reshape the industry?

PRAMILA JAYAPAL: It's a very exciting appointment. I worked with Chairwoman Kahn for the last 16 months as we worked on this investigation into antitrust. She has a very strong competence around this topic. She understands why we have to be aggressive in taking on monopolies and protecting competition with small businesses and choice for consumers.

And the fact that she got an overwhelmingly bipartisan confirmation from the Senate was very good news. I think this is one of the areas where Republicans and Democrats agree that we have to do important work. and I think she's going to be aggressive in making sure that the FTC is both enforcing existing antitrust laws, but also taking on whatever big challenges they can. And she obviously is very supportive of the recommendations that came out of the 16-month investigation of the Judiciary Committee last year.

KRISTIN MYERS: Now, Congresswoman, another bipartisan initiative has been some of the big tech legislation, antitrust legislation that you yourself are a supporter of as well. Curious to know, because the FTC previously had been a fairly toothless agency in going up against some of these big tech companies-- you yourself said that some of them, frankly, were too big to care. We had seen some recordbreaking sums, at least when it came in terms of fines. But they were really drops in the bucket for some of these companies.

Going forward, how much do you think having Kahn in the driver's seat as a chairwoman at the FTC, but also coupled with some of these new bills, that we'll actually see some measure of regulation and punishment that almost hurts some of these companies?

PRAMILA JAYAPAL: Well, we have to, because ultimately we are about ensuring competition thrives, innovation thrives, small businesses thrive, and that consumers have choices. And I think the combination of Chairwoman Kahn, her understanding, her aggressiveness on the subject-- but then these five bills that we just introduced on Friday, bipartisan bills to really take on the monopoly power of these dominant tech platforms, is going to provide additional tools to the FTC and the DOJ to do what they need to do to rein in this anti-competitive behavior, and ultimately to have really meaningful fines levied and to structurally separate lines of business.

And that's the bill that I have, the Ending Platform Monopolies Act, which says that you cannot have-- and it will be unlawful with this bill to have-- a dominant platform actually own and operate multiple lines of business that produce conflicts of interest. Because when you have Amazon selling and allowing others to sell on their platform so they get all the data, they set all the terms, and they basically have a dominant advantage to be able to take advantage of those businesses, it drives businesses out of business.

When you have Google buying and selling ad revenue on the same platform, it hurts independent publishers. When you have Apple controlling the app marketplace so that people can't even get off the ground without access, it hurts consumers and those small businesses. And the same thing, obviously, with Facebook.

So I think that this is a really important set of bills. They are all bipartisan. And they will provide new tools to the FTC and to the Department of Justice to ensure that we preserve competition and that we protect consumers.

ALEXIS CHRISTOFOROUS: Well, certainly, Congresswoman, response from the tech company was pretty swift here. They're saying that these proposed regulations would in essence kneecap-- that's their word-- American companies, undermine innovation, especially at a time when we are trying to become more globally competitive, especially as it relates to China. How do you continue to foster innovation while mandating these regulations and these parameters in which the companies would have to exist?

PRAMILA JAYAPAL: Well, what's really interesting is that these bills are the result of a 16-month investigation with hundreds of small businesses testifying, many, many hearings, and tens of thousands of documents that we got from the tech platforms to really examine exactly what was happening. And then of course, culminated with having the CEOs of those four companies come and testify.

And I think part of the reason you have this bipartisan agreement is because it is very clear that while the tech platforms say that they are actually fostering innovation and competition, they're doing exactly the opposite. We heard from hundreds of small businesses who have either been put out of business or had their business greatly diminished or feel like they have absolutely no choice to get off of that platform.

And so that is why I think we have seen in the history of antitrust, whether it was the railways or the Baby Bells or whether it was Microsoft-- which had to go through something similar with an antitrust lawsuit that was filed and the settlement that was made-- that it was those settlements, those breakups, all of those things that actually helped ensure that there were other businesses that came up and were able to innovate, that these dominant platforms didn't have so much power that they could stop that from happening. And I think that's why there's overwhelming support across the country, across partisan lines to make sure that we do rein in these big companies, these big tech platforms, and provide more tools to ensure that they do not become so dominant that they are too big to care, as I asked Mark Zuckerberg during the questioning.

KRISTIN MYERS: Yeah. Interestingly enough, some actually antitrust legislation aimed at Microsoft in the '90s gave rise to some of the companies that you guys are going after right now. You know, everyone says that increased competition is essentially going to be good for consumers. But some of the criticism and the response that some of these companies have had is that actually, these bills in the long-run are actually going to harm the consumer. What is your response to that, and are you saying that there is absolutely no risk at all that going after a company, for example like Amazon, isn't going to result perhaps in higher prices for consumers down the road?

PRAMILA JAYAPAL: Yeah. It's so good that you mentioned that about Microsoft, because we actually had Brad Smith in to testify in some conversations. I've been in deep conversation with him. Obviously, he also is from our region, from my district. And I think that's exactly right, and it shows why ultimately you help consumers when you undertake strong antitrust regulation.

The reality is that we believe in innovation and competition as being the best opportunity for consumers to get the best prices and the most choices. When you have dominance of the level that you have with the four tech platforms, the reality is that that is not what we see in the marketplace. These small businesses have literally no opportunity to thrive. They are forced into agreements that they have to abide by while the dominant platform does not. They are forced to either sell or be acquired or be killed. They are forced to agree to all kinds of products in order to get the preferential placement on these platforms. And so in every way possible, I think what we will see is the market will restructure. And ultimately, it benefits those small businesses and the consumers.

And the high prices-- let's just be clear. When you kick everybody out of business, you may have some low prices for a very short period of time. But the minute there is dominance in that market, you will again see those prices increase. That's the whole point of antitrust, is to prevent that dominance from happening. Because while you might undercut initially, ultimately the consumer is paying a higher price.

ALEXIS CHRISTOFOROUS: All right, we're going to leave it there. Congresswoman Pramila Jayapal, thanks so much for your time today.