Today, I\u2019m talking with Jonathan Kanter, the assistant attorney general in charge of the Antitrust Division at the Department of Justice. Alongside FTC Chair Lina Khan, Kanter is one of the most prominent figures in the big shift happening in competition and antitrust in the United States.<\/p>\n<\/div>\n
This is a fun episode: we taped this conversation live onstage at the Digital Content Next conference in Charleston, South Carolina a few days ago, so you\u2019ll hear the audience, which was a group of fancy media company executives. You\u2019ll also hear me joke about Google a few times; fancy media execs are very interested in the cases the DOJ has brought against Google for monopolizing search and advertising tech. Kanter was very good at not commenting about pending litigation.<\/p>\n<\/div>\n
But Kanter\u2019s leading a major charge<\/a> when it comes to competition in tech and media. The US government blocked a record number of mergers in the past few years. You\u2019ll hear us talk about the DOJ preventing Big Five book publisher Penguin Random House from acquiring competitor Simon & Schuster<\/a>, for example \u2014 a case Kanter says was designed to protect authors\u2019 payments from decreasing.<\/p>\n<\/div>\n You\u2019ll hear us get really into that, and also into the concept of \u201cmonopsony.\u201d In the same way a monopoly is a market with just one big powerful seller, a monopsony is a market with one big powerful buyer<\/em>. Tech giants can pretty easily end up occupying that space, and you\u2019ll hear Kanter talk about how that can distort a market.<\/p>\n<\/div>\n And of course, this is Decoder<\/em>, so we talked about what the Antitrust Division really is<\/em> and how it\u2019s organized. You\u2019ll hear Kanter point out that the division today still has fewer people<\/em> than it did in 1979, despite how much bigger and more complicated the economy and, frankly, the world have gotten \u2014 but he\u2019s also pretty confident that the new theories he and others are bringing to bear make antitrust enforcement more accessible than it\u2019s ever been.\u00a0<\/p>\n<\/div>\n Okay, US Assistant Attorney General Jonathan Kanter, here we go.\u00a0<\/p>\n<\/div>\n This transcript has been lightly edited for length and clarity. <\/em><\/p>\n<\/div>\n Alright, 30 minutes of avoiding questions about Google begins now.<\/strong><\/p>\n<\/div>\n Alright, let\u2019s start. Go!\u00a0<\/p>\n<\/div>\n So we are going to run this on Decoder<\/em>, the podcast. There are two questions I ask everybody on Decoder<\/em>, which I think, Jonathan, will help us understand a lot of the things that you are up to right now. So the first one: you are the assistant attorney general for antitrust, Department of Justice. How is your division structured? How does that work?\u00a0<\/strong><\/p>\n<\/div>\n Sure. So we are a division of over 800 people. We are a lot of lawyers, enforcement lawyers, who focus on antitrust enforcement. We have roughly 50 PhD economists. We have data analysts, data scientists. We have an amazing support team, an amazing group of paralegals.<\/p>\n<\/div>\n Some of the smartest people that I\u2019ve ever met and ever had the honor of working with are at the Antitrust Division. And so the way I would think about our organization is in a few different ways. First, we have civil antitrust enforcement and that includes mergers. And so if there\u2019s a big merger, we review that merger and then, if necessary, take action to block that in court.<\/p>\n<\/div>\n We do monopolization investigations. I know that\u2019s something that I look forward to avoiding your questions about later. And we investigate big monopolies \u2014 the standard oil, AT&Ts of our era. And then we have criminal antitrust enforcement. And so these are companies that engage in price-fixing and market allocation and certain kinds of fraud.\u00a0<\/p>\n<\/div>\n And then we have an advocacy policy arm, and that focuses on international. We live in a global economy, and there are antitrust and competition law regimes all over the world, and we have to coordinate our work there. We focus on providing technical assistance to Congress on legislation, and then just feeding the discourse and dialogue around antitrust and making sure that competition policy in our country is sound.\u00a0<\/p>\n<\/div>\n There is a lot of renewed discourse around competition policy, both in our country and around the world. One thing you pointed out to me just a minute ago was 800-some people is still relatively small, right? The amount of emphasis we\u2019re putting on antitrust does not actually match the investment.\u00a0<\/strong><\/p>\n<\/div>\n Yeah, so just for a little bit of context, the Antitrust Division today\u2026 we\u2019ve been in existence for over a hundred years. We are over 200 people smaller than we were in 1979, right? So think about we were more than 200 people larger in 1979.<\/p>\n<\/div>\n Not only was the economy much smaller then, but the kinds of issues that we\u2019re confronting now are extraordinarily complex. The amount of data, the amount of information that we have to consume, ingest, and review in the course of\u00a0 reviewing even a merger, the merger economy has changed.<\/p>\n<\/div>\n So our folks are constantly charged with doing a lot with very little. And then obviously it puts an important emphasis on prioritization.\u00a0<\/p>\n<\/div>\n I assume you picked 1979 because in 1980 Ronald Reagan was elected. Is that when it started going down?<\/strong><\/p>\n<\/div>\n That would coincide, yes.<\/p>\n<\/div>\n Alright. Fair enough. The second question I ask everybody on Decoder<\/em>, and I think it\u2019s very important here to understand, how do you make decisions? You have a lot of pretty market-moving decisions to make all the time. What\u2019s your framework for making those choices?\u00a0<\/strong><\/p>\n<\/div>\n Yeah, so the good news is that\u2019s kind of embedded in our mission. And so everything that we do starts and finishes with the facts and the law, right? And so what does the law say? What did Congress write and how has that been interpreted by courts? And then how do we fit the facts into any given situation? Now obviously there\u2019s a lot more that goes into that, and we\u2019ve developed a methodology that I call HIPS \u2014 tell everybody to keep their hands on their hips.\u00a0<\/p>\n<\/div>\n It stands for high impact, programmatically significant. And so when we think about a matter that we\u2019re investigating and we think about our scarce resources and how to deploy them, we think about, \u201cOkay, well what\u2019s going to have a big impact on society?\u201d And that could be in terms of the amount of commerce it affects, but it could also be about the kind of industry.<\/p>\n<\/div>\n And so news and journalism, for example, the raw material of our democracy and the marketplace of ideas is vital to a thriving, free society. And so that is high impact. Similarly, the PS stands for programmatically significant. And so as a law enforcement organization, we need to make sure that we are bringing cases that enable the law to develop in a way that\u2019s healthy and adapts to current market realities.<\/p>\n<\/div>\n And so we bring those cases that we believe are important to establishing the kinds of precedents that will allow the antitrust law to evolve the way it was intended to by Congress. And to make sure that we are adapting it to market realities and deterrence. And this is important: the best, most successful work we can do is to keep the bad stuff from happening in the first place.<\/p>\n<\/div>\n And whether that\u2019s a merger that never sees the light of day because of antitrust risk, or a company that doesn\u2019t engage in antitrust violation because they\u2019ve invested in compliance, that\u2019s the win-win scenario for everyone.\u00a0<\/p>\n<\/div>\n Alright. I want to talk about deterrence first, and then I want to talk about some bad things that have already happened that you\u2019re trying to stop. Deterrence: I think the best example is you <\/strong>stopped the Penguin merger with Simon & Schuster<\/strong><\/a>. What were the bad things you saw coming that you think you stopped there by blocking the merger?\u00a0<\/strong><\/p>\n<\/div>\n Yeah, so that was a really important matter for us. It was a merger of book publishers, and we brought that case on a theory that was successful. We asserted correctly that it was rooted in well-established legal principles, but we didn\u2019t bring the case based on a theory that book prices were going to go up. We brought the case based on the theory that advances to professional authors who relied on advances in order to fund the development and research and writing of their books will go down.<\/p>\n<\/div>\n It was what we, in our wonky way, call a labor and monopsony case. And so, we were preserving the market to make sure that people who create things for a living have enough competition to be compensated for the value of their creations.\u00a0<\/p>\n<\/div>\n So that\u2019s a really important idea that I want to stay centered on as we talk. The idea that it\u2019s the buyers who are consolidating and the demand will go down, or the price the demand is willing to pay will go down, I think is very relevant to everybody in this room because our buyers have traditionally been large platforms, right? And our direct relationship with our customers, maybe we\u2019re all trying to build them now, but our buyers for the past decade have been large platforms. So get ready.\u00a0<\/strong><\/p>\n<\/div>\n Alright. You\u2019ve got two cases going right now. The case against <\/strong>Google for search monopolization has come to a close<\/strong><\/a>. We\u2019re waiting on a decision, and you\u2019re <\/strong>about to go to trial on the ad tech case<\/strong><\/a> against Google. Why did you choose to bring these cases? Was it for the same reason that you see the demand side changing dramatically or were there different theories?\u00a0<\/strong><\/p>\n<\/div>\n Let me zoom out to a higher altitude. As you anticipated and previewed, I can\u2019t talk about any ongoing matters or pending cases.<\/p>\n<\/div>\n You have to drink now. Did we put the vodka on the table for him?<\/strong>\u00a0<\/p>\n<\/div>\n I guess I need a little horn to honk every time I say that, but I think it\u2019s helpful to think about this contextually.<\/p>\n<\/div>\n It is public record that we have those cases. It is public record that we\u2019ve gone to court and filed complaints to address these important industries. And I think it\u2019s self-evident, including to this audience, why we should care about markets that involve the flow of information, markets that involve advertising, which is so important to monetize the kind of information that companies like the ones in this room run to better society through the distribution of journalism. One of the themes I think we\u2019re seeing in a lot of cases \u2014 and this is not just in tech and media, but it\u2019s throughout the economy \u2014 are intermediaries, right?<\/p>\n<\/div>\n Intermediaries who are becoming more powerful than the products and services or the entities they intermediate. And I think that\u2019s a phenomenon that\u2019s a result of a lot of developments in technology in the law. Sorry, technology in the economy. Where I think you used to have a lot of one-for-one transactions, but now you have a lot of one-for-many.<\/p>\n<\/div>\n You have platforms, you have entities that sit in the middle and that generate revenue from aggregation rather than production. And so that\u2019s changed market realities. And I think a lot of the cases that we\u2019re bringing, a lot of the merger matters that we\u2019re pursuing and challenges that we\u2019re bringing, not all of them but many of them relate to these kinds of intermediary markets.<\/p>\n<\/div>\n And in a lot of those markets, the intermediary is both a buyer and a seller. And, increasingly, when platforms can exert a massive amount of control and asymmetry of power over people who supply that platform, it becomes a real concern. And we hear from businesses a lot that these intermediary markets and the establishment of these dominant intermediaries can have a negative effect on their ability to distribute, grow, and invest.<\/p>\n<\/div>\n So if you don\u2019t like this pattern in digital media, you call it a monopsony. If you think it\u2019s the natural order of the internet, you might call it by another name. My friend Ben Thompson <\/strong>calls it aggregation theory<\/strong><\/a>: you aggregate all the demand and suddenly you have a lot of power over your suppliers, you can raise prices. And that comes from building a superior user interface or a superior user experience.<\/strong><\/p>\n<\/div>\n And this is why Apple just pays Google for search, right? They build the best search products, they\u2019re just going to keep using it. That\u2019s going to feed data back into it. This is their argument. You look at that and you say, \u201cNo, this is a problem. This is artificially distorting the market in some way.\u201d Is there a balance there?<\/strong><\/p>\n<\/div>\n Yeah, so the balance is we believe in full-throated competition, right? And that means we don\u2019t pick winners and losers. But sometimes someone will win and sometimes someone won\u2019t win.<\/p>\n<\/div>\n We want folks duking it out and competing in a very vibrant, full-throated way. And Congress \u2014 going back to 1890 and updated many times since \u2014 has made a judgment that a competitive economy is one that provides opportunity. It\u2019s one that is consistent with the values of a free and open democracy.<\/p>\n<\/div>\n And so companies can get big on the merits of their own innovations. But when companies start using contracts and payments and start engaging in moat building in order to preserve their monopolies from disruption, from competition, from disintermediation, those are the kinds of things that turn from being competition on the merits to anticompetitive conduct that can violate the law.<\/p>\n<\/div>\n One of the approaches you and Chairman [Lina] Khan have taken as you\u2019ve been in charge of competition policy in the country is\u2026 I would say the pendulum has swung since 1979. It was a very permissive environment. Under the Biden administration, less permissive environment. More things are blocked or challenged or enforcement actions are taken that I would say the record there is spotty. There\u2019s been some wins, there\u2019s been some losses. On balance, do you think you\u2019ve pushed the pendulum to a healthier place?\u00a0<\/strong><\/p>\n<\/div>\n Yeah. I\u2019m really proud of our results. When we think about the mergers that we\u2019ve successfully challenged in court, and there have been a number of high-profile victories, including most recently our victory in court against the JetBlue\u2013Spirit merger, the Penguin Random House\u2013Simon & Schuster, the American Airlines\u2013JetBlue transaction.<\/p>\n<\/div>\n When we think about the wave of deals that have been abandoned, either after we filed litigation or in the face of it, including recently in the tech space, the Adobe\u2013Figma matter. There have been a number of matters including in the supply chain area involving ocean shipping, CIMC\u2013Maersk comes to mind, Cargotec\u2013Konecranes, and a number of other transactions where in looking down the possibility of litigation, the companies decide not to pursue those transactions.\u00a0<\/p>\n<\/div>\n We\u2019re also hearing that enforcement of the law is having its anticipated effect of deterrence. And so when companies are considering a merger, they consider antitrust risk as a real factor.<\/p>\n<\/div>\n And if a merger is going to roll up an industry, if a merger is going to reinforce the dominant position of a platform, if the merger is going to enable a firm to exercise monopsony power over key participants in its ecosystem, then more than we\u2019ve seen anytime in recent memory, companies are choosing to either compete rather than merge or they\u2019re finding another dance partner. One that doesn\u2019t raise those competitive concerns.<\/p>\n<\/div>\n And I think when we look at the entire body of work \u2014 at least that I\u2019ve been involved in, which is now a little over two years \u2014 we see trial victories, we see updated merger guidelines, we see abandoned transactions, we see deterrents. Those are the ingredients of success, and I\u2019m really proud of the work that our team has done to achieve that level of notable success.<\/p>\n<\/div>\n I\u2019ll also say this \u2014 and I think this is really important, and it\u2019s something I think that a lot of folks here in the room today and certainly listening understand \u2014 these issues are more accessible than they\u2019ve ever been. When I started practicing antitrust, it was in the late \u201890s. It was this wonky, technical, technocratic, insular area that was largely occupied by a small group of people inside the Beltway and New York and occasionally San Francisco.<\/p>\n<\/div>\n But it was really limited and that was due to a vocabulary that was exclusionary.\u00a0 And I think what we\u2019ve seen is, over the last number of years, more people feel affected by monopoly power. More people see their lives worse off because of concentration of power and control.<\/p>\n<\/div>\n And by people, I don\u2019t just mean people who go and buy something at a store or online. I mean people who work hard for a living as laborers, people who create the creative economy, perhaps more than any other, have experienced firsthand the harm and the threat of monopoly power. And the resonance that these issues have is something that I\u2019ve never witnessed in my lifetime. And I think that is a significant change that animates a lot of the success that we\u2019re having on the field with our matters.\u00a0<\/p>\n<\/div>\n I will say that when I was\u2026 I was not a good law student. I majored in Miller Lite, but when I was in law school over 20 years ago, antitrust was described to me as a math class. And it feels like maybe not the place it occupies anymore.<\/strong><\/p>\n<\/div>\n So I\u2019ve been to about 20 or so law schools and business schools over the last year alone. It\u2019s been eye-opening. So people often ask me, \u201cOkay, is this a transition period? Is this an inflection point?\u201d And I say, \u201cYes, but we\u2019re just at the beginning.\u201d And the energy that\u2019s coming from students who care about these issues because they care about the problem, as opposed to thinking about antitrust as a math class that you can take in order to get a high-paying job. It\u2019s different today than it\u2019s been in many years.<\/p>\n<\/div>\n Yeah. This is a room full of media executives. This industry is under a lot of pressure. There are probably some conversations about consolidation happening in and around this room. How should the media industry think about consolidation? There\u2019s a lot of ideas that maybe we can get leverage against a Google or another distributor if we actually get bigger ourselves.\u00a0<\/strong><\/p>\n<\/div>\n So every matter, again, we start with the facts and the law. What\u2019s happening here? I think that we would rather a market that\u2019s competitive. And we think that\u2019s the best solution: when the problem is not enough competition, the answer is often not to create less competition.<\/p>\n<\/div>\n Now I know that\u2019s not always that simple, but one of the things that I\u2019ve talked about a lot is why it\u2019s important to make sure that we\u2019re enforcing the law against monopolies, so that the only way to compete and survive isn\u2019t to merge. We want to promote competition in a law enforcement regime that creates enough opportunity for as many companies to compete without having to merge with their competitors.<\/p>\n<\/div>\n We\u2019re talking here a day or two after Disney, Warner, a handful of the other streaming giants of sports rights announced a big tie-up. We\u2019re going to make a new sports bundle for people. This is an old idea that sounds very new and sounds very good, but we\u2019re going to try it again. Does that raise any red flags for you \u2014 as a sports fan?<\/strong><\/p>\n<\/div>\n In the sport of public speaking and podcasting, I\u2019m going to exercise my all-star ability not to answer your question.\u00a0<\/p>\n<\/div>\n Alright. I\u2019m going to try another way at this.\u00a0<\/strong><\/p>\n<\/div>\n Alright, go for it. I could do this all day.<\/p>\n<\/div>\n Do you know the codename for Decoder<\/em> is \u201cNilay versus media training\u201d? That\u2019s what our team calls it. And if I consistently get to a draw, we\u2019re doing a good job. You mentioned the Adobe\u2013Figma deal. Adobe just <\/strong>openly blamed that on European enforcement<\/strong><\/a>. Dana Rao, Adobe\u2019s general counsel, was <\/strong>actually on Decoder<\/em><\/strong><\/a>. He said, \u201cWe evaluated it. We could not find a way to meet the standard that Europe was trying to impose on us.\u201d<\/strong><\/p>\n<\/div>\n And his description of it was they thought Figma could be a big company and we could not prove that negative. Right? That Figma would be better off with us, and they walked away from the deal. Europe is kind of leading the charge here, at least from my perspective. They are doing that enforcement, they\u2019re setting those standards.<\/strong><\/p>\n<\/div>\n I want to talk about the Digital Markets Act with you for sure. Europe has also spent a decade trying to get people to not use Google, like aggressive interventions on people\u2019s computers. They designed browser ballots on Android phones. They ask you if you want to use the Play Store or not. They\u2019ve mostly failed. After a decade of intense interventions, people in Europe, as far as I can tell, still use Google. They do not use Bing. I know they don\u2019t use Bing, but they definitely use Google. Does that strike you as that\u2019s actually the wrong way to do it, like these aggressive interventions? Is there a better way?<\/strong><\/p>\n<\/div>\n You know, these are complex questions. And we have different legal regimes. We work very well with our counterparts in Europe, including on that matter you mentioned regarding Adobe\u2013Figma. We issued our press release. Our process was not public, but we discussed the importance of that merger, our process as well. I think we all work within the confines of the tools we have and the legal and regulatory regimes that are binding in our country.\u00a0<\/p>\n<\/div>\n And so here in the United States, in the absence of new regulation and laws, we have our antitrust framework, and that\u2019s one that says, \u201cOkay, we\u2019re not going to prescribe outcomes. We\u2019re not going to pick winners and losers. And we\u2019re going to, for the most part, disfavor telling people how to run their businesses.\u201d<\/p>\n<\/div>\n Instead, we\u2019re going to rely on a competitive market to fuel innovation and to give different parts of the market the opportunity to discipline other parts of the market. That only works if you have a competitive economy.<\/p>\n<\/div>\n And so my job, at least, is to make sure that we are enforcing the law to preserve competition, to promote it and make sure that competition can work to generate these benefits for folks more broadly. Obviously there\u2019s been discussion of legislation in the United States. We\u2019ve weighed in as the department on some of that, certainly in the last Congress. Europe has its own pathway. We are at this moment in a regime that focuses on enforcement, and those are the tools we have. Those are the tools we\u2019re going to use.\u00a0<\/p>\n<\/div>\n When you look at some of the proposed legislation out there, I\u2019ll pick the Journalism Competition and Preservation Act. The JCPA mirrors legislation that we\u2019ve seen around the world in Australia and other places.<\/strong><\/p>\n<\/div>\n \u201cWe\u2019re going to allow this group of producers to go negotiate as a bloc to get favorable terms from platforms.\u201d Do you see that as a useful tool that would actually enable the kind of competition you\u2019re talking about? Or do you see that as a prescription or a tax?<\/strong><\/p>\n<\/div>\n So ultimately, again, decisions about legislation are made by Congress. We provide technical assistance to Congress when they consider these kinds of legislation. I will say that I think what we\u2019re talking about here \u2014 and this is not specific to the legislation, but I think it\u2019s symptomatic of the issue \u2014 are asymmetries of power, right?<\/p>\n<\/div>\n And so when a company or intermediaries have so much power that they can extract prices or terms that are unfavorable to a wide range of a market, that is often viewed as a market failure. And how you deal with a market failure can be through a mixture of legislation and regulation.<\/p>\n<\/div>\n And I think there are lots of different theories and many college and PhD courses taught on how to deal with that.<\/p>\n<\/div>\n Do you think the journalism market has failed?<\/strong><\/p>\n<\/div>\n I think that journalism is probably one of the most important industries in our country. It is not just vital to an informed society, it\u2019s vital to a democratic, free society.\u00a0<\/p>\n<\/div>\n And so if monopolization and harm to competition is harming journalism, if it means that companies can\u2019t invest in original journalism and the kind of reporting and infrastructure that is necessary \u2014 not just on a national level but on a local level \u2014 to keep our country free of corruption\u2026 To make sure that our political discourse is well informed, to make sure that people can learn about exciting new things, to make sure that we can vote in an informed way. It\u2019s hard to imagine something that\u2019s more important or critical to the fabric of our nation.\u00a0<\/p>\n<\/div>\n And so, going back to my hands on hips, if something is affecting in a meaningful, deep way the journalism industry in our country, yeah, that\u2019s really important.\u00a0<\/p>\n<\/div>\n One of the tools that is available in Europe now is something called the Digital Markets Act. It is, again, a very aggressive intervention into the market. It classifies certain companies as gatekeepers. Particularly, Apple is a gatekeeper for the App Store and other parts of the platform. It says you have to open up, you have to allow these other sources of competition to arrive.<\/strong><\/p>\n<\/div>\n