Tech Refactored

Ep. 25 - What Are Those Big Tech Antitrust Bills All About?

June 30, 2021 Nebraska Governance and Technology Center
Tech Refactored
Ep. 25 - What Are Those Big Tech Antitrust Bills All About?
Show Notes Transcript
Another "just in time" exploration in our TR/DT series, this week we're looking at the many antitrust bills shaking up the business and tech world this week. Jennifer Huddleston, the director of Technology and Innovation Policy at the American Action Forum, joins Gus to break it all down.

Disclaimer: This transcript is auto-generated and has not been thoroughly reviewed for completeness or accuracy.

[00:00:00] Gus Herwitz: This is Tech Refactored. I'm your host, Gus Herwitz, the Menard Director of the Nebraska Governance and Technology Center at the University of Nebraska. We have another special TRDT episode today. As always, shout out to the math fence who understand derivatives. These episodes are short and informal, just in time explorations of topics in the news.

For those who pay attention to the antitrust world, you may know that last week, the United States House of Representatives held markup hearings on a set of five proposed bills relating to antitrust law, and these hearings were a doozy running through the night. I'm really excited to have Jennifer Huddleston, who is the Director of Technology and Innovation Policy at the American Action [00:01:00] Forum with us today to talk to us about what's in these bills and the hearings and all the excitement around them.

Jennifer, great to have you with us. 

[00:01:08] Jennifer Huddleston: Thanks for having me, Gus. 

[00:01:10] Gus Herwitz: Let, let's just, uh, start, uh, we have these five bills that have been proposed in the house, and some of them have companion bills in the Senate. But before we get into what's in these bills, can you just, uh, tell us what's going on with these bills?

Why are we seeing all these bills being proposed right now? 

[00:01:27] Jennifer Huddleston: So over the last couple of years we've seen a increasing conversation around questions of, are the current antitrust standards appropriate for to deal with, particularly technology policy. But when it comes to any range of industries we've seen.

Questions coming, um, particularly from the left about the consumer welfare standard, but also from the right when it comes to can these standards adapt to our current technological giants. This included last year [00:02:00] having a very long, I believe it ended up being 15 month investigation by the House Judiciary Committee.

Into questions around digital platforms and market dominance. The result of that investigation was a house judiciary report that was signed onto only by the Democratic members of the committee, as well as a separate report from some of the Republican members led by representative Kim Buck, really questioning whether they're needed.

Further legislative action around antitrust standards. The latest set of bills that we've seen from the house really stemmed from that report. It's a set of five bills, um, that were originally led by several Democratic members, but did have Republican. Some Republican members sign onto various ones of the bells.

This included bills ranging from. Fee increase related to merger filing fees that would help enforcement agencies [00:03:00] for antitrust have better resources to potentially engage in the enforcement. Two things that would require companies actually be broken up and divest it from quote unquote, conflict of interest, mergers, and many other steps in between.

Things that could impact generics or house owned brands of companies like Amazon, as well as things that were looking at the burdens for mergers and acquisitions in addition to this kind of package of five bills that came together. We've also seen another bill kind of included in this conversation recently that has to do with questions of venue when state attorneys general bring.

Antitrust cases, and that bill started in the Senate, but was included in this most recent house markup. Additionally, beyond that, now we're seeing some conversations at the ftc, particularly given that Chair Le Conn has been confirmed now and become the chair and are expecting to see conversations around what's known as the Section five statement in an upcoming.[00:04:00] 

[00:04:00] Gus Herwitz: So that, that's a whole lot right there. Uh, let, let's, uh, delve into some of this, but, uh, do so by starting to take a step back. First, I'm going to ask you to explain what the consumer welfare standard is in a moment, but I, I, I want to highlight the politics of this is really fascinating and important as you, uh, uh, discussed in the previous Congress, the House Judiciary Committee.

Put together this significant antitrust report and only the Democrats signed onto it. There was this other statement by some Republicans, but at that point it was unclear whether any of this would ever turn into law or lead anywhere because we had Republican controlled everything previously, and now we have controlled or near controlled everything in government.

So there's been this pathway to legislation, but as you said, the democratic. Concerns largely have related to the consumer welfare standard. Many Republicans are not so concerned about the consumer welfare standard or [00:05:00] think, Hey, antitrust law is pretty well settled and it's on sound footing. But then we have a group of Republican members of Congress as well who are largely concerned about big tech.

And freedom of Speech Section two 31st Amendment, Twitter online political speech sort of concerns. So there's some weird opportunity for, or some weird, not quite bipartisanship, but some bipartisan interest in antitrust reform. There, I, I've used this, uh, phrase, consumer welfare standard a couple of times and you used it as well.

Can you briefly just explain what the consumer welfare standard is and why this is such a defining topic in this discuss. 

[00:05:40] Jennifer Huddleston: So when it comes to antitrust law, there are some specific actions by companies that are considered per se, violations of antitrust law. This includes things like collusion that, that are just straightfor- forward violations. But most actions when it comes to [00:06:00] questions of is something a monopoly? Is it violating the existing antitrust laws in the view of the enforcers are examined under the consumer welfare standard? And what the consumer welfare standard does is it attempts to provide an objective standard to these questions related to antitrust law and examine our consumers being harmed by the current actions.

Consumers seeing prices go up, for example, some of the reasons that we have problems with monopolies are because of the way those behaviors impact consumers such that consumers are not receiving the full benefits of a free and fair market. So it really, pushes is the focus, not to a question just of concentration or or how other competitors are being impacted, but really looks at how the consumer is being impacted. A lot of times you'll hear critics say that the consumer welfare standard only considers price, and while the consumer welfare standard is a very [00:07:00] objective and economic based standard, it does consider some other elements as well, Particularly when it comes to things like innovation that can be a factor in the consumer welfare standard analysis that allows it to adapt to a wide range of markets, including the tech space today. One other thing I'll note particularly around this conversation when it comes to technology is consumer can actually mean a couple of different things in this context.

Oftentimes, we think of ourselves as the consumers, the ones that. Buying something on Prime Day from Amazon or going to get a, a new iPhone or downloading the latest app onto our phone. But consumer can also be someone who's purchasing ad space on the internet. Consumer can also be various elements along that, that market as well.

For example, the app developers in ways are consumers, so the consumer welfare standard. Took antitrust law and tried to make what had been perceived as very subjective and [00:08:00] very up to judges and enforcers to decide, you know, what actions were good and what actions were bad, such that companies weren't necessarily sure what standards they were being held to and impose this objective, consumer based viewpoint that really looked at why we have antitrust law to.

[00:08:18] Gus Herwitz: So the, the history here, uh, of the consumer welfare standard, early antitrust law in the United States circa in 1910 through 19, uh, sixties was, as you say, very subjective and easily politicized. We would very frequently in particular, see, uh, competitors. Using antitrust law to harm their more successful competitors.

So I'm a successful company in a business. I innovate. I have a lower cost approach to doing business. I'm able to offer higher quality or lower priced, uh, products to consumers because I've got better technology. And you, my competitors say, Hey, I'm being pushed outta the market. I can't compete. This is anti-competitive. And [00:09:00] we saw instances of courts or regulators agreeing the more successful company. Was competing more successfully harming their competitors since they were quote, harming their competitors. Isn't that anti-competitive? No, that's exactly what we want. Uh, so we had this famous book, uh uh, Robert Bork in 1978, The Antitrust Paradox, who said, "Isn't antitrust law about protecting consumers?"

Why are we using it to protect competitors in ways that harm consumers, which gave us the sec- consumer welfare standard. And especially as you know in the tech sector where prices for products are often really low, sometimes zero in a lot of products, the consumer welfare standard is believed to have overly focused on prices.

And when prices are really low, what are courts supposed to do? We're never gonna find anything. Anti-competitive is the concern. That's lots of what's uh, been driving concern. And concern here. Let, let's focus and turn to these five [00:10:00] bills. So I'm just gonna read the names of them. We've got the platform, Anti Monopoly Act, the Ending Platform Monopolies Act, the Platform Competition and Opportunity Act, the Access Act, and the Merger Filing Fee Modernization Act.

You'll see the word platform in the first three, the biggest three of these bills obviously. Deals with platforms, which is a, a tech sort of concept. Can, can you briefly explain to us what's going on? What, what are the highlights of these, uh, bills? 

[00:10:30] Jennifer Huddleston: So, as I mentioned earlier, we have some of these bills that are probably less.

Controversial than others. So starting with the Merger filing Fee Modernization Act, we're looking at a proposal that seeks to raise the filing fees on some of the, uh, larger mergers that would be considered so as to better fund agencies that are engaged in enforcement. The idea behind that being that we see.

These [00:11:00] proposals are the ones that are more likely to have higher cost when it comes to investigation associated with them, and so therefore, they. They could help fund this additional enforcement that is potentially needed 

[00:11:17] Gus Herwitz: next. So that's the non-controversial one. Let's go to the controversial 

[00:11:20] Jennifer Huddleston: ones. I was gonna say start.

Start with, Start with the, The ones that, that tend to be a little less controversial. One of the, uh, next builds is the Access Act. And the Access Act largely deals with questions of portability and interoperability and seeking to require larger platforms to make themselves interoperable and have certain portability requirements with other parties.

There's a lot of debate on this bill about what it means for privacy interactions as well. We can some, a lot of people think interoperability and portability. Great and that they are something that we should really be pushing particularly large platforms to do. [00:12:00] But with, as was pointed out, there's a lot of questions with who this would require platforms to give access to when it comes to user data and what sort of regulations there are on that in general, with all of these ladder bills as well.

There's been a lot debate about the power that they potentially give the FTC and what that means for the growth of the administrative state as well. Particularly from kind of more more conservative points of of view, the next three bills. I can, uh, start with the platform Competition and Opportunity Act.

All of these bills are really aimed at various elements of the debate concerning things along the lines of self preferencing from platforms, concerns that platforms are creating kind of these kill zones where new startups can't emerge. Other concerns related really to. Potentially the tech economy. [00:13:00] But oftentimes the way that while these bills were targeting tech with some of their definitions, there are concerns that they could eventually expand to other areas as well, Particularly say the financial services sector and, and payment processors and, and things like that.

Um, So with the platform competition and and Opportunity Act, do you see this kind of burden shifting language when it comes to analysis of mergers? This is something that has really popped up a lot in the debates around antitrust and continues to pop up there. You also though, see that there is a change to a presumption that certain mergers are bad rather than this kind of- innocent until proven guilty. Presumption that we typically have in American law, whether it's dealing with the, the mergers or dealing with other aspects of our, our legal system. Next, when it comes to the ending platform monopolies act, [00:14:00] this means-

[00:14:00] Gus Herwitz: That sounds really good, right? We want to end monopolies.

[00:14:03] Jennifer Huddleston: Right, exactly. A lot of the, and I think that actually is an important note that a lot of these ideas on paper, May sound appealing, and then when we think about what they would actually. To consumers and to the market, it's important to take that step back. No one is arguing for monopolies, in, In this case, no one's saying monopolization is great.

But what we're saying is that having that objective standard, having that ability to really look at the market and continue to encourage dynamic innovation, Likely serves consumers best and that we wanna remain focused on those cases where there are, where there is clear consumer harm. So the ending platform, Monopolies Act is the one that would.

Require the breakup of a lot of different potential tech companies by really limiting their ability to be in multiple lines of business. So [00:15:00] there's a great piece by Sam Bowman at the International Center for Law and Economics that I know you're associated with as well, Gus, where he says that, you know, under this law, Apple couldn't develop a search engine to compete with Google.

Amazon couldn't also. Own streaming service. Google probably couldn't have YouTube. You'd really be narrowly limiting what these platforms could. And then finally, we have the American Innovation and Choice Act, which really attempts to target concerns related to allegations of self preferencing and what that could mean for other entrepreneurs using this, these platforms.

What's really interesting about this one is I think this is one where a lot of consumers would see the most impact. Under this type of proposal, it would be very difficult for Amazon to offer Amazon Basics for Apple to put basic apps on your new iPhone when you purchased it. [00:16:00] Instead, you would have to be able, if they were offering a product, they wouldn't also be able to allow.

Third parties to offer the same product. What's interesting there though, is more traditional retailers often whom rely on these house brands, more places like Walmart, cvs, or Costco, wouldn't be covered with this law. By this law, despite oftentimes engaging in very similar practices and having that be a larger portion of their kind of economic.

[00:16:30] Gus Herwitz: Okay, so we have five bills. We've got them all on the table, and we will be back in just a moment to get into the weeds about the good, the bad, and the ugly of these bills and their likely future in, uh, both the House of Representatives and the Senate, uh, and, uh, what we should expect as time moves forward.

We'll be back in a moment with, uh, Jennifer Huddleston.

[00:16:58] Elsbeth Magilton: I'm Elsbeth Magilton, the executive producer [00:17:00] of Tech Refactored. I'm so glad you're tuning in today. You must be a very smart person interested in technology and society. Sound like you. Check out our weekly tech roundup posted to our blog, The Record, every Friday. This weekly roundup highlights tech news nationally, but with a special focus on Nebraska and the Midwest.

Also, we know word of mouth is critical to reaching new listeners. We hope you tell all your tech interested friends about us and encourage them to listen and check out our roundups. Now back to this episode of Tech Refactored.

[00:17:38] Gus Herwitz: and we're back talking with Jennifer Huddleston about the various proposed antitrust bills that the House of Representatives, uh, was discussing last week. And, uh, let, let's actually pick up, uh, just right with that. There was a marathon markup session last week completely putting all the substance of the bills to the side. Jennifer, can you tell us [00:18:00] about uh uh, this markup? 

[00:18:02] Jennifer Huddleston: Yes, I watched 16 hours of this markup, which was not the full thing, believe it or not, it, it ended up lasting between 23 and 24 hours d- depending on how you count certain recesses. So the five bills that we mentioned that were, were part of.

This kind of original package that really stems from the House Judiciary Report plus a six bill, concerning the ability to change venue for cases brought by state's, attorn by State attorneys General. When it comes to antitrust law, we're all part of a house judiciary committee markup that started on Wednesday at 11:00 AM went until 5:00 AM.

Thursday and then uh, went into recess and reconvened at approximately 11:00 AM. On Thursday, before going into the, the early afternoon, there was some interesting [00:19:00] debate over these bills, many of which had amendments offered to, to make some changes, but also a lot of questions about the speed with which these bills were.

Shift it to markups. So the bills had only been introduced a little over a week before, and you saw some concerns from various members that they really hadn't had time to have the expert debate and hearings on these bills while advocates for the bills point to the months long investigation concern.

The digital platforms that had occurred in the previous Congress. Of course, we've had a new Congress since then. We have new committee changes, so members that are currently on the committee may or may not have been a part of that previous investigation. Additionally, we saw several conservatives members such as Representative Jim Jordan speaking about how, while they are concerned about big tech and concerned about various policy issues, whether it's Section 230, Data [00:20:00] privacy or just the power of these platforms in general, that they were concerned that these bills were not the appropriate tool to handle those concerns.

That they were really changing the nature of antitrust well beyond just those platforms themselves and really shifting the way that. Our regulators had power over various aspects of the economy and potentially opening the door to much more regulation of various aspects of the economy at a time when many businesses were just starting to recover from.

The from, from the COVID 19 impact as well as to the ways that these businesses have helped consumers during the COVID 19 pandemic. There was also an interesting dynamic where we really saw the California delegation, particularly discussing the economic impact that these companies have, not only on their own districts, but more generally in the [00:21:00] way that they're able to.

Consumers and a lot of interesting conversations that hadn't necessarily been a part of this broader debate about what this could mean for the economy and what this could mean for consumers beyond just the tech company. Yeah, 

[00:21:16] Gus Herwitz: let's start there. I, is this an antitrust bill or are these antitrust bills, or are these technology regulation bills?

And I'll, I'll just, uh, say for the purposes of our discussion, uh, e even though I think it's in many ways the most important, most likely to go anywhere, Bill, let's put the merger fee filing. Modernization act to the side. That seems to be the least controversial and likely to get past that, in a sense, makes it the most important.

But let's focus on the other bills. Is this about antitrust or is this about regulating big tech? 

[00:21:51] Jennifer Huddleston: I think it probably depends a bit on who you ask. So for critics of the current platforms and critics of our current [00:22:00] antitrust law, typically on the left you do see that an increasing conversation, that this is about more than just tech.

You hear conversations about how this could be used on other industries, whether it is big pharma or. Whatever, that there's a broader conversation about a push to potentially change more generally antitrust laws to move away from the consumer welfare standard, potentially to something that looks a lot more like a European abuse of dominant standard.

And we can certainly talk more about what's going on in Europe, which has its own antitrust debate going on as well. For the critics of Big Tech on the right, I think they wanted to attempt to narrow these bills such that they would only impact the large tech platforms. And oftentimes they're looking at concerns, particularly around online content moderation and online speech concerns that they feel that conservatives are being silenced or do not have the access to platforms that [00:23:00] they feel they, they should have.

With that in mind though, there's a really interesting conversation to be had about how changing antitrust laws, how, or whether or not changing antitrust laws, whether or not breaking up big tech companies would actually resolve that problem, whether or not, if that's the problem, you see, there are better policy tools to be had.

Oftentimes, antitrust law and a breakup is a sledgehammer when what you really need. A scalpel to, to handle these issues. So for example, around the content moderation concern, there's no guarantee that smaller platforms that a separate Instagram from Facebook, that a separate YouTube from Google would have any different content moderation policy.

Than the current large platforms. And in fact, there could be concerns about what happens when they have fewer tools to deal with some of the content that most people don't wanna see to begin with. Some of the really horrible content online that is generally agreed upon [00:24:00] as. Distasteful and that we want platforms to be moderating for things around violence or, or different pro profanities or, or hate speech or, or whatever.

Your real concern is that these platforms would not be able to afford the most state-of-the-art tools or would have fewer content moderators while dealing with a large amount of content still to address. 

[00:24:24] Gus Herwitz: Focusing on the goals of the legislation. The, I, I think the speech relay concerns, that's what's bringing the republicans who are supporting, uh, these bills to the table.

But these are definitely still being driven by representatives on the left. What are their concerns? What's the argument for what they're trying to do with these? 

[00:24:45] Jennifer Huddleston: I think from the left you've seen a large shift to what's been kind of called neo brand Dyson or hipster antitrust, a, a questioning of the consumer welfare standard that instead looks to return to those [00:25:00] earlier standards of law.

They feel that as a result of focusing only on the consumer and economic analysis associated with, um, the Chicago School and the consumer welfare standard. It's missing larger policy conversations that there are things that are not taken into account when it comes to policy goals. Whether it is anti-racism or climate change or, or whatever else the concern may be that they feel is not being appropriately considered.

Concentration is another kind of market example that often gets brought up. So you see that applied not only to concerns about big tech, but up to other in industries as well. And so really I feel, I think on the left, this is about a broader conversation of what is the appropriate role of antitrust law.

Is it merely a need for. Better enforcement and perhaps more enforcement, Or is there something that the current law isn't [00:26:00] serving and a push to perhaps change the current law to be more like Europe and or to revert to that earlier standard? So looking more at the potential impact on competitors in a kind of abuse of dominance, standard way, looking at bringing in more subjective.

Policy goals into the conversation that would allow the enforcement agencies to potentially bring cases that they might not have been able to in the 

[00:26:27] Gus Herwitz: past. So it's not quite a big as bad standard, but it's a, if you're big, that's inviting, uh, substantial scrutiny largely on a subjective, uh, basis from regulators and the, the intuitive explanation for why that might make sense.

I think both you and I, Jennifer, our personal of yous are, doesn't make sense, but, so just to be open about that. But the reason that might make sense, It's really hard to define what a lot lot of these harms could be and how we need to analyze them. And I, I think you and [00:27:00] I would both agree there are legitimate concerns that can come with companies getting really large and having the ability to abuse their dominance, to use the European term, so the question then becomes, if you can do bad stuff, what's the burden of proof? What evidence do we need to, uh, have in order to protect consumers and society from potential harms? And you invoked the Chicago school. This is a school of economic thought, obviously developed at the University of Chicago for the most part, if not entirely, the tools in the Chicago toolbox are generally placing a greater burden on the government to clearly demonstrate harm, which arguably the concern goes, makes it hard for the government to fulfill its reasonable, uh, and legitimate consumer protection role. On the flip side, uh, we have the evidence of the early years of antitrust where the government was very abusive and would without strict rules that governed when it could use this power to [00:28:00] act against companies, the government regularly abused this power.

So it, it's this classic trade off of do you trust big companies or big government?

[00:28:08] Jennifer Huddleston: I think there's something to point out there as well though, and that is that the consumer welfare standard is agnostic when it comes to the appropriate amount of enforcement. It's an objective standard that is there to guide enforcement and to determine when harm is be, is occurring.

But you can have, you know, zealous enforcement still applying the consumer welfare standard, but those cases would only be successful when consumers are being. 

[00:28:39] Gus Herwitz: Look at some of the highlights from the proposed legislation. Uh, I know there are, I'll, I'll phrase it. Curious, interesting, shocking aspects of each of these bills.

I'll leave it to you, Uh, Jennifer. Are, are there any things that you'd like to start with, uh, discussing that, uh, you think folks should understand about these bills? 

[00:28:58] Jennifer Huddleston: I think the one that, that [00:29:00] really, I've found most people are surprised by, regardless of kind of their feelings. Tech platforms in general are these requirements that would basically end Amazon Basics and, and as I kind of mentioned earlier this, your iPhone would come with nothing on it kind of proposal by limiting the ability of platforms to both.

offer a service via third party and to offer the same product themselves. What's really interesting here is if you think about something like Amazon Basics, so you're going to buy batteries. You, you search on Amazon, you come up with all the choices. You select the generic batteries because they're $2 cheaper and their four year TV remote.

All you care about is that they work and you would rather save $2 than buy the name brand. That's a very similar transaction to you go to Walmart, you are looking for batteries. You go to the batteries aisle, you have the Walmart brand, and you have. [00:30:00] The Dura Sale brand and you select the Walmart brand because it's $2 cheaper.

The only difference is that one of those transactions is incurring online. In fact, if you went to the Walmart website and did the same thing, you could still get the generic brand of Walmart batteries. But under some of these proposals, Amazon wouldn't be able to offer the Amazon Basics brand and offer a third party.

Battery sellers platform to offer their own batteries or to offer a name brand batter. And, and what's the rationale for that? The rationale has to do with self-referencing the idea that it's two, two ideas there. One is that Amazon is unfairly using data to squeeze out sellers of new and innovative products before they get big.

So the idea that they're copy. Products that are, are successful and that they're getting the share and then the small guys can't survive. Again, this is a very similar. Policy that most retailers are using when [00:31:00] developing their own house brands and generics that are a much bigger part of their sales than they are of Amazon's.

And so it's really, again, a good example of how these changes would focus on competitors and on. Other sellers as opposed to on the consumer experience itself. 

[00:31:18] Gus Herwitz: So the, the story here is to use Amazon or Walmart. Uh, I'm Walmart and I see some new product on my shelves. I see lots of consumers are buying this new thing and I realize, hey, they're selling this product for.

Uh, uh, $25. We could manufacture that for, uh, $15 per unit and sell our own version of it at $16 and make a, uh, a profit off of that. So we're going to do that. There's no intellectual property protecting it. So Walmart offers their, uh, white label version of this product. Amazon. It's, uh, Amazon's basics, versions.

I guess this is still Amazon Whole Foods, your everyday 365 version of bottled water [00:32:00] that you can also buy from lots of other. And the small companies, the entrance or the companies that are making these are saying, Hey, Amazon is ripping us off. Walmart is stealing our product, and possibly you're even going to hear, and they operate at such scale that this is predatory pricing.

They can manufacture this at $15. It costs us $20, so we can't compete against them. I, I guess I'll ask why isn't that anti-competitive? 

[00:32:27] Jennifer Huddleston: We still have a lot of choices in the market and we still have consumer. Able to choose those products. I think we can all think of times when we may choose a different product, even if it's more expensive, whether it's loyalty to a, a brand name, a belief that it's a superior product, convenience, any number of factors.

The point is that we're looking at. The opportunities for consumers when it comes to being able to choose amongst the products, but also to the prices that consumers are being offered. Are consumers being [00:33:00] harmed by this behavior, not just our competitors potentially being harmed? So again, we see a lot of conversation around concentration in the market, but concentration itself isn't necessarily enough to bring in antitrust.

[00:33:17] Gus Herwitz: And what are some of the, uh, other interesting things going on in this legislation? 

[00:33:23] Jennifer Huddleston: So I think one of the elements that may not necessarily catch people's attention right away because we don't always think about these transactions as consumers is this question of what does this do to mergers? We hear a lot of concerns about is there a kill zone?

Are these large tech companies? Gobbling up small startups before they can rise up to challenge them to, to keep them out of the market. One of the things that these bills would do would be make it much harder for particularly large tech companies, but also, again, there, the way these bills are drafted.

There could be broader implications in the [00:34:00] future as other companies grow past that $600 billion market cap. As we continue to see a growth of online data usage that this could. Some other industries as well. We see oftentimes venture capital is involved and that having a variety of exit strategies is important to the startup economy.

So there are a lot of really cool startups that wanna be the next Facebook or wanna completely revolutionize social media or completely change the way we do search, or come up with the next cool idea and we can't even imagine them right now. And they'll completely revolutionize our lives and they'll IPO and they'll be these great successful.

Thanks. There are also a lot of companies that are looking to innovate on the margins are coming up with slight changes to existing products that make our lives better, or that because of the talent they have, an acquisition may enable them to offer a product to consumers [00:35:00] a lot more easily. Then if that they remained entirely independent.

The problem with the changes to the merger proposals and some of the other requirements around what companies would potentially be allow allowed to be in more than one line of business or not, is that it could really discourage acquisitions in the startup economy. This limits the exit strategy. For those new creators.

And so while a lot, while some companies may want to I P O or may think that that's the best option, it really eliminates one exit strategy that oftentimes is a good exit strategy, both for us as consumers in getting access to a product as well as to innovators in being able to have their product reach the masses, or in being able to have a relationship and, and move on with other ideas that they.

[00:35:52] Gus Herwitz: Yeah, that, that last point is really important and I think often gets lost, uh, in the exit strategy, uh, discussion. [00:36:00] So e even the term exit strategy, that sounds like the, you're jumping out the plane, pulling the parachute kind of has negative connotations. Who cares if venture capitalists don't have an easier way to turn their.

A hundred million dollar investment into a billion dollars crocodile tears for everyone. Well, it turns out that it's a really different skill set. Coming up with an idea and starting a company and then growing that company and commercializing it successfully and turning it from minimum viable scale to, uh, a billion people around the globe using it.

And some products, some innovations can. Easily immediately be deployed at scale. If I'm an innovator who's not good at commercializing or growing a business, we still want me to be able to come up with an idea, get some venture capital, start a business, and then give it to sell it to someone who's able to, uh, either grow it and nurture it into a billion user, uh, business, or sell it to a Google or an Amazon where they're able to just add it [00:37:00] to their portfolio and automatically.

Overnight, a billion people have access to it instead of waiting three or five years to see if I can grow that product. So there, there's a real value to, uh, that form of acquisition. I think it's important to note, you mentioned this earlier, that what this act does, first you mentioned the $600 billion threshold.

That's a size of company that gets subject to this. And there there's a lot of debate. How many companies would actually be subject to these new. But the big thing that it does is it reverses the presumption. Ordinarily, if I want to enter a contract, if I want to hire, if I want to acquire a company, that's all that a merger is.

I'm buying someone else their company. The burden is on the government to prove that it's harmful to consumers. So just like if I want to buy a hamburger, the presumption is I can buy a hamburger. Okay? This is a $600 billion hamburger, but it's still ordinary contracting just at a very [00:38:00] large scale. This legislation effectively does, is says, You no longer have freedom to contract or, uh, buy or sell, uh, uh, property unless the government approves you're doing that.

So from a, uh, traditional rule of law perspective, there are arguments on both sides whether this, uh, is good or bad, but it's worth, it's important to understand what this is doing. This is effectively saying, If you have, if you're a large company, you no longer have the ability to engage in freedom of contract without getting government approval for those contracts.

I think 

[00:38:33] Jennifer Huddleston: that oftentimes when we're talking about antitrust reform, We focus on what this means for large companies. What does this mean for the big tech companies? What does this mean for, for the larger companies? But it's important to note, as we were discussing when it comes to the merger questions, that there's also a lot of questions of what does this mean?

For [00:39:00] smaller companies, what does this mean for the ability of these companies to offer, say, third party seller platforms? What does this mean for app developers and questions of how this could change various aspects of a very dynamic element of the economy? There's also those questions of what does this mean for us as consumers, and what does it mean in terms of how we view the.

Of antitrust enforcement in general, and I think a lot of that really gets to the heart of the debate right now. Who is antitrust enforcement designed to protect? What is antitrust enforcement designed to do? Is this really a consumer protection law focused on very objective economic standards, or is this more about the appropriate level of regulation of the economy in general?

Is this more about how we view concentration and competitors instead of how we view. , the consumer experience of the economy. 

[00:39:55] Gus Herwitz: Yeah, and you uh, uh, made [00:40:00] reference to this earlier one, one of these, the Access Act, which deals with interoperability. It would effectively empower the Federal Trade Commission to create a committee that would basically be designing technologies that companies.

Need to use for implementing, uh, their technologies. And that that's just a, such a major intervention into the American economy that, uh, we rarely, if ever see it, it's a, a remarkable, uh, thing for Congress to actively be discussing. Right now, we, we could. We haven't even really touched on the Access Act.

That's probably the one that's closest and nearest and dearest to my heart. Uh, we, we might need to have you back to talk just about that for an entire 45 minutes, but we should, uh, move on to some, uh, concluding thoughts or questions. And, and I'm just going to cut straight to the big question. What's gonna happen.

[00:40:51] Jennifer Huddleston: So all of these bills were reported favorably out of committee, so, so next steps will be, The bills [00:41:00] will go to the house floor. We will likely see companion bills of at least some of them introduced in the Senate. The venue bill actually started as a Senate bill. So what happens next with that is a a little bit different, but we will continue to see a lot of debate around antitrust This congress.

For sure, regardless of what happens with this particular set of bills. I also think that there are some other interesting things to note when we look at the current policy environment as a whole. One of which, as I mentioned earlier, is we're seeing a lot of questions at the FTC right now. About potential antitrust enforcement, not just in the tech space, but more generally and about the role of the FTC in general.

Should the FTC be a more active agency? Should we see more rule makings from that agency? And so that's certainly something if you're interested in this area to pay attention to. And then the final thing that. Flag is that this is not just a US debate. We're seeing a [00:42:00] lot of conversations in Europe, particularly around the digital markets act, as well as various Europe, European competition, agency enforcement actions against American companies.

And it's really interesting to watch the dynamic there because these do seem to be very protectionist policies targeting American technology companies. And what does that mean for the importance of having. American leadership in an innovative field at a time when there are a lot of concerns about what the other options are.

What does that mean in terms of the future of competition in in Europe? What does that mean in terms of the future of innovation and what does that mean in regards to the choices that may be out there between European, I'm sorry, between American tech companies and Chinese tech companies where you get into all sorts of.

Policy dynamics too around cyber security and foreign policy and, and everything else. 

[00:42:59] Gus Herwitz: [00:43:00] Yeah. The, yet another entire episode for us to, uh, get into one of these days. What one of the jokes over the last couple of years at a lot of antitrust conferences is we're all trade lawyers now because the, the international dynamics are so important here.

I look forward to, uh, continuing this discussion. Uh, Jennifer, thanks for having me. Thank you, uh, for joining. And thank you to our listeners for joining us as well. I've been your host, Gus Herwitz. Thanks for joining us for this episode of Tech Refactored. If you want to learn more about what we're doing here at the Nebraska Governance and Technology Center, you can go to our website at ngtc.unl.edu, or you can follow us on Twitter @UNL_NGTC.

This podcast is part of the Menard Governance and Technology Programming Series hosted by the Nebraska Governance and Technology Center. The Nebraska Governance and Technology Center is a partnership led by the Nebraska College of Law in collaboration with the Colleges of Engineering Business and Journalism in Mass communications at the [00:44:00] University of Nebraska.

Colin McCarthy produced and recorded our theme music. Casey Richter provided technical assistance and advice. Elsbeth Magilton is our executive producer. Lysandra Marquez is our associate producer. Until next time, you can trust in me.