Meet the Most Feared Person in Silicon Valley

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Speaker 7 Welcome to Pablo Torre Finds Out. I am Pablo Torre, and today we're going to find out what this sound is.

Speaker 11 I think Lena Khan

Speaker 11 should have been given more power, should have been able to do more things. I think there's obviously a big problem.
I think a big problem problem in Silicon Valley.

Speaker 7 Right after this ad.

Speaker 7 Do I call you Lena? Do I call you chair con?

Speaker 10 Whatever you want. I mean, I'm not really a chair anymore.

Speaker 7 Well, I was going to say, I don't know if it's like, you know, you're sort of Mr. President forever.
I don't know how it works with the other people.

Speaker 10 I think we get to set the rules. So whatever you want.

Speaker 7 You're going casual today.

Speaker 10 We can do that. I mean, it would seem fitting.

Speaker 7 Well, look, I, uh, I've told a bunch of people in my life you were coming to visit our studio today. And I thank you for being here, by the way.
And the reactions tend to go into two camps.

Speaker 7 One of them is, holy shit.

Speaker 7 The other one is, who is that?

Speaker 10 That's not too surprising. I mean, for a long time, you know, the Federal Trade Commission was somewhat esoteric and arcane.

Speaker 10 And we really tried to revive it, revitalize it, start focusing on some of of the biggest pain points that people were facing in their day-to-day lives.

Speaker 10 And so I would say that did generally elevate the profile of the agency.

Speaker 7 So if you're one of the people who have zero idea who Lena Kahn is or what any of this even has to do with sports, which we will get to, I promise, you should know something very important here.

Speaker 7 which is that there is an almost inspiringly bipartisan coalition of people

Speaker 7 who hate her guts.

Speaker 12 Elon Musk, who I guess is going to be in charge of the federal government soon, stated that the FTC chair, Lena Khan, quote, will be fired very soon.

Speaker 13 Lena Khan going over and reportedly colluding with European regulators when she should be standing up for American companies. She's colluding against them, and that's horrible.

Speaker 7 Why are you harassing Twitter? My problem here today is that you're a bully.

Speaker 7 Mark Cuban, who has really emerged as a major Kamala surrogate, quote, if it were me, I wouldn't, asked if she should keep Lena Khan as FTC chair.

Speaker 7 And it keeps going like that.

Speaker 7 The roster of critics who have called for Lena Khan to be out of power includes Elon Musk and yes, Republican Congressman Darrellsa, as well as Republican Senator Mike Lee and plenty of guys along those lines, but also Mark Cuban.

Speaker 7 and tech billionaire Reed Hoffman and Maryland Governor Wes Moore, these noted Democrats, all of which leaves Lena Kahn with one conspicuous and unlikely defender.

Speaker 14 Look, I think Lena Kahn is one of the most important political figures in this country.

Speaker 14 And I think if she had been listened to more by Democrats, they would have actually been more competitive against us in November of 2024.

Speaker 7 Steve Bannon, who said that at a tech conference in April, is, of course, the ideological steward of the Make America Great Again movement. He is also an avowed enemy of Silicon Valley.

Speaker 7 Which raises one, at this point, relatively overdue question.

Speaker 7 Just the basic job description of FTC chair.

Speaker 7 What does it mean?

Speaker 10 Yeah, so the Federal Trade Commission, so we were created in 1914 against, again, the backdrop of the robber barons, the industrial trusts, and Congress wanted an agency that would stand up for the American people against corporate abuse and exploitation.

Speaker 10 The nuts and bolts of that are that the agency is supposed to enforce the consumer protection laws.

Speaker 10 And so if companies are engaging in unfair or deceptive behavior, That can span anything from fraud and scams to data brokers illegally spying on you. That's a big part of the job.

Speaker 10 And then the agency is also supposed to enforce the antitrust laws. So if companies are trying to illegally merge to snuff out the competition or are engaging in monopolistic practices.

Speaker 10 That's what the agency is supposed to take on as well.

Speaker 7 And Lena Kahn, who has the endorsement, incidentally, of Bernie Sanders, but was appointed by Joe Biden, actually did take on Amazon and Facebook/slash Meta and has since become a wildly endangered political species.

Speaker 7 You are referred to as the most feared person in Silicon Valley, the most hated person on Wall Street. You provoke strong reactions, I guess, is

Speaker 7 the brief scouting report on Lena Kahn.

Speaker 10 The job I had was to enforce the law without fear or favor.

Speaker 10 And I think for a period, there was a sense that the government's very comfortable going really hard when it finds kind of smallball violators of the law, right?

Speaker 10 Pickpockets or kind of small-time scammers, and it's ready to bring the full force of the government to go after them.

Speaker 10 But that when you have corporate elites, when you have fancy people in suits breaking the law, time and time again, the government seemed to go much lighter.

Speaker 10 And, you know, I came of age during the financial crisis where I think we saw that discrepancy and it made a big impression on me.

Speaker 10 And I think has contributed to some of the disillusionment we see across America with government. And so when I came into this role, it was really important to me that we actually be even-handed.

Speaker 10 And even if we found that it was really big corporations breaking the law, that we didn't think, oh, well, we have to go soft here.

Speaker 10 And I think that did provoke some emotions, some hysteria sometimes from those corners. And, you know, that's just part of the job.

Speaker 7 And Elon Musk said after Trump did, in fact, win that, quote, she will be fired soon.

Speaker 7 And so I'm talking to you now. It is June.
You left your post as of January.

Speaker 10 So I left the Federal Trade Commission at the end of January. The last few years have been super intense.
So I've been mapping out what the next phase of all of this work will be.

Speaker 10 You know, for those who are not following it super closely, it was pretty unusual for me to become head of the FTC at age 32.

Speaker 7 The youngest FTC chair ever.

Speaker 10 Yeah. And just more generally, a lot of this work went from kind of a very small number of people.

Speaker 10 reformers making arguments about how we had gone too soft on monopolies and corporate lawbreakers lawbreakers to suddenly be given the opportunity to govern.

Speaker 10 Oftentimes, it takes decades for kind of reformers on the outside to ultimately be able to kind of get into positions in government and start governing.

Speaker 7 So before it sounds like the focus of the FTC when it came to what they're enforcing, it was centered around this standard of prices.

Speaker 7 prices that consumers had to pay, that being the way that we could evaluate whether something needed to be intervened against. But what your, and again, it's called neo-Brandeisian, but also hipster.

Speaker 7 What's the term?

Speaker 10 I think there are a lot of different terms running around. I mean, the way I look at it is this is about competition and power, right?

Speaker 10 And there are lots of different ways that companies can exercise power.

Speaker 10 Sure, in some cases, companies absolutely use their power to hike prices, to inflate prices, especially when they know you don't have competition, you don't face choice, you're kind of stuck, right?

Speaker 10 And companies can become too big to care and then just price gouge you basically. But we also see that companies use their power in other ways, right?

Speaker 10 And especially in digital markets, where sometimes people are not paying with dollars, they're paying with their data.

Speaker 10 We've seen, for example, companies like Facebook or Google degrade their privacy policies and dramatically expand the data they're collecting on you.

Speaker 10 We've seen companies just make products and services worse. I mean, I think a lot of people can relate to Google search just becoming much worse, becoming cluttered with all of these ads.

Speaker 10 And I think we just see across the board that when companies don't have to compete for your business, where you're kind of stuck with them because there aren't other options in the marketplace, they don't just, they just don't have to try that hard.

Speaker 7 But even more to the point, and you're referring to a thing, I don't know if you co-signed this term, but inshittification

Speaker 7 is the term that I always go back to, whether the McDonald's ice cream machine works.

Speaker 10 Yeah, well, we fixed that.

Speaker 10 The last administration did.

Speaker 7 I feel like you should be proud. I forgot to mention that up top in this episode.

Speaker 10 So one trend that we've seen has been that manufacturers can make it really difficult to fix products, be it tractors, you know, be it ice cream machines.

Speaker 10 And the FTC was pretty active in this area, requiring that companies not artificially make it difficult to repair your own product.

Speaker 10 And that can mean either allowing you yourself to be able to kind of go in and tinker or give you the freedom to not just go get it fixed by the manufacturer, but actually go to an independent repair shop.

Speaker 10 Right.

Speaker 10 And so we ended up filing a lawsuit against John Gere because we had heard that they had been making it very difficult for farmers to get their equipment fixed in a timely way, which, if you're a farmer, can be really devastating if you find out, yeah, you're in a like four-month queue and you need your tractor now in harvest season.

Speaker 10 So that was something we did.

Speaker 10 But we also provided support to the copyright office, which was, you know, looking at some of these rules that ended up affecting things like the McFlurry machine, and they ended up making a ruling that would make it much easier for those machines to be fixed.

Speaker 7 You made America McFlurry again.

Speaker 10 You know, it seems like something that people could really do with right now.

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Speaker 7 So now I imagine that you might be wondering how Lena Khan became the youngest chair in the history of the FTC in the first place.

Speaker 7 And if you've listened to PTFO before, you probably remember that I personally dreamed of going to law school and wound up becoming this journalist.

Speaker 7 Lena Kahn

Speaker 7 is kind of the opposite.

Speaker 10 It was a kind of childhood dream to be a journalist for me. And I, you know, in high school, spent my summers working at local newspapers.

Speaker 10 I was worked on the high school newspaper, the college newspaper, and just happened to graduate in 2010. You know, still the financial crisis was very raw.

Speaker 10 It was pretty difficult to get journalism jobs. Yes.
And so ended up at a think tank doing kind of research and, you know, some journalism and reporting, but not a traditional news outlet.

Speaker 10 And she kind of loved it.

Speaker 7 And by the time she was offered a traditional job by the Wall Street Journal, the gold standard, to be a commodities beat reporter, this was some years later, Lena Kahn turned it down.

Speaker 10 By that point, had become really interested in this issue of consolidation of economic power and was really confused by how it was that we, on the one hand, had these really strong laws on the books that were designed to check monopolies and take on concentrations of economic power.

Speaker 10 And yet, in industry after industry, it seemed like we had just allowed so much consolidation.

Speaker 10 And so, I was just really intrigued by that gap and thought we were on the cusp of really needing a renewed anti-monopoly movement and decided to go to law school to figure out how I could be part of that.

Speaker 7 And in 2017, at Yale Law School, would-be Wall Street Journal reporter Lena Kahn found out how.

Speaker 7 He published a 95-page article for the Yale Law Journal that became a seminal text in the so-called hipster antitrust movement, which renewed the work of former Supreme Court Justice Louis Brandeis and also drew the attention of the future Biden administration in the process.

Speaker 7 And the article, with the byline Lena M. Kahn, was titled Amazon's Antitrust Paradox.
So So you turned down this job at the journal. And are you,

Speaker 7 I presume in the abstract, you're aware of how much you've been covered by the Wall Street Journal as a result of that sliding door's choice?

Speaker 7 Do you have the number, the number of pieces that, again, mostly op-eds and editorials that the journal has published about you?

Speaker 10 I don't have that number.

Speaker 7 124.

Speaker 7 Feels about right.

Speaker 10 Yeah, we're in the ballpark for sure.

Speaker 7 And just in case you were wondering, the journal editorial board is not a fan.

Speaker 7 So the idea that one of your biggest fans, your most outspoken fan, is Steve Bannon, who is a guy who, and for people who somehow don't know who Steve Bannon is, former chief strategist for Donald Trump, helped get Trump elected, ran Breitbart News, one of the chief architects of the whole MAGA movement, went to federal prison because of his role and his refusal to cooperate with the government after January 6th.

Speaker 7 I'm just curious, the first time that you realized that Steve Bannon was going to be a stan of yours, that he would be a Lena Kahn simp.

Speaker 7 I'm a Lena Kahn fan. You're a Lena Khan fan.
Break him up. Break him up.

Speaker 15 I would be a huge supporter of Lena Kahn remaining, and I would love to see Lena Khan given more power.

Speaker 11 I think Lena Kahn

Speaker 11 should have been given more power, should have been able to do more things. I think there's obviously a big problem.
I think a big problem in Silicon Valley.

Speaker 7 Do you remember that? Do you remember your reaction,

Speaker 7 how you even discovered that?

Speaker 10 I don't remember the precise moment, but it's unusual. It's surprising.
It's unexpected.

Speaker 10 And I think it just reveals just more generally how strange it is that on this issue of taking on unchecked corporate power, there has been this strange bipartisan alliance where there were certain cases filed against companies like Google and Facebook that were filed under the first Trump administration.

Speaker 10 We saw then those be continued, built upon, expanded during the Biden administration. And now we're back in the Trump administration.

Speaker 10 And I think there's a big question mark about what's going to happen.

Speaker 10 But we do see a real factional fight in the Republican Party between, say, the kind of corporatists, the oligarchs, and the populists or the people who think that we do actually need to enforce the law against powerful lawbreaking corporations.

Speaker 10 And I think we see a troubling set of signs, including, for example, the shutdown of the Consumer Financial Protection Bureau, one of the government agencies that was on the front lines of standing up for Americans against corporate abuse and predation.

Speaker 10 So dismantling the government, dismantling the law enforcers that are supposed to stand up to this predation is not a great sign.

Speaker 7 The Strange Bedfellows aspect of this, though, does speak to something that is so glaring in its otherwise conspicuous absence, which is

Speaker 7 what does cut across the aisle these days?

Speaker 7 And insofar as there is this rainbow coalition in which it's you and Steve Ann and a bunch of other people, I'm curious how much of tech is the glue there, in your view.

Speaker 10 It's true that some of it started around tech

Speaker 10 in kind of both parties. I think especially with the 2016 election, there was a

Speaker 10 revelation for people about how a very small number of tech giants held huge sway over key information channels, could potentially even contribute to swaying elections.

Speaker 10 And I think that was a real wake-up moment for a lot of people and in both parties.

Speaker 10 But this is something that's much broader. I mean, at the FTC, you know, we were filing lawsuits against companies like Facebook and Amazon, but we were also taking on hospital monopolies.

Speaker 10 You know, we were also taking on big pharma companies who have been using some of these patenting tricks to make it much more expensive for Americans who are trying to just buy, say, prescription medicines.

Speaker 10 And so this is something that goes much beyond just tech.

Speaker 7 I get the sense that you have seen the inside of various places that a lot of, again, everyday Americans have not taken the time or had the access to really examine.

Speaker 7 Was there something that really kind of startled you? Is there something that you think of where it's like, even I am surprised that they are this brazen?

Speaker 10 We found that asthma inhalers have been around for decades, but for some reason, people were still having to pay out of pocket as much as $500, $600, $700,

Speaker 10 even though asthma inhalers are as cheap as, say, $7

Speaker 10 in other countries. And we tried to figure out why this was.

Speaker 10 And we found that some of the big pharma companies were using patenting tricks to have patents on things like the plastic inhaler cap or the piece of it that counts the dosages.

Speaker 10 Nothing to do with the ingredients, the drug ingredients. And so we called them out on this.
We said, you know, this seems illegal.

Speaker 10 And within a few months, three of the four big inhaler manufacturers said, okay, we're going to cap how much people pay out of pocket to $35, down from hundreds of dollars.

Speaker 10 And on the one hand, that was a, you know, big win for people.

Speaker 10 But on the other hand, I'm like, how many years and how many billions of dollars were these asthma inhaler companies able to extract from people just from these illegal patent tricks?

Speaker 10 And candidly, why was this not fixed until, you know, 2023, 2024? These authorities have been on the books. And I think that's another component of this.

Speaker 10 Sometimes there are all these legal authorities that agencies have that have just gone somewhat dormant that people have not been using assertively.

Speaker 10 And that was another thing that we really tried to change is once I came in, we kind of read all of the laws that Congress had passed that gave us powers and authorities and said, okay, what does this provision do?

Speaker 10 What does this provision do? Oh, this hasn't been used in a few decades. Why is that? What can we do with it?

Speaker 10 And I think you really need that full canvassing of what an agency's authorities are and make sure you're actually using all your tools.

Speaker 7 Yeah, the more I think about hipster antitrust as the label, the more sort of darkly ironic it is that actually what you're doing is harkening back to the before times when there was a more aggressive way to,

Speaker 7 yeah, enforce the need for this country to have competition.

Speaker 7 It feels like your revolution is almost a throwback as much as it is something that, you know, is very very Williamsburg or whatever the f people think hipsters are now.

Speaker 10 Yeah, it's there is a real conservative orientation.

Speaker 7 Dare I say even conservative, Lena. There we go.
Yeah.

Speaker 10 And, you know, one thing I did at the FTC was made a big effort to travel across the country.

Speaker 10 I think in DC, there can sometimes be this tendency to kind of just fall into these pretty narrow feedback loops where you're over-indexing for a lot of kind of elite punditry and commentary that's pretty removed from what the vast majority of people in this country are thinking and feeling and experiencing.

Speaker 10 And so we tried to really mitigate those blind spots by going to places like Baraboo, Wisconsin, or Kansas City, meeting with independent pharmacists and figuring out, you know, what are the biggest pain points that people are seeing in their day-to-day lives.

Speaker 10 And I was just struck time and time again how this is not a partisan issue.

Speaker 10 I think people feel like a lot of their daily choices are being constrained by big corporations and that all too often they're not able to get a fair shake in our economy.

Speaker 10 And, you know, for most people, a lot of how they end up interacting with power in their day-to-day lives is less directly with the government, but more with their commercial relationships and economic transactions, right?

Speaker 10 If you're trying to switch cable companies and you're trying to call your cable company and you have to wait for three hours on hold and then the call drops.

Speaker 10 There are just all of these day-to-day frustrations that people feel when navigating what should be the most simple of transactions.

Speaker 10 And I think people just feel this basic indignity to that in big and small ways.

Speaker 10 We got enormous support and we would get letters and comments from people who would say things like, I'm a lifelong Republican, I'm a hardcore free market capitalist, but what this FTC is doing in say taking on non-compete clauses, which trap you, or in requiring that companies make it as easy to cancel a subscription as it is sign up.

Speaker 7 Some of the best stuff that you guys did was just like the click to cancel rules,

Speaker 7 which is, again, we all know how unbelievably annoying it is to try and cancel like a streaming service or some subscription product. And why? Why is it so hard?

Speaker 7 Is a thing we've all yelled into our laptop screens or phones at one point.

Speaker 10 When the FTC would investigate some of this, I think we were were stunned to see just how deliberate a business strategy it is.

Speaker 7 I think people sometimes are willing to be generous to just the monolith of corporate bureaucracy because it's just like the way, of course, a big company works.

Speaker 7 But you're suggesting that we need to understand that these patterns are not accidental.

Speaker 10 That's right. I mean, I think one thing we've seen over the last few years accelerated during the pandemic is that there's been a huge surge in subscription-based services, right?

Speaker 10 So previously, there would be several services that you would just go out and buy and then own the thing, right?

Speaker 10 Even with things like printers, that now there are all sorts of subscriptions associated with.

Speaker 7 Everything wants to be a subscription.

Speaker 10 Everything wants to be a subscription. And firms have identified this as, you know, a key revenue source.

Speaker 10 And they've noted that to fully monetize that, they need to make it as easy to sign up and as difficult to cancel.

Speaker 10 And unfortunately, we saw when we were investigating companies like Adobe, for example, or Amazon with Amazon Prime that there was explicit strategies to make that happen.

Speaker 10 Amazon even had a name for the cancellation process. It was called Project Iliad

Speaker 7 after the kind of epic tale of the war. As in canceling Amazon is as hard as reading the entirety of the Iliad, or even yet, yeah, going on an odyssey sometimes, a literal odyssey.

Speaker 10 Nobody should be stuck paying for a subscription that they either never signed up for or want to cancel.

Speaker 10 And so the FTC did finalize a rule that says companies have to make it as easy to cancel as it is to sign up.

Speaker 10 So if you can sign up online with one click or two clicks, you have to be able to cancel with one click or two clicks. This rule was actually supposed to be in effect already.

Speaker 10 It was supposed to go into effect last month. Unfortunately, this new FTC, for some reason, punted out the date.
So it's not going to come into effect till next month.

Speaker 10 I really hope that sticks because, you know, this is hurting people.

Speaker 7 Why does all of this take so long? And I mean that not merely in the way of trying to cancel a subscription, but also just like the gears of change when it comes to antitrust stuff.

Speaker 7 How should we feel about that?

Speaker 10 Yeah, it's a great question. And I think there's an antitrust specific version of it where you're absolutely right.
It just sometimes takes too long. These cases take too long.

Speaker 10 I mean, the Facebook case was originally filed in December 2020. Right.
The judge then tossed out the Trump administration's complaint. We've refiled it, kind of fixed some of the deficiencies.

Speaker 10 And it only went to trial a couple of months ago.

Speaker 7 You were the person who got Mark Zuckerberg to testify on the stand in this landmark case of

Speaker 7 FTC v. Meadow.

Speaker 7 And you brought this. The government brought this thanks to you, I should say.
The six-week trial just wrapped up. He now sits with a judge, as you were alluding to.

Speaker 7 And the government, just to do the brief recap here, the government accused Mark Zuckerberg and Meta of acquiring Instagram and WhatsApp in a quote-unquote buy-or-bury strategy to secure his monopoly.

Speaker 10 So that is an accurate summary. I mean, it really goes back to Facebook watching the switch from desktop to mobile.

Speaker 10 I mean, Facebook had become pretty successful in the desktop market, but as people started using smartphones more, it realized it needed to pivot.

Speaker 10 And it tried, you know, all sorts of features and apps that just wouldn't take off.

Speaker 10 And it saw mobile native apps like Instagram and WhatsApp do really well and grow really quickly, grow exponentially.

Speaker 10 And we have documents and communications showing that Zuckerberg and other top executives feared being lapped and being left behind, where Facebook would just be a desktop service and not really be successful in mobile.

Speaker 10 And they realized that that would, that was really existential.

Speaker 7 Phones, it turned out, would be important.

Speaker 10 Exactly. And instead of being able to compete with Instagram and WhatsApp, Zuckerberg decided to just go out and buy them up.

Speaker 10 And this ended up being harmful for people because, just to take an example, WhatsApp at the time had the distinction of not selling people's data, right?

Speaker 10 You could pay as little as $1, and there were a lot of privacy protections that people would have on WhatsApp. And then they were bought by Facebook.

Speaker 10 And, you know, Facebook is a behavioral ad-based business model. So they monetize people's data.
And so there were a lot of privacy protections that people ended up losing.

Speaker 10 And kind of one of the main privacy messaging apps was suddenly taken off the market.

Speaker 10 I think more generally, we've seen that to go back to your earlier point about insidification, you know, historically, a major vector of innovation and of products and services getting better for people has been when companies have to compete, right?

Speaker 10 When even the biggest giants have to to look over their shoulder and say, oh, you know, I need to go faster and make my services even better.

Speaker 10 And when companies are able to just buy out the competition, we see they can get lazy, right? They don't feel like they have to try as hard.

Speaker 10 And that is something that the antitrust laws are supposed to prevent.

Speaker 10 So this case, you know, just wrapped up in terms of the trial, there was a lot of evidence that the FGC put forward showing both that these transactions were anti-competitive, but also that there's been a real cost for people, including with things like the ad load.

Speaker 10 So, for example, Facebook's been able to get away with increasing the proportion of ads that you see on apps like Instagram relative to organic content.

Speaker 7 We've noticed.

Speaker 10 Yeah, and that's a tax, right? You're not paying higher dollars, but it's a degradation of the service. And ultimately, this is also about

Speaker 10 what is going to be the future of innovation in some of these markets. And are we going to allow a company like Facebook to monopolize?

Speaker 10 So I wish this case would have been able to go to trial even faster. But I think this is a government-wide challenge.

Speaker 10 One thing we saw at the FTC was there had been a lot of procedures and red tape and bureaucracy that the agency itself was handicapping itself with.

Speaker 10 And this is actually a legacy of the Reagan administration, right? I mean, they came in with a very deregulatory view. They wanted to weaken agencies, handicap them.

Speaker 10 And one of the mechanisms for doing that was just handcuffing agencies in their own red tape.

Speaker 10 There was so much process and bureaucracy that when we came in and said, hey, let's, you know, do some of these rules, like the click-to-cancel rule.

Speaker 10 Some people were like, well, that's going to take at least five years, maybe closer to 10. And we were like, what? That's wild.

Speaker 7 It's like the problem of click to cancel also applied to the literal thing that enabled click to cancel. Yeah.
How can I cancel bad government?

Speaker 10 And so we looked at those procedures and we said, wait, these are not even required by the law. These are just discretionary and it seems like a legacy of some of this Reagan administration.

Speaker 10 And so we streamlined those. We eliminated the unnecessary red tape.
And so instead of it taking at least five years, we were able to do some of those rules in two years.

Speaker 10 So we had the click to cancel rule. We also had a rule that prohibits fake reviews.

Speaker 10 And I think one phenomenon we've seen is just this total pollution of the online reviews with either paid reviews that are not being disclosed, or sometimes companies were actually paying people to go write bad reviews on their arrivals' websites.

Speaker 10 And so, just really distorting the information ecosystem.

Speaker 10 I think we've seen with influencers sometimes just a lack of disclosure around what's really an advertisement versus kind of an organic review.

Speaker 10 And so, we're hoping that'll just promote more honesty and transparency in the system. So, that was the rule along with the click to cancel rule that we were able to do in closer to two years.

Speaker 10 We also just finalized a rule that has now gone into effect that bans some of these junk fees.

Speaker 10 So, if you're buying like an online ticket, I think a lot of people have had the experience that you see a ticket, it's maybe $75,

Speaker 10 you check out, and then all of a sudden it's like $130.

Speaker 7 Yeah, suddenly I put my kid up for adoption. Yeah.
I don't know where I agreed to that, but I guess I have to do so.

Speaker 10 And you like squint and you're like, the service fee, a convenience fee, like, what are these fees? What am I paying for? And suddenly there's just this bait and switch.

Speaker 10 So we finalized a rule that says companies can't do that. They have to be honest about what the price is up front.
They can't do this slow drip, drip, drip of these fees just when you've checked out.

Speaker 10 So that's now in effect with live event tickets and with short-term lodging. And we just saw companies, including like Airbnb and others, that have already switched to this more honest pricing model.

Speaker 10 So, you know, hopefully these are some ways that people's lives will be better because of what we were able to do.

Speaker 7 Every time I have a guest here who has in any glancing way a thought about artificial intelligence, I just got to pull them on like, where are you on the doomer scale?

Speaker 7 And even more relevantly, perhaps to your point of view, what does scare you the most about AI and also its rollout in the context of competition?

Speaker 10 The doomer question is an interesting one because I think it somehow assumes almost this inevitability, right? The AI is just on this trajectory. We've already lost.

Speaker 10 That we've already lost, that we're just subjects to whatever is going to happen. And I really reject that assumption, right? I don't think there's any inevitability here.

Speaker 10 I think there's a lot of decisions, policy decisions that are going to determine what is the ultimate trajectory that these technologies take.

Speaker 10 And I think one of the big red flags for me right now is the enormous concentration of control and power.

Speaker 10 The number of companies or even individuals that are right now getting to call the shots on a lot of how these technologies develop is pretty small in terms of who controls the ultimate inputs, be it at the level of the chips, be it with these hyperscalers.

Speaker 10 And I think, you know, having sat down with founders and startups in Silicon Valley, I think there could be some really beneficial uses here.

Speaker 10 But in order for that to happen, we're going to have to make sure that companies actually have a fair shot.

Speaker 10 I think the other thing that I've been troubled by is what does the landscape look like for the creation of content and information and art if we're in a world where all of these inputs can just be ingested by a model?

Speaker 10 And talking to creators, many of whom did just wake up one day to find their life's work ingested by this model and now competing with it.

Speaker 10 I mean, I think there are kind of basic fairness questions there, but also who's going to invest in the organic production of some of this art or information or content if there's not really a monetization play there.

Speaker 10 I think that's a big thing to solve for too.

Speaker 7 Formal government accounts in this administration were posting this studio Ghibli Open AI art stuff.

Speaker 7 And I guess it's telling and indicting that you refer to it by the proper name of the actual artistic entity that is responsible for that aesthetic, for that creative sensibility.

Speaker 7 And yet it's not them. It is them ingested into the open AI system and then spat out without any recognition or payment, apparently, for the originators of that work.

Speaker 10 Yeah. I mean, I think, you know, the other component here is

Speaker 10 a lot of this requires just an enormous amount of energy, right? And

Speaker 10 literal energy.

Speaker 10 And, you know, that layer of the resources question, I think is another one where we just need to make sure that there is public accountability and that we are getting to make some of these decisions as a public rather than, you know, a handful of companies getting to call the shots.

Speaker 7 I was going to ask you, as a user of stuff, as a young person,

Speaker 7 do you buy things on Amazon? Do you use ChatGPT? Do you use some of the stuff that, of course, also you are compelled to take this view of?

Speaker 10 I've used ChatGPT to contest a medical bill.

Speaker 10 That's a good use.

Speaker 7 Yeah.

Speaker 10 A good use case. It was.

Speaker 10 But look, you know, I think so many of these technologies have now become essential to navigating day-to-day life. Yes.
Right.

Speaker 10 And so, you know, I don't think whether people are using them or not using them is going to be a mechanism really of major accountability. Right.
Just given how enmeshed these companies have become.

Speaker 7 Yeah, they don't need you on Amazon Prime, but I am curious. Do you remember the last thing you bought on Amazon?

Speaker 10 So, I'm not a Prime member. I don't use it very often.

Speaker 10 You know, I had a kid a couple of years ago, and I think

Speaker 10 probably the last thing I bought was probably a year ago when he started kind of eating more. And I got really freaked out about choking.

Speaker 10 And there's like this device you can buy and have at home in case like your kid chokes.

Speaker 10 So, I think that was probably the last thing I bought.

Speaker 7 I bought the thing where you have to like use your mouth and suck on a tube to get the boogers out.

Speaker 7 Yes. I don't know if you ordered that one, but we got one of those.

Speaker 10 Those things are actually really effective. Like, the kids hate them, but they really work.

Speaker 7 Five stars. Our review, Lena Kahn, and Pablo Torre, give five stars to the suck boogers out of your kid's nose device.

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Speaker 7 So I don't know how much sports ended up being on your docket when you were... chair of the FTC, but please enlighten me.
I don't know if it did.

Speaker 10 Yeah, it wasn't a big area where we were very involved, but there has been some really interesting developments in kind of sports and antitrust over the last few years.

Speaker 7 Yeah, what are you noticing?

Speaker 10 So there was a big case several years ago that got to the Supreme Court relating to the NCAA and student athletes and whether some of the restrictions, in the Alston case, whether some of the restrictions on kind of education-based benefits were legal or anti-competitive.

Speaker 10 And the court said they were anti-competitive. And I think more generally just validated this idea that these student athletes could be subjected to anti-competitive constraints, right?

Speaker 10 The NCAA was not somehow exempt from the antitrust laws, that there needs to be kind of fair competition for the labor that these student athletes are providing.

Speaker 10 And so, that case has led to a whole ripple of additional cases where some of the student athletes are arguing that other forms of restrictions are also illegal.

Speaker 7 But this is where I do just need to jump in to point out that just days ago, in fact, we got the latest ripple, as Lena Kahn just put it, that stems from the NCAA's legal wipeout.

Speaker 10 There is a big change coming to college sports. Friday, a U.S.
district judge gave a final approval of the House v. NCAA case, allowing schools to start paying athletes directly.

Speaker 7 Chase Bachmann. Is the only future college sports model that could hold up, in your view, under the antitrust laws as you see them?

Speaker 7 Would the only one to pass that test be a completely unregulated market? Or can there be these structures and impositions?

Speaker 10 I mean, there's no inevitability here, right?

Speaker 7 And

Speaker 10 kind of laws and rules can structure fairness in any type of market. It's been really interesting to see, I think it was the Dartmouth basketball team that unionized.

Speaker 7 Yeah, the men's basketball team.

Speaker 10 The men's basketball team. And the NLRB, the National Labor Relations Board, kind of came out and said that, you know, student athletes can be employees in some contexts.

Speaker 10 So that could end up being another vehicle for student athletes being able to assert their rights and making sure that there is fair treatment, fair compensation.

Speaker 7 Now, you may also recall that we have already spent four episodes on Pablo Torre Finds Out covering the domino effects of this historic case, House v. NCAA.

Speaker 7 But allowing these schools to pay college athletes directly is also just one antitrust case among many.

Speaker 7 Last Tuesday, for instance, PTFO also published a deep dive about Trump and golf and Saudi Arabia, where we quoted Lena Khan on the monopolistic potential of a merger between the PGA and Live Tours.

Speaker 7 And a little over a week ago, we also just got an update in another high-profile antitrust showdown, this one involving the owner of 2311 Racing, a franchise which competes in the NASCAR Cup Series.

Speaker 7 And that owner's name happens to be Michael Jordan.

Speaker 1 Look,

Speaker 1 I'm all in.

Speaker 22 I'm all in. I love it.
You know, it replaces a lot of the competitiveness that I had in basketball. But this is even worse, you know, because I have no control.

Speaker 22 If I was playing basketball, I have total control, but I have no control. So I live by carrots through the drivers

Speaker 22 and all the crew chiefs and everybody. So, I mean, I'm very happy for 2311.
110%.

Speaker 7 Congratulations. So please walk us through through the Michael Jordan case.

Speaker 10 Yeah.

Speaker 10 He filed against NASCAR, claiming that basically NASCAR had illegally monopolized Premium Racing Series through a set of tactics, including illegal acquisitions, including acquiring racetracks, including through using some of these non-compete clauses, and basically saying that NASCAR's dominance is not reflective of its just superiority, but instead is reflective of these tactics that they've taken to block out competitors.

Speaker 10 And that's resulting in undercompensation and worse terms for these teams that have no choice but to only really compete in NASCAR.

Speaker 10 So that's a case that's still proceeding. They actually won a preliminary injunction at the district court stage that I think is now being appealed.

Speaker 10 But just, I think, goes to show how relevant antitrust can be to all sorts of corners of the sports world.

Speaker 7 Yeah, I didn't have Michael Jordan, Lena Kahn, and Steve Bannon somehow hanging out together on one side of the aisle, but I found out quite a bit today.

Speaker 7 It does feel like sports is just another case study in the ways in which we've inherited over time these assumptions around the way things are.

Speaker 7 One concept that I just wanted to just

Speaker 7 see if it passes the smell test for you is just the concept of a draft in sports. So the idea that you leave college and you are entering, let's say, the NFL draft or the NBA draft.

Speaker 7 And to be very clear about this and almost pedantic about this, so players are required to sign with the team that drafts them according to a formula that regulates their salary that they have no say in determining because they are not a member of a union yet.

Speaker 7 So they can't really be categorized as working according to the collective bargaining agreement. And yet

Speaker 7 they do not have freedom of choice when it comes to how they enter professional sports. Why is that legal?

Speaker 10 It's a great question. And I mean, there are just so many anomalies and idiosyncrasies in a lot of markets.

Speaker 10 If you are going out and getting multiple offers for employment, you then have negotiating power to make sure you're able to negotiate what your compensation is going to be, what the terms are.

Speaker 10 You're able to pit those employers against one another and use your leverage.

Speaker 10 And, you know, we definitely see all sorts of ways in which that dynamic is just not allowed to play out in the context of sports in ways that seem sometimes unfair to athletes.

Speaker 7 Yeah.

Speaker 10 I mean, your FTC did, I believe, explore regulating uh again non-compete clauses and potentially like name image and likeness stuff for college athletes right yeah we uh finalized a rule that would ban non-compete clauses uh in the vast majority of contexts because these are clauses that prevent people from being able to freely switch jobs They affect people in all walks of life, right?

Speaker 10 They may have started off in the boardroom, but now they've expanded to affect fast food workers, janitors, security guards, people making close to minimum wage.

Speaker 10 And when we put out this rule, we got 26,000 comments from people all across the country, including from, I remember a sports journalist who worked in sports broadcasting and had a non-compete and so was stuck because they worked in a small town.

Speaker 10 And if they wanted to go work for a rival, they wouldn't be able to.

Speaker 10 I remember we got a comment from somebody who was involved in designing athletic shoes who had kind of a new design idea, but because of this non-compete was prevented from being able to go make it out on their own.

Speaker 10 So yeah, I mean, these non-competes can affect athletes, but also all other corners of the sports world.

Speaker 7 Yeah. Counterpoint, according to Mark Cuban, you are hurting more than you are helping.

Speaker 10 Well, look, I think ultimately the number of wins that the FTC got for the American people was pretty astounding and something that I was really thrilled we were able to do.

Speaker 10 I, of course, wish we had had more time.

Speaker 10 But I think it really set a model for how government can use all of its tools to really fight for people and make life better for them, even when it means standing up to powerful corporations.

Speaker 10 And sometimes that's going to trigger hysteria and a lot of emotions from some of those lawbreakers, but that's just part of it.

Speaker 7 Yeah, I've never known Mark Cuban to be hysterically emotional. So that doesn't sound right.

Speaker 7 And so this is where I should point out that Mark Cuban and Elon Musk and Senator Mike Lee and this coalition of Democrats and Republicans and the Wall Street Journal Editorial Board all got what they very loudly demanded when it comes to Lena Kahn.

Speaker 7 Because our guest today, after four years in charge, is no longer chair of the FTC.

Speaker 7 And just last week, in fact, the same week that House VNCAA was wrapping up, and the same week that huge swaths of America decided to protest against the rise of oligarchs and autocracy in our country,

Speaker 7 something else was happening in Washington as well.

Speaker 7 One of Lena Khan's lieutenants, FTC Commissioner Alvaro Bedoya, officially resigned from his post also,

Speaker 7 which formalizes his firing earlier this year by the Trump administration, as well as the dissolution of this renewed governmental movement that Lena Khan was trying to lead.

Speaker 7 I'm looking at the stories coming out of the current FTC. And by the way, yes, it is.

Speaker 7 Also being chaired by a young person, a 38-year-old, who is steeped in the Donald Trump agenda, who is talking about about fighting back against the trans agenda, also investigating a media company that Elon Musk also happens to be, I believe totally coincidentally be suing.

Speaker 7 How do you describe the sensation when you are watching what your former part of government is up to now?

Speaker 10 I mean, if you step back and

Speaker 10 make a list of what are the biggest pain points that the American people are seeing in their day-to-day lives that the FTC could have a job in fixing or addressing, none of the items that you just mentioned would be remotely in the top 10 or 20 or 50.

Speaker 10 So it is pretty striking and disturbing.

Speaker 10 And I would just hope that the zeal with which we see the FTC pursue some of these topics, they would bring to really addressing the pain points that regular people are facing in their day-to-day lives.

Speaker 10 Right. Like high drug prices, high grocery prices,

Speaker 10 you know, that sort of thing.

Speaker 7 And so for you in the present tense, what are you up to? What's going on?

Speaker 10 So I'm going to be teaching antitrust law in the fall and I'm also going to be, you know, making sure we're figuring out how do we continue to build and expand this movement, especially among young people.

Speaker 10 I get, you know, emails like every week from people, including from high schoolers, who are like, hey, I read about what you were doing at the FTC and now I'm doing my school project on Ida Tarbell and I want to be a trust buster.

Speaker 10 And so I'm trying to figure out how do we harness that energy and enthusiasm so that if there is another opportunity to govern, we have more of a kind of standing army that's waiting that's able to kind of come in and help us do all this?

Speaker 7 Yeah. Are you interested in electoral politics personally?

Speaker 10 Not personally, but I do think we need to make sure that we are carefully focusing on what are all the tools and authorities that the government currently has.

Speaker 10 And in the way that we were able to kind of go in and revitalize the FTC, how do we make sure that that's we have a game plan to do that across all of these other agencies, especially given that these, some of these agencies are going to look very, very different at the end of this administration, just given how much dismantling we are seeing.

Speaker 10 So that's going to be a key set of my interests is not just the kind of how does the Democratic Party win elections, but how does the Democratic Party govern?

Speaker 10 And how do we make sure that we're being smart and effective in that governing?

Speaker 7 Yeah. If I were to tell you that

Speaker 7 I looked into my crystal ball and I saw a Supreme Court nomination for you, how would that feel?

Speaker 7 You've been mentioned.

Speaker 7 I'm sure you've heard your name bandied about in some of these very nerdy precincts, but bipartisan candidate who has principles, who has a clear legal background, how does that feel to be on someone's hypothetical list?

Speaker 10 It's very flattering, to be sure. You know, I'm focused more on the near term in the kind of coming months and years.
So we'll see.

Speaker 7 Well, that is a very political answer.

Speaker 10 I did work in D.C. for for several years.

Speaker 10 So I have a two-year-old. And so I find that,

Speaker 10 you know, playing with him ends up being a really good distraction. And, you know, he's very active.
So we go to the playground a lot. And it's a good break.

Speaker 7 Yeah. Now that I think about it,

Speaker 7 manually. sucking boogers out of your child's nose, not a terrible metaphor for what you might have been trying to do with the American economy.

Speaker 10 Yeah, I mean, he's really into cars and trucks and is really into kind of making them race. And so we try to create, you know, a fair competition between the different cars.

Speaker 7 You made the joke before I got there.

Speaker 7 Lena Khan, in a world of staggering insidification, thank you for

Speaker 7 trying to find a

Speaker 7 reasonable path forward.

Speaker 10 Thanks so much for having me.

Speaker 7 This has been Pablo Torre Finds Out, a Meadowlark Media production.

Speaker 7 And I'll talk to you next time.

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