The Exchanges

Q While you were at Yale, you published this very influential essay, um, about Amazon and the antitrust paradox. Um, can you describe the theory behind the essay and, you know, how that might differ from traditional antitrust and if it still applies in your, your thinking today?

A The big caveat here is that, uh, I wrote this paper as a kind of a law student. It's very different from being a law enforcer. Um, but that paper Followed a lot of this market research that I had been doing, um, and before I went to law school, I spent a good six months just talking to a lot of the businesses that were selling through Amazon, and then also talking to various investors and market analysts about how they viewed Amazon from a more long-term perspective. Uh, this was a time when, you know, Amazon's returns were still fairly low, and there was just a question about what the end game here is gonna be. And it was really interesting through talking to those set of market participants, they were already seeing and experiencing the structural dominance that this company was starting to achieve, even though that structural dominance was not necessarily resulting in higher consumer prices right away. And so the SA was a way to use Amazon as a way to tell a broader story about the history of our antitrust laws and how we had evolved from, uh, you know, Viewing this issue of, of dominance and, and monopolization through a broader prism, uh, and a broader understanding of the different ways that companies can exercise their monopoly power to a much narrower, thinned out version of just viewing short-term price effects and output effects primarily as the metric of whether you …

AI assessment note: “use Amazon as a way to tell a broader story about the history of our antitrust laws”

Q is positive for the consumer in some cases, and the trade-off of taking away part of the positive distribution of M&A outcomes is worth that. That's, that's kind of the trade-off I'm hearing. But from the entrepreneur and investor perspective, there is, ah, there feels like there's an inability to predict, you know, when that enforcement is going to happen. What advice would you have for people from that ecosystem?

A I mean, the big piece of advice is, you know, if you're selling to the company that's already the monopolist in a particular market, that is more likely to raise issues than if it's, you know, selling to a company that doesn't really have a presence in the market. The agency has also put out new merger guidelines at the tail end of last year that lay out kind of what are the main frameworks that we use to assess whether a deal may reduce competition or not. I also, you know, think it's worth noting that there may be Kind of a tension between what's good in the short term versus what's good in the long term, right? Partly how we've gotten to the markets of today where you have, you know, five major players for the most part is because they were allowed to buy up some of these nascent competitors and, You know, lead to a market that was much more consolidated and much less competitive for startups. I imagine that that means that the set of potential buyers and the set of potential suitors is much smaller. Right. And even if you want to sell a market in which you have, you know, eight or nine or 10 potential buyers is going to be better for the startup than a market where you just have one or two. Both in terms of your negotiating leverage, you know, the valuation you might get, your ability to negotiate better terms. And so, you know, the market that we want in the longterm is on…

AI assessment note: “if you're selling to the company that's already the monopolist in a particular market”

Q come on the show, um, is around, you know, how they think about running their company management style. Uh, given that you come from a different area and type of organization, we were just curious, you know, what was the most unexpected thing about running a government agency? And also how would you typify your management style or how has that evolved over time as you run, um, the FTC?

A So one of the biggest adjustments for me was, um, you know, in prior jobs, I really had just the privilege of going really, really deep on like one thing or a couple of things and, and feeling like I totally had it mastered inside out new kind of every last detail. Um, and in this job, you have to just have more capacity for breadth over depth and you're, you know, relying so much more on the expertise of, of other people. And we have a really fantastic team. And so Making that transition from, you know, greater, uh, capacity for focusing on, on breadth rather than depth and just being able to switch contexts, uh, very abruptly. I mean, you know, the types of things that go into running an agency range from, you know, really substantive decisions about what investigations you're doing, what cases you're bringing, how to think about what theory you're including versus not to, you know, much more administrative, Stuff relating to the budget and how are you allocating, you know, your resources and, uh, what is the future of workplace flexibilities look like at your agency? And so, uh, you know, really adapting to that full range. You know, for me personally, it's been important to figure out, um, what is my comparative advantage in this job and how do I Protect my time to make sure I'm spending as much of that time on that area of comparative advantage and build a team around me. …

AI assessment note: “one of the biggest adjustments for me was... more capacity for breadth over depth”

Q VR application, uh, acquisition. And in that case, you know, is a very early market. There wasn't a lot going on yet there, but in part simply because there wasn't as much technology progress and traction. How do you think about more broadly, uh, from your lens today, having now practiced this for many years, when is the right time to intervene or how do you even think about that?

A So the right framework for all of these questions is making sure we understand what is the market reality here, and what are the dimensions on which firms are competing, uh, and how do we make sure that as we are reviewing some of these mergers and acquisitions, we're making sure that they're not being used to snuff out a competitor, be it in an existing market or in a future market. It's worth knowing, noting up front that Merger enforcement is inherently a predictive exercise, so Congress has told the antitrust agencies, you all need to be on the hook for reviewing and investigating mergers and determining whether they may substantially lessen competition. That's language, and it's up to us to figure out, okay, what is this market about? What are the terms and the dimensions on which firms are competing? Are they vigorously competing to drive prices down? Or is this really a market where they're instead competing on some type of quality dimension or some type of innovative dimension? And then how do we make sure that we're actually safeguarding that competition? It's a really important question, um, that you raise around how do we think about nascent markets or markets that are still fully emerging and it's not entirely clear You know, is this gonna just die out and fizzle out in a few years, or is this really the next great thing? And that's where the predictive component co…

AI assessment note: “the right framework for all of these questions is making sure we understand what is the market reality”

Q How do you think about other efforts to regulate AI? So for example, some people have called for registration of models over a certain parameter size or other things that seem to largely favor some of the larger incumbents. Do you think those sorts of approaches make sense? Or do you think, you know, there should be a different mix of sort of regulatory action?

A Yeah, I mean, there's a big policy conversation going on right now, both in Congress, both at the state level. Uh, you know, I'm a law enforcer. And so my job is not to come up with like rights. What's the right way to regulate this stuff. It's to enforce the existing laws that we have in place. Um, one concern that I did hear from, from founders and startups, um, has been this risk of creating regulations that will just protect and favor the big guys. And lock out everybody else. And from where I sit, I think it's really important that we remember that not all rules and regulations are created equal. And there definitely are rules and regulations that are designed in a way To favor the big guys and end up having that effect, both because they mean you have to hire up hundreds of lawyers. The rules are kind of like complicated, so it's not really clear what does it mean to abide by them versus be in violation. And, and the FTC's work in as much as we've issued rules, we've always tried to be on the side of clear, simple rules that are very easy to understand. That are easy to follow and that don't necessarily, you know, require hiring this army of lawyers that big companies have access to, as well as the access to the big armies of lobbyists. And so just to give a concrete example, a few months ago, the FTC finalized a rule that would ban non-compete clauses in the vast majorit…

AI assessment note: “my job is not to come up with... What's the right way to regulate”

Q How do you think given that about, um, AI and foundation model companies then? Because if, if the idea is, uh, you know, allowing ideas to win in the marketplace, I think there's a big question about how much Um, ideas and research matter versus investment in GPU data centers at scale.

A Yeah, it's an interesting question. I mean, I'll say generally speaking, you know, I've spoken out, um, in favor of, of open weight models and wanting to make sure that in as much as you have layers of the stack where there could be risks of depriving some of these companies of key inputs, um, actually having open weight models can be just such a key driver and catalyst of allowing more tinkering Without, you know, everybody having to have those enormous startup costs. And so we've seen historically that openness can be a key driver of that innovation. Um, there is a big question right now, I think, especially among, you know, creative professionals, publishers, journalists, about what this is going to look like in the long term for them. Um, the FTC sat down with a bunch of creative professionals a few months ago, including, um, authors, graphic designers, even fashion models, who all had stories about how, you know, one day they woke up and their life's work had been ingested by these models without anybody asking them, without anybody compensating them. And now they were, you know, some, in some cases seeing these models spit out content that is directly appropriated from them, and in some cases even competing with them. And that viscerally felt unfair to a lot of these people, and many of them were quick to say, look, we're not anti-AI. We totally recognize that these techn…

AI assessment note: “there is a big question right now, I think, especially among, you know, creative professionals”