Transcripts For CSPAN2 Senate Hearing Discusses Antitrust Law And Consumer Rights 20210312

his friendship. we've been working together for a long time on these issues and i look forward to that continuing. i appreciate his passing of the gavel to me, whether it was voluntary or not. i also appreciated his text last night where he thought if i should be called chair, cochair or clover chair. that's a new one. examine the state of competition across our economy and to consider what should be done to protect, preserve and foster competition in the 21st century. american prosperity was of course built on a foundation of open markets and fair competition. it is competition between companies that give consumers lower prices come forces manufacturers to constantly innovate and improve their products, it forces companies to pay for wages because there's competition for those employees. competition provides opportunities for entrepreneurs to start and grow new businesses, fueling future economic growth. but if you look at our markets today we see big cracks in that free market foundation. we see more and more consolidation. in so many areas markets are not as competitive as they once were and the devastating effect of covid-19 covid-19 a small and medium-size businesses threatens to make things even worse. we lost hundreds of thousands of small businesses. but even before the pandemic, well before epidemic it was clear that america had a major monopoly problem. an example, , the two-thirds of u.s. industries have become more concentrated even between the years of 1997-2012. now, we all know that the problem is most obvious in technology industries, , and we thank our friends in the house, chairman cicilline, chairman nadler, for the hearings that they conducted all last year and the report. i was just people read that report. at the root of this power lies the ability of a few companies to act as gatekeepers. thanks to senator lee we had a hearing together on one of those gatekeepers, google, recently, last year which in this case controls over 90% of the search market, giving it the leverage to hold companies hostage, but even as we recently learned, entire countries hostage, by using its leverage to threaten these countries that they would just pick up the business and their search engine and go somewhere else. that, my friends come is a sign of monopoly. if there was, in fact, greater competition in the tech market, you would see companies that would come up with bells and whistles that i think would remedy some of the problems we have today, if there was to competition we could have small businesses, maybe they would even instagram or whatsapp could've risen up, develop bells and whistles, develop better privacy protections, developed better policies for handling this information, developed arrangements for paying for content. but if you big monopolies that buy up all that potential innovation, , that buy up the small companies, you lose the ability to get at those major challenges. over time if left unchecked the companies dominate markets, exclude the rifles and buy out their competitors, even small competitors compete in what is known as nascent competitors. perhaps we should just look at the words of facebook had mark zuckerberg. in his own e-mail he said this. these businesses are nascent, but the networks established the brands are already meaningful, and if they grow to a large-scale, they could be very disruptive to us. disruption actually as a positive word intact. disruption means you are disrupting the status quo, that you're bringing in new ideas and new competitors. but in the sense when zuckerberg look at some of the smaller companies that were coming up to compete, he thought they would disrupt, what? disrupt the monopoly power of facebook. as he wrote in another e-mail, when you're building a monopoly, quote, it is better to buy then compete. at some point, and i say this to all the senators on the subcommittee, we need to reply to those e-mails, not just by holding hearings and throwing popcorn at a screening of whatever ceo we want to throw st popcorn at, no. not just by getting sound bite for the day but actually responding with action, i responded with legislation. and with all due respect to the views of a few of the witnesses here today, i don't think the status quo is going to do that for us. one of the points we need to make today is that this isn't just about big tech. america's market power problem cuts across our entire economy. we see it in agriculture, and number of republican senators just yesterday approached me about this. we see it in online travel where when people go to these travel sites they think of all these great choices but, in fact, over 90% of the market is owed by just to make of the companies. they simply owns the brand names under them. receipt and the live event industry where one vertically integrated company dominates ticketing events sponsorship and performance venue booking. we see it in everything from captivity caskets. so it is no wonder that two-thirds of americans have come to believe that the economy -- cat food to caskets -- unfavorably favors how interest. why is there a monopoly problem? the big reason is the courts are becoming increasingly closed up to antitrust action. cases like drink go and most recently ohio the american express have made enforcing our antitrust laws more challenging. add to that the fact congress and multiple administrations have failed to ensure that antitrust enforcement budgets have kept pace with the demand of a growing and increasingly complex economy. in 1980 when the justice department antitrust division was working to break up at&t the division had 453 lawyers. 453 lawyers, this includes during the time of ronald reagan. by 2017 and had 330 lawyers. the ftc is a a shadow of its former self. it's 1007 of 19 employees in making 80, down to 1102 by 2018. our agencies cannot fight the biggest companies the world has ever seen with duct tape and band-aids. i know senator grassley has been such a leader on this agrees we are together leading a bill to inject some more investment in these agencies because we know they actually deliver money when they bring these cases to the government. we know it's worth the money, and we also know that we can do it in a way that is not on the back of taxpayers by simple changing the fees assessed on large companies. for them if the drop in the bucket when to bring these mergers before the agencies. the purpose of the antitrust laws is to protect competition. in america when we see a problem we take action, we figure what is working, what isn't working, and we fix it. that's what why i introduce competition antitrust law enforcement and reform act with many people on this committee including senator leahy, and withal in booker off the committee have since joined. the bill would increase the baseline for antitrust agency budget update the clayton act to stop harmful consolidation come out not affect competitive exclusionary conduct a dominant firms, and if you're talking about markets that already highly concentrated, and make of the reforms to protect competition. i will end with this because it truly with senator lee and i started the new year and so much interest on the republican side as well as the interest we already have on the democratic side, this has always been a bipartisan issue. our founding fathers recognized the dangers of monopoly power. the boston tea party and our fight for independence was partly motivated by british government granted monopoly on the key trait. and america's long tradition of promoting pro-competition pro-cn policies have often been led republicans. senator sherman of ohio is republican. teddy roosevelt most notably the nation's most famous trust buster, republican president. our current monopoly power prompted just come out of nowhere during the last administration. it is the product of decisions by republican and democratic administrations over the last 40 years. it took both parties to get us into the situation and it's going to take both parties to get us out of this situation. one good example of that just yesterday senator thune b and i introduced a bill -- center to kennedy -- broadcasted negotiate on a level playing field with the powerful digital monopolies. that now dictate how consumers get most of the news. i think it's three out of four consumers get the news off of facebook and google. we have strong support for this bill. senator mcconnell was on it last year, senator durbin has supported this bill and the companion bill with house members. again bipartisan. we must find common ground on these issues. at stake is nothing less than the future of our economy and the way of life that it supports. this is about saving capitalism and building an economy that works for all americans. it's about laws that throughout our history have rejuvenated capitalism. the breakup of the real trust come the breakup of standard oil come to the breakup of at&t. what did we get out of that come lower long-distance rates. we got innovative cellular phone industry. we got strong at&t that a still employs many people with their own former chairman saying they were a stronger company because of the breakup. we all want successful american companies but if we want to see the rise of the next generation of great american companies we need to reinvigorate our competition policies. i look forward to the witnesses testimony. i turned over to senator lee. thank you. >> thanks so much, madam chair. i want to begin today by talking about the constitution. the utah constitution, that is. i knew i would throw you there, i thought you would be expecting another 1787 moment. instead of going to go to 1896. my states constitution is actually surprisingly insightful with regard to competition policy. article 12 section 20 of the utah constitution says quote it is the policy of the state of utah that a free market system shall govern trade and commerce in the state to promote the dispersion of economic and political power and the general welfare of all the people. each contract, nation in the form of trust or otherwise or conspiracy in restraint of trade or commerce is prohibited. except as otherwise provided by statute. it is also prohibited for any person to monopolize, attempt to monopolize, or combine or conspire with any of the person or persons to monopolize any part of trade or commerce. this is riveting stuff but it's actually got some good wisdom in it. notice how in utah we had tied free markets and antitrust enforcement. the prohibition against monopolization and the protection of competition itself directly with the dispersion of economic and political power. this was prescient. today our competition problems in this country have truly become political problems. we see this when trillion billion dollars monopolies are eager to impose their ideological censorship all for by their political benefactors. it's worth remembering that some of my colleagues want to punish big technet because engages in too much censorship but because it doesn't censor speech enough, speech with which they disagree that is. that isn't a competition concern. it's extortion but our competition problems go beyond big tech. i'm especially concerned by cases in which free markets and competition are distorted by the government itself, putting its finger on the scale to pick winners and losers in the marketplace, whether through regulation or lacks antitrust enforcement or otherwise. sadly, this, to come has only become increasingly common. for example, many parents at this very moment wish very much they could send their children back to school. in fact, many children who were suffering from a record high s of anxiety and depression themselves wished that they were back in school. but the federal government and many state governments have start the education market competition. instead imposing protectionist policies for public school monopolies. maybe it's education itself had more competition, say by ensuring that funds followed students rather than the schools and teachers unions, parents and students would have more options and better education. speaking of the efforts of the pandemic, last year has been devastating for many small businesses. this is due in no small part to own risk and prolonged lockdowns that shuttered local brick-and-mortar stores and drove consumers into the arms of the tech monopolists like amazon. i'm glad some of my colleagues across the aisle share this concern and i wish we all considered this risk while chewing on some of those same lockdowns. the same thing is happening in healthcare, also. just this past weekend in the midst of the worst health crisis in a century congress forced to hyper partisan expansion the affordable care act, a law that has distorted competition and is been disastrous for consumer choice in health insurance markets. in the airline industry, repeated government bailouts and protectionist regulations have insulated legacy airlines from market forces and foreign competitors. this in turn has allowed them to avoid competing with new rivals, meaning american flyers continue to be subjected to higher prices and lower quality services. yet another example can be found in occupational licensing, something it will be more important than ever to address as millions of americans struggle to find new employment. to that end i will be in reintroducing the act this august interest dates licensing boards are not used as cover for professional cartels that protect market from competition by discouraging new entry. early this week i also reintroduced a bill called the one agency act, consulting or antitrust enforcement at the department of justice is essential to improving and strengthening law enforcement efforts and avoiding the inefficiency and bureaucratic infighting of the past here juss updated version of the legislation also removes the federal communications commission ability to undertake duplicative competition reviews of transactions under its regulatory jurisdiction. the sec's application of the public interest standard has been yet another example of government distorting competition as it's become go to venue for rent seeking by competitors and special interest groups. the constant posed by sec overreach our old we passed on to consumers, consumers who have no say in the process. and those are not the only examples of businesses attempting to list the government in preventing competition. for example, a number of national media conglomerates are making, coming to congress asking congress for corporate welfare in the form of antitrust immunity to allow them to stage a group of boycott against their advertising partners europe despite having to update their business model to account for the internet and the cunning and publishing biased and fake news that many americans consume or simply don't want, these companies believe they are entitled to engage in federally sanctioned when syncing. they also have amazon -- rent seeking. a giant who is not only a giant in online shopping but also in cloud services. it's attempting to have federal judge forced the department of defense, give it $10 billion, $10 billion contract that it lost to a competitor. not only did amazon lose the contract on the merits but giving amazon the contract would only further cemented amazon's market power and make it harder for new entrants to compete. and finally several calls to reform the antitrust laws seek to abandon the consumer welfare standard and to instead address not economic issues like social justice and climate change or simply punish bigness or get one thing to support such goals as a matter of personal preference or political popularity. it's entirely another thing to inform families under strained budgets that they will have to choose between food on the table for the roof over their head because an unelected judge somewhere prefers shopping and local boutiques to the efficiencies that make modern life affordable for the majority of their fellow americans. all of this is to say that i agree. we do have a competition policy problem, though perhaps not in the same way that many have imagined. what we need now is not a sweeping transformation of our antitrust laws. rather, this particular moment calls for two things. first, agency leaders who with the resources and the will to vigorously enforce the laws we have. and second, congressional action to get the government out of the business of the distorting competition. as i said before, we are at an inflection point back in antitrust law and policy, and i'm optimistic that we can find bipartisan consensus on a path forward to improve and strengthen our antitrust enforcement regime. i'm grateful to the chair of her subcommittee, senator klobuchar, for opening this incredibly important conversation, for her friendship and for leadership in this area, and look forward to making progress in that endeavor and in that direction to the city. thanks so much. >> thank you bench, strongly and among those lines that new beginnings we have still allsop has joined her subcommittee and we're excited about that. we will recognize of the people as they come along -- center also. i will introduce the witnesses today. our first witness is george slover. were going opposite order because we are disrupting, i guess things today. a senior policy counsel at consumer reports where he focuses on antitrust and competition policy issues. prior to his position at consumer reports he has had three decades of federal government policy experience including nine years in the house judiciary committee, two years at the house energy committee, and commerce committee and 11 years at the justice department's antitrust division. our second witness today will be ms. ashley baker, the director of public policy for the committee for justice. her area of focus includes the supreme court, technology and regulatory policy and judicial nominations. she is an active member of the federalist society, she serves as a other regulatory transparency project cyber and privacy and outreach on legislation and regulations related to these issues by writing up ads, letter to congress and regulatory common spirit are third witness is mr. barry lynn, director of the open markets >> mr. lynn spent 15 years at the new america foundation researching and writing about monopoly power before that he was executive editor of global business magazine. he has authored numerous articles and several books on the damaging effects of concentrationn of political and economic power including most recently liberty from all masters, the new american versus the will of the people our fourth witness will be mr. yon counsel at the law firm of fresh fields where he focuses on antitrust law. he represents clients related to u.s. merger control joint ventures and antitrust litigation he previously served as an attorney to former commissioner joshua wright of the ftc and in addition he's an professor and w senior fellow at the global aipght trust institute at the g scalia law school at george mason university teaches courses on antitrust law h and economic hes an active member of the antitrust section. our fifth witness who will be with us from professor nancy rose, she is a professor of applied economics in a massachusetts institute of technology and research and teaching focuses on industrial organization, competition policy, and the economics of regulation. previously, she served as deputy assistant attorney general for economic analysis in the antitrust division, the u.s. department of justice, and director of the national bureau of economic researches program on industrial organization. her research includes analysis of antitrust law and economics, economic regulation, and firm behavioror in a variety of transportation and energy markets asgu well as of labor rt sharing and determining executive pay toipght thank our witnesses and all of their credentials they bring with them, for t appearing before us today and i look forward to your testimony. please stand, i'll swear you in now. tow swear the testimony you will give before the sub committee shall be the truth, whole truth, and nothing but the truth so help you god? thank you. you will be seated our recognize witnesses for five minutes of testimony each. and will begin with mr. slover. >> thank you. our antitrust laws are not working as they should sensible clarifications are need competition helps marketplace work for consumers by empowering them with choice, the ability to go elsewhere for a better deal. that makes businesses responsive, offering better choices at more affable prices and spurring innovation. butst there a profound imbalance of power in marketplace increase concentration leaving consumers with fewer choices and less leverage. consumers spending drives the economy, yet they are being denied t a fair voice. this power imbalance is starkly evident in online marketplace where a handful of dominant digital platform calling as gate keepers but it is happening inthroughout our economy. congress is amended antitrust laws from time to time -- it is tile amend them again. to correct offcourse court interpretations and provide appropriate guidance these measure reforms are far from all that's needed to write the imbalance but they are essential to it. two areas in need of a course correction, are mergers and exclusionary conduct, merger enforcement lost potency half a century ago justice stewart complained that challenges was a government always wins. thathe time has long passed. antitrust enforcers now face skeptical court that instipghtively view merger challenges c as business interference section seven of the clayton act embodies congress intengt that harmful concentration trends be arrested before the harm is too locked in. it products mergers where the effect may be substantially the less in competition. but courts have read the may write out requiring proof of immediate quantity if harm thatd sto examination with blinders as to what's on the horizon. write up to the brink of immediate harm, no margin for error, or for a key player deciding to close shop. we've seen the riskiness of this shortsighted brinksmanship and covid pandemic where supply chains suddenly gave out exposing our overalliance for critical needs. the prohibition against exclusionary conductne a dominat corporation sabotaging competitors cutting off access to critical splice or customers orri distribution, has also been weakened. first, courts have required proof of a dangerous probability of success to create a monopoly, this leaves out corporations that clearly have enough market power to harm competition and are clearly harming. second, various theories have gained currency to explain away exclusionary conduct as never making logical business sense. this erects bull ark of theory against concrete empirical evidence of actual harm. like the marks brothers they are asking who are you going believe me or your own eyes? deficients claims are at the core of every merger proposal but this puts the cart before the horse. efficiencies aren't even a factor until a merger is assessed as unlawfully harmful and cannot excuse that harm or be traded off against it. they matter only if they show that there is no harm that the merger actually increases competition.e and they can't just benefit the corporations own bottom line. a merger combines two work forces so you can cut costs by cutting redun dangt jobs but those jobs were necessary before. when the two corporations were competing. atso cutting them is a by-produt of reducing competition. as to the consumer welfare standard we naturally view antitrust through a consumer oriented lens.nd but it is a wide angle lens. some theorist would constrict consumer welfare to short-term lower retail prices. even to use the corporations ability to cut costs as a proxy. but consumer welfare is much broader. it is an all encompassing looking at all ofoa the way consumers benefit from choice, short and long-term. and it benefits from competition at all levels of the production and distribution and marketing chain because that's what generates the choice for consumers. for the marketplace to be working for consumers, it has to be working for all who seek to reach them senator klobuchar bill makes merger enforce their course correction, while well establish antitrust principle and terminology. we believe it provides a solid vebasis for bipartisan discussin which we hope will lead to a consensus forss effective solutions toto ensure that our antitrust laws are effective guardians of competition in the 21st century marketplace. consumer reports stands ready to assist you. >> very good. thank you very much. ms. baker. >> can you hear me now? yes thank you for having me so i want to address am couple of things. first get to a bit of main underlying question that we're trying to address i feel leak those are sometimes very different things and i also want to talk about the court quite a bit as you have brought that up a bit and i actually -- accidentally and putting out my speech i precincted three copies of doug ginsburg original esm and economic analysis soo theres no clear sign that with the courts in that. >> probably exceed your time to read it. >> i will -- >> putting on the record i will be summarizing it but the courts are important that's something to be talking about too. and i think -- you know, coming from both sides of the aisle on this, we're trying to solve two very, very different problems, and from the left you have the maybe i'm not on the left maybe i'm not somewhere and market power and how big is too big. and on the right there are a lot of concerns too, and i think those are concerns are concerns about speech, i'm not crazy about a lot of things platforms are doing either. there are concerning about preif city there are concerns about patent but i want to start off by saying that -- we need to be a bit clearer about what we're trying achieve here because if we're all going for, you know, one proposal for different reasons i think that -- would turn out well. i think you know how big is too big problem, question which we should be asking is what problem are we trying to solve so something i looking at shifting burden of proof, and merger pieces i think it is really important why are we doing this, underlying legal standard that we have wrong, or is it something else? because really if you look at the data there's no evidence to support, you know, agency is that's having a problem with the cases. and lost four or five i think in the past decade and bringing morere cases that's why i'm glad the bill actually increases funding for agencies. i think that could certainly help a lot. when coming back to the courts, i knoww it kind of came up earlier that kinds of tension between how do we get here with consumer welfare standard that's something that i keep repeating to my colleagues on the right to don't really understand the history of like 1890 to 1910 or so and why exactly is that law came to be developed but common law and i think it is very -- has to make in between, you know, this judicial activism that we talk about. and kind of the majority sense, and common law interpretations that go to body of law and i'm not saying this is mutually exclusionive by consumer welfare standard that keeps those aparting and guided our judgments for a very -- long time and i think it is really important to look at, you know, the sense that we built before we tear that down. to get a couple of things that i think -- changes antitrust law weary of anything that undermines property rights. be kind of top -- i would say that, you know, patents are one of the greatest antimonopoly that allows a single inventor out of left field to disrupt an entire industry and tear down a business despite having this property right and pension i think we need to look at our patent system a lot more closely, and i'm really weary of any legislative proposals, you know, in our court that would have undermine that because i think that's a big part of the --us larger picture that is competition because it is, you know, ain't trust is one tool in larger. i also -- i think it is worth reiterating that in european union there's a very different, and we here we do not protect competitors. we protect the comptive process and if you notice we have lots of problems with these large companies in the united states. but they don't really have that many of them at all, and i think -- under -- i said earlier reading preserve the welfare center i think there's ways that that's not statutory or a return by saying that you're going overturn consumer welfare standard but all of these ways to do and run around what is original purple was. and that was to give the court, you know, this system to -- i'm running of my team so i like to thank you for inviting me and thank you for all of the work you've done it has been really great. thanks. >> thank you, thank you ms. baker. mr. lens. >> ranking member lee. members of the sub committee. thank you for inviting me to speak with you on this very important topic. i'm barry lynn i represent open market institute it is good to see you all good americans today are fast reawakening to essential truths of how many society. that political economics is the art of governing how people compete with and exercise power overer one another. competition itself is inevitable what people can't control whether corporations and markets are constructed to support well being of the individual, the ability of citizens to make wise decisions, and the security and prosperity of the nation. for two centuries, americans were masters of engineering competition policy to achieve these ends. american st ises used monopoly laws to be most equal and free people in the world. and the most prosperous innovative and powerful. but four decades ago americans radically altered how we think about it and enforce competition policy. rather thanan aimed to promote liberty, r democracy, and community, policymakers say we should focus on efficiency alone. the result -- the result today is that americans face the gravest set of domestic threats to liberty and democracies and perhaps since the civil war. today in america, monopolist directly threaten freedom of the press and expression, and misinform insight needily enrage citizens for a profit. tax, manipulate extort steal other people's businesses they destroy vital industrial capacities, last year it was face mask this is year semiconductors. they create dangerous dengt cities on foreign sources of supply and dangerous exposure to the influence of powerful foreign states. monopolist strip america community of wealth, and opportunity monopolist use power in ways that endanger human health and pollute air and water and choke off entrepreneurship innovation and growth, monopolist drive down the people wages while driving the prices that the people must pay. none of this is new. i myself first warn of the dangers of the supply chain concentration 18 years ago. i myself first warch how the platform monopolist threatening freedom of expression and much speech and of the press more than ten years ago. but there is good news. the speed at which americans are awakening to this crisis is bracing. it was only three years back that this sub committee hosted a hearing onsi wisdom of using antitrust mainly to promote deficiency. most who testified that day denied we face any monopoly problem at all. today, the great majority oft americans want action. against today's unrestrained monopolists. better yet, enforces legislators rising to the challenge. the justice department ftc broughto lawsuits against googe and facebook, and in the most democratic antimonopoly action in u.s. history attorney general from 49 states puerto rico, d.c. and guam launched investigations of google and facebook and many file three additional lawsuits. then efforts to restrain america antitrust laws with senator klobuchar providing excellent start. the people of the united states, we intend to keep our democracy. our task today is to begin to map out stage two and once a century battle to restore people's control overe the u.s. political economy. in my written testimony i focus on five channel we must meet. first admit the full magnitude of the monopolist threat to democracy. second, relearn the original purposes of competitional policy, which are to protect democracy and individual liberty. third relearn scrix rule and bright line rule it is fourth reintegrate antitrust with trade, and national security and trill, policy. fifth understand the political check and intellectual opportunity it that lies before us. this last point is especially important. our opportunity today is not merely to solve most pressing threat but relearn how to dream of an america that is far more democratic, liberal, just, community oriented, forward looking, and secure. than any of us have dared imagined in a generation. that is the america that we can build all of us. together -- using smart competition policy. you here in this room have the power to make this future come true. >> thank you very much mr. lynn i like you said this was a once in a century battle as senator durbin chairman of our committee came in to mark the importance of this discussion. so thank you very much for your testimony. next, we're pleased to be joined by mr. check, thank you. >> gentlemen klobuchar ranking member lee members of the committee, thank you for inviting know appear before you today my name is yon antitrust practitioner and professor and former enforcer i'm grateful to the committee for holding this hearing and i along forward to sharing my views. for the voidance of any doubt my views are my own and don't represent views of any client or law firm. i wantre to make, use my remarks to make three points. first, the american economy is competitive, r and innovative it is envy of the world and serves u.s. kiewrls well. there could be substantial evidence of systemic competitive heart to warrant judicial economic and economic experience in favor of dramatically reducing or rewriting the antitrust laws. that evidence does not exist today. the recent debate about antitrust was born out of a research suggesting thaws markets have become more concentrated over the last several decades and that as a result, competition has declined. the complication is that lack antitrust enforcement is to blame. while economists across the political spectrum have acknowledged that the link between concentration, and competition is ten wows at best, the popular narrative about increasing concentration does not withstand scrutiny on its own terms for one, it uses broad sector level, categories to measuree concentration across groups of prungts as diverse as used car and groceries. this does little to inform us unthe statedi of u.s. competiti. thankfully competition in the majority place of ideas is robust as competition in our actual markets. and the initial research spur follow on studies. these later studies have shed more light on what actually may be happening in our economy. whatli nay show is while sector level is increasing at the nationalw level, it is actually decreasing at the local level. what that means is that national players are becoming more efficient than expanding into local market it is resulting in more rather than less competition. together these studies throw cold water on claims that increasing concentration suggest that it is denying in u.s. and overhauling antitrust laws is necessary. we should be especially weary of overhaul given actual performance of the u.s. relative to her global counterparts. the united states has become the unequivocal and where leading enno vatter tan route and where they are laying foundation to become disrupt tores and reason for this success are no doubt complex, it is in part because the u.s. is developed a well defined antitrust law it is that protect against competitive conduct while also allowing procompetitive product to flourish and observe competition policy in u.s. is diverged elsewhere, the more important to recognize and welcome is america clear leadership in investment, innovation, and entrepreneurship. second, modern antirust is developed into a principle body of law. it has been made coheernght through the adoption of the consumer welfare standard, and it is easy to forget that there was a time when antitrust employed incoherent doctrine and promoted vague social and political goals that not only fail to promote competition, but in many cases diswaded conform tigs that would bring consumers lower prices, greater innovation and other benefits. the consumer welfare standard rescued angst trust in grounded it in a more disciplined and framework in doing so, it fosters rule of law and helps prevent arbitrary and politically motivated decisions. efforts to undermine consumer welfare standards do far more harm than good. many of thear calls to reform antitrustd. are unfounded belief that pen forcers rarely able to convert power and into litigation victories under current -- under current antitrust frame work but reality is far different. over theth last 20 years within the doj and ftc won 50% of their merge challenges a record any lit gator would envy significant changes to antitrust laws should be predicating showing they are losing cases under current standard theyru should. finally third finally while antitrust laws contradict positively today there are no ways to improve them through incremental changes firstro ense that the antitrust agencies have adequate resources to carry out their mission of promoting consumer welfare. the t staff of the antitrust agencies are talented, public servants we should make sure that we can retain them and recruit best lawyers and economists possible. and that -- that we give them tools necessary to do their jobs no one can seriously think agency should permit for lack of resources second we should pee limit inefficiency in two agency system if we were to create a new antitrust system today it is hard to believe we would vest the act trust enforcement powers in two federal authorities. practitioner it is difficult to explain to businesses why authorities and procedures are warranted and seriously consider proposals that eliminate that friction in the system. thank you for your time and i look forward to answering your questions. >> very good. thank you very much. i was just noting to the chairman that you're also in favor of adding resources as we look at our future bills so i was out of my chair because i was happy you said that. the end -- withut that, appearing remotelys profession nancy rose, thank you for being here professor rose. thank youer can you hear me? >> yes, we can. >> madam cheer lee and thank you for the opportunity to testify in front of you today on the casehe for antitrust reform. i'm sorry not to appear in person but i very much appreciate accommodations that are given for covid-19 travel restrictions senator klobuchar mention i have privilege to serve 28 months in the doj antitrust division and while i'm very proud of the work to be accomplished working together with the terrific career staff and the division, during that service, that experience provided firsthand confirmation of a conclusion also reached by abundance of empirical economic research analysis of antitrust case law, and a concern that has been demonstrated to be shared by many of you here today. as well as people across america and that is we have a market power problem. many factors contribute to that outcome. but i believe that the most significant to the effective exercise of the trust enforcement is needed to adequately deter halt or remedy anticompetitive conduct. and i want to describe for you why i think that that conclusion is justified and that -- out of the evidence in the record. but first pipght ept i want to emphasize conduct that threatens competition threatens the cornerstone of our economy prosperity and market and someoneit who spent much of motr career working in regulatory economics, i see antitrust and antitrust enforcements as critical to avoid kinds of problems in regulation that senator lee mentioned in his opening remarks. so let me describe for you the foundation on which i base this solution and compelling case that i think it makes for antitrust reform. but foundation of the conclusion that we have a market power problem and that the impediment is ability to effectively enforce antitrust laws on combination of economic research, on market power, and the study of antitrust enforcement as well as my personal experience drawn from being on enforcement frontline. both point to the urgent need for increase enforcement which i believe the agencies cannot accomplish on their own. it is a vital to increase resources that they have available to restore some better balance between government and private parties who would harm competition. and it is critical to have effective leadership that recognizes that challenges and move forward on it but those two on their own are not enough and not only more resource and strategic leaders but they need you and your colleagues acting on legislation like the bills that you have before you. and recent years, considerable attention has been paveed to rise concentration and profit margins, most commonly measured at the industry and levels as you heard by the previous witness. that's turned a lot of necessary and frankly overdue public attention and debate state of competition competition policy. but this is a steak to think that the evidence of a competition or competition policy problem left solely on how that debate over aggregate trends resolve there's empirical evidence of market power concerns,es across a broad ragef well define markets study by industrial economists from airline to pharmaceutical to publishing and grocery store to publishers and many, many more. dozens perhaps even hundreds of studies conclude that mergers failes efficiency so commonly ad harm consumers. there's a rich literature in economics that shows how exclusionary behavior can destroy theon competitiveness. more competitive harm for private market. many providers put input into market including farmers, nurses, doctors, and workers to name just a few are harmed by anti-xettive exclusionary conduct to which they sell their services or products. the u.s. economy may be a model in many respects, but it is not as strong or as vibrant or innovative as it could be if we did a better job protecting competitioner rather than monopoly. but economic studies are far from the only source of evidence growing competition problem. the operations of the antitrust enforcement system itself provides way of anyone doubting significance of it. antitrust is at heart a deterrence base system and evidence is, that the deterrence is no longer working as it should or as our country needs it to. agencies are increasingly and scarce resources and investigating challenging and litigating mergers to monopoly it is not surprising that rate is high when you bring cases like that but you have to bring cases otherwisese you have a monopoly problem and not leave unresolved hundreds of challenges tacked take place where we have resources and the case law to support them. competition has been as a example and problem is worse on the conduct side. so what i would say -- in conclusion is that we face clear and convincing evidence of harm to competition and competitive markets. that the problem is in part a resource problem. sbut even more significantly, hostile case law to enforcement, and overa license on settlement perhaps because of result of adequate resources combined with states with state of judicial reading antitrust laws, and i believe a role to play in excessive quantityification i so thank you for the opportunity to speak with you today and for protection of the vibrant competition and our american economies that i hope that you will act to preserve. thank you. : i guess i'll go to you mr. lynn first when he was togs about the fact there's not really concentration he acknowledged that there was by sector but by locally i looked at all of this literature that professor rose talked about i think there's a lot of concentration going on i think people feel it out there. and it is everything from walking into the senate and hearing some pretty conservative republicans talk about how their cattle ranch reverse feeling right now. hearing from regular people and even owth of tech what you're seeing with concentration. this is one of the most important things which is concentration of power at the local level. and one example is, in hospitals and in health care, and clinics, i mean we've seen massive concentration in particular regions and baltimore and pittsburgh, cleveland, and wherever you see that kind of concentration prices skyrocket and delivery of service and many ways goespr down. we've seen stripping out of clinics and small hospitals across america rural areas especially hard hit. but r as you mention this is something that is affecting, you know, heartland communities all across our country it is retail, it's agriculture, it's, you know, wherever you look. there's not a single sector where you're not going to see significant concentration sometimes extreme concentration or the last 20 years. >> yeah. one of my favorite moments of this was john oliver did a segments and went through examples of cat food to online travel and he ended the segment by saying, if it is enough to mac you want to die, good luck. because now there's only three casket makers, and he showed them and since then won bought the other so there's only two. so next thing -- we talked about the need for the agencies to be a sophisticated as people that they're trying to regulate and challenge which is biggest companies world that has ever seen and you don't want to neglect areas outside of tech because of the understandable focus so just to see where people are philosophically do you think this needs, suits bought by the trump administration who senator lee and i work with extensively chairman simon, these are republican appointees they brought these suits at the end which was pointed out by i think mr. lynn joined by -- democratic attorney generals at least in the ftc suit with others interested, of course, in the justice department suit against google. do you think it wasas a good ida to bring those suits just yes or no mr. slover? >> absolutely yes. >> okay ms. baker? >> yes, depending on overall yes i'm in favor of enforcing that. yes. >> mr. lynn? >> yes. >> mr.-- >> i'm not going to apine on suits it is a fast intensive exercise so -- >> okay that's fine. >> and then professor rose? [inaudible conversations] i think she said clearly in a very professor way. i just say that because i think there's some widespread agreement across the country and across the aisle on these suits so if you do that as ebbs you can't take them on with band-aid and duct tape and i did appreciate outside of your viewings on those lawsuits mr.-- rube that you support funding these agencies, and i don't know if you want to take this mr. slover. but as having someone that's warninged extense ofly at agencies in the past, these engineers during reagan administration and yet asking them to take on these major cases that we tend to agree with t as a country need o be taken. on exclusionary conduct senator grassley and i have aed bill tht he's very devoted to change the fee structure that hasn't been changed since hard scott passed for major mergers. so that we can get some more funding to be able to better adequately take on these major companies. could you comment on that? >> sure. we think that additional resources are clearly needed i said that in my testimony and i think the bill you have with senator grassley is a good way to help get more of those resources to the enforcement agencies. it's essentially a user fee on thess biggest mergers that creae the most work for the agencies. and the companies can clearly afford to pay it. >> okay very good. next thing so we've got the funding for the agencyings and then we have exclusionary conduct and i asked a lot about this because people say okay let's sayio we do something to make it easier to go after mergers in theeo future. but what are we doing about what's happening right now? we don't even have data anymore at theut ftc that actually casperwine burger had decades ago part of the bill to collect that data again. but people sigh this how this is intractable what can you do about conduct that's going on right now like pricing whereha u try to drive your competition out of business with the extreme low prices. so you can raise them later? that's what predatory pricing is it seems real good at the beginning and then a monopoly and jack up prices excluesive dealing where you force your customers to agree not to deal with your competitors. or strategies to cripple your rivals and i read again from mr. zuckerberg exact words from hisor e-mail. and in which he said that these businesses are but network establish brand meaningful and grow to large scale they could be disruptive to us and buys them with words it is better to buy than compete. i guess i would go to you professor rose, exclusionary conduct can we actually i know you see it as a problem. but can we actually do something about it? >>ro i think we can senator i think what we need, however, is a recalibration of what the antitrust laws and what congress intended when itt passed them ad seeing court decisions that are really nullifying i think that congressional intent and even just basic understanding of what exclusionary conduct is, and -- and a business judgment. the examples you gave are terrific. you know, we basically i think it is almost impossible to successfully bring a predatory pricing, or predatory behavior case at this point. and that shouldn't be. that if you believe in competitive markets you believe in small businesses, if you believe in entrance that someone here have talked about you want to the give them a fighting chance and you don't want to allow incumbent to drive they will out of the market before they have a lance tohe compete. so i think there's a variety -- sorry. >> one has this argument that oh, hey they've won 85% of their cases in court. so there must not be a problem. to me, i get this. but to me it means that they're not bringing all of the cases one they don't have resources and two, they know how the courts are going to rule. >> i think that's right and other thirdnk factor is, that yu have to when you've got a legal environment and judicial environment that's a hostile to considering exclusionary conduct as present environment is, you worry a lot that if you bring a case not only when you lose but agency can take a lot that's not a problem. what you worry you'll create bad precedent bad case law and shining example of that from recent years is the american express case that doj, one at the district court level. went all the way up to the supreme court and we have a truly terrible supreme court decision thatdo not only meant e couldn't enforce against those anti-steering provisions in the credit card market. and competition in the credit card market but it also now means that lower courts are using that to mean basically anything fair game in a platform industry or two sided market. and that's, that's are also devastating. >> i'm going to go back to you on second round i know you want to answer this and i want to talk about merge ergs but ilgd i thought shift burden on mergers and how that would bhepful and leave with exclues their conduct because we can't pretend we don't have a monopoly problem right now and thatre is the -- bill that i just introduced senator kennedy to given even playing field for our journalist and agreew and been on forms wh you about the need for looking at consolidation in the media. that a vibrant free press is vital to a our society and democracy you've been a journalist yourself i'm a daughter of a journalist and our free press right now is underthreat, and we saw this played out in such a big global way and australia where we realized even company the size of news corps. that we rose up and trying to challenge this, and literally these tech companies threatened to just take their marble and go home and leave entire country with basically no search engine, and losing their biggest platform. obviously, that didn't workne as the world looked and regulators across the world started looking at this. but this is the philosophy of this bill that we have to have an even playing field and then allow people to negotiate. could you comment on that? >> yeah. i think it's a very important bill. it is very important that we even playing field. i think it is also important for us to look ahead and actually begin to plan how do we reconstruct the entire marketplace for advertising in the united states? advertising from the founding of this country, advertising has played a fundamental role in creating the environment with the free press can operate and it was, you know,pr advertising was what allow not to defend on handouts allows publishers and journalists to sort of not depend on philanthropy advertising is what allows publishers and journalists to be free thinkers and say what they want. and the advertising that exist out there should be attached to publications. not it should not be captured by and diverted by the intermediary that's what we're seeing today as we see intermediary choke point corporations, exploding their power, to steal other people's money, and that is they're starving the free press in the process and starving our democracy. >> to the point thank you with that i turn over to senator lee. thanks. >> thank you. something that i've been adamant about but something that some seem to struggle to grasp is that, thehe consumer welfare standard is in no way shape or form w a get out of jail free ct as not for big tech. and not for any other monopolist. and advocating for the consumer welfare standard is entirely consistent with a belief in the need for strong aggressive, antitrust enforcement. judge fork perhaps single most advocate of a consumer welfare standard, of course, support of the breakup of at&t. the department of justice wanted antitrust case against microsoft under consumer welfare standard, and the department of justice wanted having one that antitrust case couple of decades ago, brought another action last year under the trump administration it sued google and facebook from monopolist under theories king consistent with consumer welfare standard.ns mr.-- i'll start with you. do you agree that current law and precedent provide adequate tools to police the behavior of today's monopolist? >> yeah. absolutely. i think thatpo the consumer welfare standard and the antitrust framework that have developed over the last 50 years toolutely have the ability identify, and competitive conduct when it exists. consumer welfare standard is not some sort of narrow framework that only gets at very specific harms. it is a way of taking the nebulous krchght protecting competition putting it into action into a framework that is -- that is able to be tractable and courts and enforcers can apply and it absolutely can reach a wide variety of conduct whether it is i based on price, quality, innovation, those are all features that are capture on kiewrl welfare standard. >> thank you. let's helpful. ms. bark i want to turn to you speaking of the consumer welfare standard. there are companies like google, and facebook and twitter that are always very quick to point out how much innovation they've given to society. how they've revolutionized the sharing of information, and revolutionized the way people communicate throughout the entire world. but i wonder sometimes whether this is necessarily unmitigated good, youtube algorithms are known defeat obscene content to unsuspecting innocent children. facebook social media products fuel anxiety and depression among teenagers. and twitter has become a seis pool of visit and abuse, so increasingly recently cause me to ask myself, how should antitrust enforcers look at markets with a product itself causes harm. causes consumer harm? how should we look at that? >> i just want to -- on why what are we talking about? i think it is -- [inaudible conversations] in 2018 they have a antitrust complaint against two staffing companies foror agreeing to fix therapist wages. and although sort of naked agreement between xet competitors alleged in that complaint, often warrantses criminal prosecution. the ftc did not notify the department of justice and did not notify at doj, of course, oversees the criminal enforcement of antitrust laws. instead, what happened was that the antitrust division learned about this matter only from the ftc press release. and in december of last year, the department of justice announced an indictment of the owner of one of the staffing companies. this looks to me like an incredible inefficiency that waste taxpayer resources, delays redress for consumers and just results in a needless amount of counterproductive organizational structure and government. would you agree that this is just one more example of why it's absolutely essential that we consolidate antitrust enforcement under one single roof? >> i completely agree that there are many inefficiencies in our two agency system you point out one of them as a practitioner it is frustrating at times to find those -- to come up in front of those frictions and to have to explain the system to businesses and why -- you know you don't know which agency will be reviewing your action, and why the agencies aren't responding because they might not have decided which agency will review the issue so ting there are ways to reduce the differences in the two agencies. that have different procedures they have different areas of expertise, and to eliminate some of those efficients i think that is an important -- jobie and as i said in my openi, i don't think anyone would create a system today if they were starting from scratch with two agencies enforcing the antitrust laws. particularly where we've seen in recent years, that they've actually had conflicting opinions on topics and, in fact, filing motions against each other. >> mr. lynn, in testimony, before this sub committee about four years ago in 2017, you wrote, quote, i agree that america antimonopoly laws are largely up to the task. as they were originally framed by congress, i also agree that antitrust enforcers should not have to make political decisions who are judged between different political outcomes that's because congress already made those political decisions when it originally framed and enacted those statutes. with that statement in mind, do you agree congress shouldn't change antitrust laws right now? >> with that statement in mind, i would say that the laws as originally written are sufficient in their intent for us to deal with the problems that face us. now, why do we need new law? why would new law actually help us? new law such as senator klobuchar would help us clarify the original intent of congress after 40 years of ideological muddying of the intent. of the original intent of congress. consumer welfare frame as well meaning as it might have been originally, actually sort of broke us loose from the original intent of the law, and has created all kinds of problems throughout the judiciary. the law itself today is, is not as clear as it was and additional statement by congress can help us understand return to the original purple of the law. >> okay so does that reflex something that's changed in last four years or am i misreading four years ago? >> senator, you know, we -- the people are going to use the law as we find it and we're going use our other power to achieve what we immediate to achieve. and we're going to save our democracy one way or the other. so if the -- there is there's no new piece of law we're going win and use what existing law and whatever way we can use it, that's one of the things that we see with the -- the attorney general of the united states. you have 49 attorney generals of the united states standing up to take on google and facebook. you know, that's actually in terms of like trying concentrate all of the authority within a single agency, there we have proof of why that's dangerous. remember it is like last time we have a problem many this country with --me with thisa degree of concentratd power, what was decisionit by te people of the united states it was to create a new agency. separateop agency to create competition among the enforcers so if one enforcement agency is runor by someone who doesn't understand what's going on or is captured or in some way controlled, then you have another agency w to create riel rei. and then, in fact, they said that's not enough we're going to establish a authority in every "state of the union." so that people all around country can use this authority and antitrust authority to keep themselves free. >> my time expired. those, of course,e, are 50 separate sovereigns -- theth different question whether we ought to have two heads the same beast. thanks. >> i thought you would like him talking about original intengt, though. that's what i thought. next we go to chairman durbin thank you for joining us. >> i wouldn't miss it. this is the first voyage of this sub committee under the chairmanship of amy klobuchar we know senator klobuchar knows antitrust, in fact, she's written a book. calls antitrust taking part from guilded tige digital age coming soon to a big store near you. and i'm told it is only 624 pages long so in time to become a run away summer vacation beach read. i'm sure it will be a success. >> you may be surprised there are cartoons -- >> looking forward to the pictures. >> that's one nice reading for senators lee. 15 year ago senator spector had a sub committee hearing on topic i never heard of before called the interchange fee, the swipe fee. i didn't know what they were talking about. and the retailers all wind up at the table like yours and explain what was going on here. they said that these fees swipe fees were being charged by visa, mastercard and other credit card companies, to all of the merchants retailers who were using them for card transactions. it turned out they were not negotiated they were mandated visa and mastercard said this is what you will pay for each interaction at your restaurant or shop and you have no bargaining power whatsoever. if you don't want to pay it don't use visa or mastercard see how long you last those fees were far and excessive any reasonable measure of cost. and far higher than they would have been charged in a xettive market but visa and magser card so dominant payments market that merchants couldn't stand business without using their cards. last year, american retailers and merchants paid out a staggering 62 and a half billion dollars and swipe fees and imposedut by visa and mastercar. and fees disngtly they announced are going up again next month in time for your little restaurant that somehow managed to survives and reopen in a pandemic to go into business and have your credit card companies saying now you're going pay us even more all of thosese cost are ultimaty born by consumers across seamerica, and i have seen by ad large the power of visa and mastercard throughout this whole process. durbin amendment and it took 8 billion dollars out of swipe fees, a year from wall street, and they didn't forget they're waiting for an opportunity to get even again. where is the policing authority to stop this from doing this to every merchant and retailor in america? i don't see it. my question gets down to something even more basic is 20 years ago, i believe, i had lunch with judge posner in chicago. and interesting man. and we talked about a number of things he had been appointed to a case involving microsoft at the time. and he's a very smart man. he since retired from the bench but viewed as a smart man and controversial in some circles but he said i finessed it very difficult toto understand the complexity of the issues in this case i cannot imagine a jury of just ordinary americans even grasping what we are talking about in those cases so let me ask you when it comes to the ultimate, a a jury, a court, are we talking about issues that are so complex in their nature that likely to be settled out of desperation because there's no place to go, mr. lynn -- >> that's an excellent question that gets one of the points that i, you know, i think is really important for us to understand about antimonopoly law which is that structure is important. when you have a corporation as extremely complicated that is extremely far reaching engaged in manyis businesses all at once with google, it becomes impossible for anybody, i mean, not even just a juror there's no government agencies that could ever understand what's going on inside of google and then you don't want to build a government that's big enough to understand what's going on inside of google that's why traditionally the united states we focus on bright line rules bright line separation, if you -- if you're districting information youou don't develop information. if you're selling books, you don'ts publish books. so you know, that, you know, this is, you know, the way to make antitrust usable by everybody. to make it understandable by every journey in the united states as you get out the broad ax and you cut and you cut things along lines so that everyone can understand what they do. and what they should not do. >>an let me ask mr.-- ysh point of view on this. >> i think -- there's no doubt antitrust is a fast intensive exercise that requires a amount of work i thinkk the judiciary is very wel placed to address these issues. they are maybe not all experts in economics or even most of them but they are experts in interpreting documents and -- >> let me educate me is there a special court or a special area of courtss that -- enjoy this expertise i have been thinking federal judges i don't know that any of them ever stood up and said i'm the person you want to go into a complex in antitrust case i havet the background. >> the point is there are experts in interpreting evidence whether it be documents, witness testimony, that isin what they'e asked to do in these cases. they're no doubt -- fact intensive they do it frankly better than some of the agencies do at times right. the ftc has an internal court so we can compare the record. and the agency has a -- certain win rate, and then those cases are appealed to the federal court of appeals and more often, the federal court of appeals overturns ftc internal decision than there. >> mr. slover would you comment on this? [silence] i think there are inherent complexities which challenge any court to come to grips with. i think that's one of the advantages of vaccination the federal trade commission as a separate organization with the bipartisan leadership and its own internal processes so some of these issues can come better to light for education within the commission and also education with the public. ... i think there are inherently challenging cases and one of the challenges is to try to simplify the issues in a way that uses the economics to give rigor to the analysis without obscuring the essential truth of what's going on. >> is >> is the time for ms. baker to respond? [inaudible] this area of law is too complicated. there are other areas of law that are complex. this is unique in that way. >> thank you very much, mr. cha. thank you for joiningou us. before i i turn to senator hay i have a submission from public knowledge, and anothert submission from carl zabel and chris markey and trace mitchell from that choice. i ask unanimous consent to enter both of them into the record. without objection they are in the record. senator hawley. >> thank you, madam chair. thanks to all of you foror being here. these companies and i know you have a personal history with google. let me read to you a summary of google's current holdings. google owns youtube android in pixel phones waymo which is itself driving car project took commercial drone delivers service google cyber phone service google cloud g suite which is calendar hangouts at cetera sidewalk labs which is an urban development company who will capitol which is an equity investment fund deep mines which focuses on ai project loaned which seeks to use hot air balloons to expand global internet access and jacquard i think incinerate which makes smart fabrics which uses radar for touchless gesture control and spotlight stories which makes films among other things. in other words alpha the google owns a whole lot of stuff across a whole lot of industries. is my question to you, is a good idea to have one company competing in a dominant influence in multiple industries all at the same time? >> absolutely not and you know there is absolutely no reason for it since why youtube needs to be connected to a mapping system. there is no reason for -- to be connected to the cloud and previous generations in the united states would have said this will not be connected in here is an example. this is what happened in 1913 when the wilson mr. shippers came to power. they have found that at&t the network of that age also controlled western union so the white house called up at&t and said you will spent off western union and they did. the reason was wind there does not need to be connection there should not be connection. >> what about companies like for instance amazon? for example should they be able to operate a retail marketplace for you have third-party competitors selling their goods and amazon itself simultaneously operate that marketplace and sell its own goods competitively on its own platform using potentially the data it's gathered from the other third parties who are supposedly in the platform? gazeta procompetition policy? >> its anti-competition from monopoly policy. there should never be competition between a provider of services and the customers of services because we know the provider service is very integrated into the business will favor their own goods. the conflict of interest which is one of the most fundamental problems in competition but we can trace it back to u.s. federal law to the banking policies in the 1860s. this is nothing new here. what is new is that we have quantified these rules to these corporations today. >> it makes me wonder when we talk about updating it to trust laws we need to consider an update antitrust laws makes it clear that these massive conglomerate mergers and holdings across industries particularly in the air, amazon, google, facebook that you can be a provider of services or he can be a seller of services. he can be a neutral platform where you sell to third-party goods like amazon or you can be in the business of selling those goods yourself but you can't do all that all at one time. do you think something like that is good? >> that would take us back to where the country was for 200 years and that would reassert and restore the basic structure of power that existed when we were truly a democracy and making ourselves a more perfect democracy. it's one of those points that i can make which is when you have a platform platform, when you have provider services this is especially true in the arab digital economics in that you have to ensure that part or miss entirely neutral in its provision of services. we know this from the railroads. you shall post your prices and deal with everybody in the order in which they come and there will never be any discrimination for anybody. u.s. a monopolist have the power of government where you are basically ceding this power and therefore there will be rules and laws and a way to establish the rule of law under the governance of unlawfully and antidiscrimination laws and rules. >> that we ask you an adjacent question to this. i wonder why dominant tech platforms are dominant platforms in any industry and it a dozen at the v-tac as we are seeing an unprecedented call it -- consolidation, consolidation we haven't seen in the country in a century since the gilded age. why should any dominant corporation be able to merge with any other entity and let's zero in on tech platforms. why should google or facebook why should they be able to buy anything else given their dominance at this point? do think the ruling would prevent any mergers by the currently dominant platform as something we should consider? >> or group has long supported in large corporations engaging in further acquisitions and i would amend that to say any corporation that is basically being charged with anti-democratic actions really that should be especially strong. at me ask about the idea of an at use of dominant trope that would make it a --of the presumption of the law illegal when they are carried out why it domick corporation. do you think that's something we have to consider? >> it would be difficult to draw a line between a zippered dominant corporation at the national and international level in a dominant corporation at the local level. one of the things about the act was it was designed to give people powers that they were able to deal with the dominant local monopoly and local where is we did this with local row roads. you don't want to have discrimination in the short line in discrimination in the dashed lines. >> in my few seconds here ms. rows of i could just turn to you and ask you a little bit more. what kind of threshold would you like to see for merger endorsement? >> thank you senator. i haven't come up with a particular number but there's interesting work by one of my colleagues that suggests just as important as it may be to bring highly concentrated markets down from 2500 to something closer to the old 2000 levels is more important to look at the change and you want to understand the changing concentration creative by the merger. that seems to be much more predictive of levels and so i would think that one thing that the agencies might look at and doing their horse on a merger guidelines is to get periodicals that puts more emphasis on those concentrations even for markets that might not be as highly concentrated in the current guidelines. >> my last question madam chair is still for you professor rosen. vertical mergers under what circumstance what do think vertical mergers along the supply chain not to be blocked? >> i think those are a fact intensive exercises but i think you have substantially hindered forest the merger but that's an area that was very challenging to the at&t time warner case that you demonstrated which i think had some difficulty understanding the arguments about why it's anti-competitive. it might be easier to understand in an economic analysis and i think in that case as in some other recent merger cases perhaps the court would be willing to take the assurances of the interested party that -- but i think we need to be much more aggressive. >> very good, thank you madam chair. >> thank you very much. we now turn to senator blumenthal along leader in this area. >> thank you very much leader klobuchar and i appreciate your leadership both especially on the competition and antitrust law enforcement format which i am proud to co-sponsor and other measures in this subcommittee today. i am very concerned about private enforcement barriers. i'm a former antitrust enforcer and cigna terry general but i know very well the importance of private attorneys general and enforcing it not just for their own well-being but for other consumers as well and i think both of our antitrust laws empower consumers and workers and small business to seek recourse for abuses of monopoly power and consumers spaced herculean obstacles and even getting a day in court under the f.a.i.r. act which would eliminate forced arbitration and it's also the reason why i think the limitations to private enforcement in the indirect purchaser role had to be reformed establish the supreme court in two decisions as you well know and they urge congress to arrive at the decisions that work together to confuse antitrust damage doctrine and to handcuff victims of anti-competitive conduct with no path to recovery while providing other calling tiffs with windfall. his speech actually echoed concerns that were raised by justice cavanagh in the courts opinion and appleby pepper. he addressed skepticism about two rigid application of the indirect pursuits of their reforms that can increase the enforceability of these rules but i hope our subcommittee will examine including the f.a.i.r. act but i want to focus first on interoperability requirements. you know how ineffective facebook has dug most around their formidable castles keeping users from leaving the network effect of their products and systems and can have devastating effects on competition and we need interoperability portability requirements to break down the walls that they have established and left congress introduced the axis -- would require large ex-companies like facebook and google to offer interoperable access for competition as consumers. they don't need to tell anybody on this panel you are experts as to why that could be very helpful to achieving lower switching costs and barriers to competition. in short it would help consumers break up with the tech and not necessarily break up big tech but engender innovation and competition by these narratives that they inhibit competition so let me ask all of you do agree that interoperability and data affordability requirements would help foster competitors that could compete on proconsumer terms with big tech and i would appreciate your supporting the access act in that regard. >> i will begin with whoever would like to go first. >> we'd definitely do support interoperability. we think it's essential in a marketplace with platforms where the dominance is so entrenched that really that's going to be the only opportunity in the near term for consumers to get a choice is to go with some new upstart alternative that doesn't require them to give up all of their facebook friends are all of there -- that they have collected or whatever it may be. it does need to be in the control of the consumer and not the platform. we often think it's important and whatever access is given that focus be kept on the consumer being aware of and in charge of what happens to their data and their permission. >> enqueue. since thank you. i would say it depends. this is potentially a very proconsumer option. first i need to separate interoperability because they are different. it comes back to implementation and how well mandated is. i think this is something that would have to be implemented. that could come with some security risk so it's definitely worth exploring but the devils are in the details sometimes. >> you have endorsed the principles they want to see the details. see i guess, i endorse it yes. >> thank you. >> senator if i could ring in. >> yes i'm sorry. >> i would say it's an extremely insightful analysis of the problems we have with some of these tech product farm -- tech platforms and light touch regulation to improve competition in the sector and i was just echoing and i know you are where of it the success we had in telecommunications first with increasing competition in long-distance services and then increasing competition in global platforms consistent on affordability and interoperability of the system so antitrust isn't going to reach the problems that we have in the large technology platform. competition can't find a way to make entrance more viable and that approach might be pursued in the uk and europe and might be a powerful way to -- competition. >> thank you. >> our position strongly supports interoperability requirements but with the caveat which is that we have to understand this alone will not solve the power problem and we have to be focused on integrating interoperability requirements with antidiscrimination roles and also ensuring we are getting the proper structure. nancy rose has mentioned the at&t case and part of what was happening was researching of at&t. this turned out to be a pursued as a unit. >> i wasn't suggesting the axis fact be the reform that we undertake but i take your point. thank you. >> thank you for that question center. the analogies made to the telephone industry in the portability of phone numbers i think was a policy supported under the bush administration and has proconsumer benefits and i think these issues are equally capable in need of study think it's likely these are much more complex and the devil is in the details so to speak because of that complexity. >> i don't dispute that it is complex or can be made complex but as all of you know as you say in telecommunications -- i hope we can continue to get the benefit of your insight. thanks. >> are a good. thank you very much senator blumenthal. we are joined by senator blackburn hasn't interested in this issue which we appreciate and even on line you can't always see everyone but i want to thank her for her participation and i'm going to turn it over to senator lee to ask a few more questions on the vote coming up. we will pose some questions. >> thank you so much medine chair. as i've said several times social media giants facebook and twitter appearing increasingly biased against conservatives and have no reservations about kicking them off the platform they are on for adverse action against them for things that they post but i say this as someone who has been a loyal and faithful customer over the last 12 years or so. it didn't exist at all when i first heard using social media platforms a dozen years ago. it was an effective albeit new technology that allowed people to share information. it didn't exist for quite some time. first it was subtle and i hope i was just misunderstanding what was happening but it has contingent grow to the point that like i say it's unmistakable. i find it interesting that the censorship the political bias became more brazen as companies grew and perhaps more importantly their market dominance became more complete. when the platform feels like it can treat its own users and its own customers that way that raises some questions. mr. rybnicek when a platform acts like this taking a large segment of its user population and treats them that way does not tend to indicate that the platform doesn't think it faces in a serious competitive threat? >> i am certainly sympathetic to these issues as a bias and i think to the extent because of a competition issue the antitrust law has a role of tackling that. these issues are being raised because of anti-competitive practices and there's nothing on the antitrust law that would put -- keep the plaintiffs from prosecuting and outlining and articulating how that is a calm competition problem. these are broader societal issues and i am certainly not in expert and it's better to address this with others. i've heard an explanation of why the antitrust laws is an antitrust concern. >> we did have an industry in which there were alternatives which there was actual competition. discriminating either on the basis of clinical ideology, economic views or anything else that tents to divide large grooves of people. you might have large migration of people from my plaid -- one platform to another. ms. baker let's go to you next. when conservatives are deep platforms and prof and told look if you don't like it you can build your own. for a long time i found that persuasive. i really don't like government intervention in anything. i'm more open to it with antitrust and many others but across-the-board i'd rather have government stay out for the most part. the argument works in some areas and in some ways but if you don't like it go build your own has caused a lot of pain recently. parler tried and what happened? apple and google and amazon all teamed up and just kicked parler off the internet and out of the zone of being able to operate entirely. build your own is nice in theory but in this instance i'm not sure works in practice. do we have an entry problem? >> the specific parler incident incident -- but as i talked about my written comments it's a bit different now. we tend to not replicate the same platforms and products. they have a new product that devalues the core asset of whatever -- so no one is building a new facebook. that is not where the start of committee is going. >> you did in the case of hare. they did in fact build a new social media network and they had a nap and within a matter of days it had amazon refusing to continue to provide cloud services thus taking them out of operation altogether. we had apple and google within i don't know hours of each other removing them from their app store. you are right there doesn't seem to be a lot of entry into the marketplace. in this instance there was a new entrant and granted parler was a much smaller platform and far fewer users than twitter and certainly far fewer than facebook and instagram. nonetheless once they got into this they got kicked out. it's difficult to see that as a robust marketplace where new entrants can make a play, doesn't it? >> it's not exactly the same. it's geared towards a separate set of consumers but for my understanding with parler and i don't like to weigh in on things without knowing all of the documents and that sort of thing but it sounds like they dropped their claim and that was more in contract disputes with how you would resolve that problem would be dangerous to say they have to provide a service. [inaudible] >> mr. rybnicek with your long talk about increasing concentration within industries it's not exactly the same thing as concentration in broad markets is it? can you explain the difference? >> shirt, so additional studies started a big debate at the sector level so combining fishing reels and groceries products that i don't think anybody would consider substandard and that is where competition comes between alternatives and substitutes and more recent research including research that came out this year shows that the concentration of the product level in labor markets is decreased and that is much more informative in concentrations to be taken as informative than thinking about the structure of the sector level competition. dr. roe's mentioned we start off by talking about aggregate data at the national level data and pick and choose more narrow markets and apple overhauled in the chest law. dr. roe's identified a few that we commonly hear with airlines and health care and others and i would just point out that those are specifically the ones that are tightly regulated by the government, ones where proponents are concentrated. >> born in captivity rather than being born in freedom. thank you chair. >> thank you senator lee. we have tried to orderly go through this as much as we can but we started by talking about concentration. i have an important bill with senator grassley and funding the agency and there's why is red interest in that from our witnesses and only talked about the exclusionary conduct and how much that is an issue right now because you can change everything you want going forward but if you don't look at this some of the stuff that is our that happened with the at&t breakups you are going to get very far. i do want to talk about the future and future mergers as we see a bunch of small businesses have closed down. we have seen the beginnings of attempts at mergers and things like delivery, food delivery which would have cornered the market for one company and i know one of those partners that down after a lot of pushback from many people but i think we are going to see more and more of this and i asked senator hawley questions about when you have the company that is so dominant why are you just automatically okaying purchases like we saw with mr. lindh and one of the things that i think would be helpful are some of the merger changes for the standards and i'm looking at you mr. slover that we put forward in our bill and affects shifting the burden to the companies attempting to make the merger and this wouldn't just be in tech, to create on them if they are either really big as he pointed out the merger is really big or if they are over 50% market share in trying to purchase a small company that is right in there wheelhouse and the standard that i have suggested is that you would have to shift the burden on those kinds of requests to the company to show it does not a risk of reducing competition. do you want to talk about that mr. slover as we go forward? >> there's already a presumption in the law or the philadelphia national bank decision and its too often lost sight of in one of the great strengths of the proposal that you have got you revise the philadelphia bank standard and provide flesh on the bones to guidance in particular situations. what does constitute enough concentration, and a power to raise concern where that presumption ought to shift. it's not a conclusive presumption. the parties are still able as they were in the philadelphia national bank division to prove that their merger was not going to harm competition so i think it's an appropriate -- it's an appropriate thing to have. >> one thing we didn't cover mr. lynn unless i missed it when i was briefly out is just how monopoly power can disproportionately hurts small businesses owned by af it makes it really hardd for thm to get in if there's just a monopoly that dominates. do you want to briefly talk about that? we have been joined by senator blackburn so i will turn it over to her to ask some questions, so mr. lynn. >> this is a fantastically important point. i monopolization is and always has been a direct threat to both racial and gender equity. in the case of racism what we see monopolization results as you said it becomes very difficult for small businesses whoever owns them to sort of get into the market and to stay in the market. we also see all these problems on the consumer side, which is like we see health deserts and where do the health deserts, who do the health deserts end up hurting most? it tends to be people often rural people but very often people in minority communities, who deserts, same thing. we just saw with usda there's a very large shift of money to make up to do with black farmers who did not receive funding, government support for many years that was equal to that of their white neighbors, and that was in large part often do to the power of monopoly corporations. what we see is throughout our society, whether it's minority businesses or women-owned businesses, monopolization makes it much more difficult and often the effects themselves fall much more sort of firmly upon the minority community and upon women. >> very good. i'm going to turn over to senator blackburn for her questions. i also note that senator cotton has been joining us remotely which we appreciate. senator blackburn. >> thank you, madamit chair. mr. lynn, i'm going to stay with you and can upon the same topic i think everybody is concerned about google and facebook and their control over the news. and one of the things that as we prepared for this hearing, and i thank you all for being here with us, we went through and look at this issue, the market as a whole. it's not a right or a left issue. lost 50 reporters last month. and then bloomberg let 100 people go last month. but, what we are seeing is across all of the newsroom spent think they're 16000 newsrooms in the country. every one of these newsrooms have experienced the loss of reporters. which is loss of journalism which is loss of the insight of people into the issues. that is being replaced relook at google's ad business and what you are seeing is that they are going for clicks and the click abate type issue. and this is something that does concern us. when you look at the connection machine with a push forward as news and then of course the connection to their ad business. so, i want to ask you about that. when you look at this connection along the lines of market dominance and the abuse of market dominance. what is the direct term to consumers when you protect the dots through the news agency who is now to be the dominant distributor of news, back to the consumer and what they're able to hear. >> in terms of the consumer as consumer the harms, thank you for that senator and up with less information. you end up with less oversight of large corporations but you end up with less oversight in terms of consumer safety. you end up with fewer people sort of watching over the governments of the main street in your community. we have lost in this country who were walking the streets of our communities. opening doors, looking into problems. tens of thousands of journalists are no longer out there. you mentioned the people at bloomberg and my friends at huffington post. so this is a true crisis. with that also understand this is very much a crisis for citizens, consumers as citizens. the information they are getting is been chokepoint in through fewer and fewer outlets. we have to understand the advertising -- mike there's another side to this part is not solving the starving of journalism. it is the replacement of journalism with a system of that is designed to provide people with misinformation with propaganda. it is a system that's designed to manipulate people. this is manipulation systems, manipulation machines. and google and facebook they rent out their machines to whoever happens to come out and manipulate other people. that's a result of having these manipulation machines. these and babble machines in the middle of our society is the incitement, and raging sort of atomization of the citizenry. and so we have people who should be working together instead fighting with each other in the streets. >> also there is an invasion of privacy component for citizens also, correct? smith that's absolute right. these manipulation machines but they learn about you they study every single move the site and the movement of your hand on your phone to better manipulate you this invasion of privacy in of itself a bad it's used to manipulate use in ways arms to as a citizen and harm the large republican harm or democracy. it is all one problem. we've never applied antidiscrimination rules to google, facebook and amazon. becky mentioned the monopolistic conduct of google with its ad business. were you see that running a foul of the sherman antitrust facts? i think there's certainly a case in texas based in large part on the monopolization of advertising. we now have people who are acting on this belief. but in terms of -- medical receipt really we see a duopoly, a capture of control over advertising, google and facebook online advertising. depends whose numbers you are using, 60, 70, 80% of online advertising, to corporations that's monopoly problem by any standard. expect mr. slover i want to come to you facebook, should they should be required through government action to compensate reporters and journalists for the news reporting that they work very hard to produce? and what other ways can the ftc and the state ag fund to raid while brain and facebook predict current lawsuits, how do those lawsuits signal to mark zuckerberg that his days of moving fast and breaking things are coming to an end. sue vexed so i do think that is a big problem. i think that the journalist who create the news have a right to profit from it. it is one thing to provide a link to the source. it is another thing to appropriate the source. and to market it as your own. and use it for your own profitability at the expense of the publisher. i hope that is something to reach into to correct respect sometimes i look at what you are talking about were they appropriate as their own. they still are intellectual property, but do not compensate the innovators thank you very much thank you. subject thank you for your thoughtful comments, senator blackburn. i think we have come to an end of the hearing. i will just notes, starting with senator blackburn was talking about evening the playing field for journalists with senator mcconnell was not in the past and is supportive of it, et cetera durbin, senator rand paul is on there, it is also a build senator kennedy and i are really devoted to getting done. i wish for doing something about monopolies. but this is going to allow our content providers to better negotiate with what are clearly monopolies. then we have the bipartisan agreement about funding our agencies by the way we almost got the proposal last year in the budget the bipartisan agreement. i think we can overcome those and there was general agreement between both parties in the senate on doing that. that's a big priority of mine going forward. then the exclusionary conduct of all of ideas on that including from sitter halley and others and that is a peace of the bill that i just introduced pedro going to look at breaking down some of the pieces of the bill and working with senators on those. and then we had the merger standards which i just discussed. i actually think correcting data would be helpful as well at the ftc, as i said they used to do that and then they would not be any disagreement on that. think it would better help her regulators focus on where we need to do it were not off on marijuana or other things like that. that was completely unnecessary dig. but some of the things that happen in the past is lawsuits against google's and face but that massive effort was done during the republican administration. now we have a democratic carried on the port torch. that's how effective antitrust is been done in the past. these from at&t or microsoft are not just limited to one administration. the initial discussion as asked by some reporters are going to focus on one thing like tech, and i said no this is a big problem and we are going to go big and will start breaking it down by different industries but all focused on trying to get things done. which we will go back to as a touchstone at every single hearing. i want to thank you all for joining us. every one of you made contributions to this discussion which i truly appreciate. and maybe i'll end with the battle of a century. it feels like every century we take on these laws in a big way. this is our this is our moment. i want to thank our staff and all of the other staff that work on this. it'srk incredibly complex but it also can be a lot of fun if you enjoy history and you enjoy complex matters, you found the place. so with that we will leave the record open for one week, and i want to thank everyone for joining us and e look forward to seeing you again. the hearing is adjourned. good job, everybody. 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