thanks everybody for coming to White
commentator today uh we're so excited uh
to host cherina Khan of the Federal
Trade Commission um you know uh so I'm
I'm Luther LOM the new head of public
policy at White combinator and um this
is the first event of its kind I think
and at least since I've been here I'm on
week five but uh we uh but I hope that
we have a lot more events like this and
I think one of the reasons uh I'm
feeling optimistic about kind of this
bridge building that's happening between
the technology industry and Washington
uh is because of the leadership of Gary
tan uh you know Gary's got this great
line about uh that you may not care
about politics but politics cares about
you and so I just want to make sure
folks know that you know I'm a resource
Luther whitec combinator decom please
don't ever hesitate to reach out um we
want to be the voice of Founders uh in
Washington and um I'm really excited to
ruce uh Len con and Gary to come up on
the stage but let me just say a few
things about Cher con so in washingt or
in in our industry it's not uncommon to
have just a massive impact when you're
really young but it's it's far less
common in Washington and uh Cher con
before she'd even in in like her 20s
wrote this seminal article on uh Amazon
that was published in the Yale
University um Law Journal and it like
went viral and Law Journal articles
don't typically go viral but it it
really helped a reshaping of thinking
around uh large technology companies and
so uh the fact that uh she came into and
when President Biden was elected she was
not only appointed to the Federal Trade
Commission but actually he named her as
the chair is just so significant and at
the age of 32 the youngest uh ever to
hold that position is helping uh shape
um our economy in that way it's just
very exciting so uh Gary and Lena are
going to have a conversation uh about
our industry and there'll be plenty of
time for Q&A please uh give them a warm
welcome
thanks thanks so much
Luther so I'm going to uh make uh Luther
embarrass in return which is uh I
received some uh messages from various
people in Tech and then they all sort of
resembled like oh bringing Luther on at
YC was like signing Michael Jordan in
his prime
for what he does so I agree and welcome
Luther um Cher Khan thank you so much
for joining us it's just such a pleasure
to see you here in uh in San Francisco
and uh you know pretty close to cerebral
Valley as we call
it
um I guess one of the funniest things
about uh you know prepping for this you
take a look at um Cher con's uh bio on
the FTC homepage and uh you know it's it
has her bio it's it's very illustrious
bio obviously and then a few lines down
the font gets bigger and it says uh a
few disclaimer uh a huge disclaimer
about CLA uh scams the font is 3x bigger
so it's really important
um I guess why is that there what let's
see what does it actually say yeah it's
uh why why do you have to have this big
disclaimer about that right now well
first of all let me just say it's so
great to be here thanks so much to YC
for for hosting this chat and we've
really had uh been here uh in SF for a
couple of days had the chance to you
know meet with the business Community
hear from Founders hear from investors
and it's just really a big part of what
we're looking to do in DC is make sure
that we're not just in a silo out there
and we're in fact hearing from like
actual people in the business Community
um so I think you're referencing
probably some disclaimer that says like
FTC officials will never ask you for
money
um uh it's good never demand money or U
make threats more specifically that's
right that's right so uh you know we see
a lot of scams and frauds in the
marketplace uh sometimes scammers are
pretending to be the government
sometimes they're pretending to be some
type of legitimate business and uh some
of our work at the FTC is you know not
just on the antitrust space but also on
consumer protection and so we enforc the
laws that prohibit deception that
prohibit unfairness and uh you know I
think there's been an epidemic at
various points of you know people
pretending to be FTC officials and
demanding money people pretending to be
IRS officials and kind of making
threatening calls and saying hey you owe
us $10,000 or we're going to seize your
home and so this stuff is scary for
people right uh sometimes they target
elderly Americans sometimes they target
people for whom English is the second
language and so part of the ftc's work
is to make sure that that type of Fraud
and deception and predation is not
happening in the market uh one thing so
uh CH con has been sort of on a
whirlwind tour of uh silon Valley and
then one thing uh I really liked about
your Stanford talk you mentioned that um
there's sort of a history of um your
Anti-Trust and anti-monopoly
regulation actually leading to a lot
more Innovation uh the most noteworthy
of which maybe is the AT&T consent
degree I believe that was in I mean what
when was that and like how did and that
sort of led to Fairchild uh
semiconductor actually
yeah so the talk I gave was really about
you know how should we understand the
relationship between Silicon Valley and
DC or the relationship between
entrepreneurs and innovators and what
the government is doing and I think
sometimes there can be you know somewhat
of a view that like the only thing that
the government should do is just totally
get out of the way uh and what I was
trying to share is that from the
perspective of antitrust enforcement
enforcing the laws of Fair competition
has actually been really critical to
make sure that the markets staying open
and staying competitive and that the
next tier of innovators are actually
able to come onto the market and scale
and become tomorrow's Giants rather than
get kind of killed in the crib by the
existing incumbents and so there's been
a history of that uh I mentioned the
AT&T consent decree in
1956 where the justice department
required AT&T to basically open up its
patent Vault right you had Bell Labs
that had done a lot of phenomenal
research and Discovery but all of that
Discovery had been locked up and so doj
saying hey you have to make these
patents available to the rest of the
business community on a kind of a
royaltyfree basis ended up then spurring
a whole set of additional Innovation
including the um example that you
mentioned I also noted that the
Microsoft case um that the doj brought
in the late 90s was in part a response
to what the government had been hearing
from startups um you know be it the
Netscape of the worlds or the others
that were you know basically introducing
this middleware tier and the browsers
that risked
disintermediating Microsoft's operating
system Monopoly Microsoft felt
threatened by that and so they engage in
a set of tactics to try to kill off
those companies and so the doj coming in
you know bringing the antitrust case
ended up re oxygenating that market and
I think really giving Runway to firms
like Google right and the next tier of
innovators to come into the market and
not get preemptively killed but you know
it seems like uh you know I'm sure you
can't confirm or deny this but uh from
from our view or from from many our
friends views uh they have pulled up the
ladder behind them a little bit for now
so there are a whole bunch of lawsuits
underway right now and you know these
these lawsuits differ in important ways
but I think it's fair if you zoom out to
say each of these lawsuits against some
of the existing dominant platforms is
more or less about that story that you
had these firms that in the early years
were really competing for users really
doing what was best for their customers
through that they were able to gain
scale and then at some point or another
they really switched tactics to start
really focusing on building Moes
protecting Moes and pulling up the
ladder so that the next tier uh of
startups and entrepreneurs really don't
have the same opportunity in the
marketplace yeah I I guess one of the
things that has been pretty fun uh after
we announced that you were coming to YC
is I I received a number of DMS from uh
friends in Tech who say well you know
don't you know that she sues Tech you
know she sues you know Microsoft and
Facebook and all these folks like isn't
she an enemy of tech what do you say to
uh you know those those critics so look
we are a friend to entrepreneurs and
Founders and open markets that are
necessary to make sure that if you have
a good idea and you're a smart business
person that you have an opportunity to
succeed and to make sure that people's
success is premised on the quality of
what they're doing in the marketplace
right are you making something that
customers want rather than success
depending on exploiting some existing
privilege or having to bow down to one
of the existing incumbents so that's
really what the goal of the antitrust
laws is is to make sure we have these
open Fair competitive markets so that
people can get a fair Shake absolutely
well I I'm super aligned with you on
that like obviously uh at y combinator
we're here to try to make uh I mean as
we mentioned
down downstairs earlier we had lunch and
the funniest thing was um we're
realizing that our motto of uh make
something people want actually very much
comes into um conflict with um the goals
and ideals of uh many of the tech Giants
because they uh you know sometimes make
things people want but sometimes they
make things that make themselves a lot
of money and uh you know that's sort of
one of the great pieces of the FTC and
the US government that um you know we
want I I don't think we need like
special uh I don't think startup the
startup world or like little Tech is
asking for anything more than a fair
playing field and uh that's something
that I feel really aligned with you
on yeah for sure I mean that really goes
to the heart of why the antitrust and
anti-monopoly laws were created to make
sure that you have that Level Playing
Field and that you know the big firms
are not able to use their muscle to
unfairly kind of squeeze out the
competitors that you know but for that
anti-competitive conduct would have a
real shot so I am curious though um you
know and some folks uh you know in the
audience uh Bugg me about this too um
you know one of the things under your
purview is um you know commenting or
regulating uh Acquisitions and of course
you know a great many folks in this room
you know may want to retain that ability
to sort of have that be uh you know a
viable exit for their business you know
they would like to be able to um you
know have that as an option um things
like Adobe you know and some of it is
like disclaimer is like this is uh you
this specific action like Adobe versus
uh n doj you Adobe and figma versus eoj
uh that's you know not your purview but
I'm sort of curious how you respond to
that you know around the AC acquisition
side is there some aspect of uh blocking
Acquisitions that you know would
actually help little
Tech yeah it's a good question so both
the FTC and the antitrust division you
know review mergers and Acquisitions and
so if you're making a deal that's over
like $11 million you have to notify the
government and then we have 30 days to
figure out hey do we think this is a
deal that might violate the antitrust
laws that may uh substantially lessen
competition uh in any given year two% of
all deals kind of get a second look by
the government uh and an even smaller
percentage ultimately we end end up
suing on so the vast majority of
dealmaking 98% goes through without the
government even asking a second question
um I think we are at a moment where
there's a recognition that the kind of
more hands-off approach that the
government had uh over the last couple
of decades really led to consolidation
and allowed some of the dominant firms
today to kind of buy up firms that they
were threatened by right so the FTC
before I arrived at the agency uh filed
a lawsuit against Facebook noting that
when the market was shifting from
desktop to mobile Facebook realized that
that could be a threat and that they
needed to survive that transition to
mobile they tried to do so organically
but couldn't really cut it and so that's
when they made a series of defensive
Acquisitions buying up Instagram and
WhatsApp to kind of take them out of the
market as independent players um the
justice department brought a lawsuit
earlier this year uh against Google
given its role in the adtech space and
they similarly in that lawsuit identify
Acquisitions that Google made that they
alleg were anti-competitive and designed
to really roll up the market in unlawful
ways so those are concerns that we think
about um you know we're very sensitive
to the idea that for startups and
Founders you know you want to have the
exit options and what we also hear
though is that if your exit option is
just one company that's going to depress
your valuation it's going to give you
less leverage in kind of the types of
deal terms you're able to get and so
even if you want to exit through
acquisition having more competition
among acquirers is ultimately going to
be better for the startup right in terms
of having more leverage in that
negotiation being able to kind of get a
better valuation at the end of the day
yeah um I'm gonna go off script a little
bit and uh I guess I just spent the week
in Singapore and one of the craziest
stories I heard about Singapore when uh
Uber went to Singapore you know a lot of
uh jurisdictions uh threw up roadblocks
didn't want them uh I met the uh former
Transportation minister in Singapore
they literally said okay here's how you
do it and then oh you're going to need a
union we know the unions let's make a
union for you and they sped the process
for Uber to enter it uh and then it just
came up because is it possible for uh
these Acquisitions to you know get some
sort of private approval through the
government and uh yeah I really feel for
my friend Dylan field right now just
because um
you know he has a management team he has
a business that he's trying to run and
he's trying to run it basically with
total uncertainty about whether the
Adobe deal is actually going to happen
or not and you know I I think it's been
months you know it might be going on a
year at this point you know I'm sort of
curious like are those things that I
mean Singapore is very different than
you know the uh you know how giant the
United States government is but you know
what do you say to things like that I
mean is it possible to collaborate uh
maybe not you know specifically that you
know with like a private um approval but
you know how open is the government to
that sort of thing like for many of us
this is actually sort of the first time
that we might have spent time with uh
someone of your stature from the US
government so we certainly can do like
information exchange with other
enforcers around the world but
ultimately each country has its own laws
and regulations and so we have to look
at you know and deals can affect
different countries differently right so
we need to look at the facts specific to
the US and figure out how do we apply
the US laws here uh sometimes different
jurisdictions come out different ways uh
because you know the market effect is
different or their laws allow them to do
different things um we are thinking
about what else can we do to provide
more clarity and certainty in the market
so this past summer we along with doj
released draft merger guidelines that
lay out clearly you know what are some
of the analytical tools and Frameworks
we'll be using to review deals uh we're
also updating uh what's known as our HSR
for that's going to in some instances
increase the information we're
collecting on the front end uh which
we're also hoping will be able to
expedite our review so uh let's move on
to the next topic which I think a lot of
people are thinking about and worried
about which is uh AI there is a
executive order that uh the Biden
Administration just released on AI which
dropped Monday uh and then there has
been some backlash from uh folks from
our community around especially smaller
AI startups um you know one of the
sections that was mocked widely um
though before we mock mock it like I'm I
I think that you know there are very
important parts around it certainly
around uh Camp you know preserving
privacy competition and then uh in
particular supporting um skilled
immigration like those are all
incredible pieces of um of the order um
you know but one part that I wanted to
ask about you know
if there's a model running more than 10
to the 26 floating Point operations for
instance um you know sort of like
Banning math which you know seems nearly
unamerican to me I'm sorry if I'm
editorializing but um you know there are
uh call outs to encouraging competition
can you talk about you know how you view
uh you know competition in the AI space
you know what are the bottlenecks and
what role do you see for open source um
in in this discussion
yeah so there was a lot in the AI the uh
the AI EO and a lot of it affects other
agencies and other parts of government
um the ftc's role as you noted is really
about competition and privacy and so I
mean I'll just say UPF front you know
this could be a revolutionary technology
and I think historically we've seen that
these types of technological inflection
points can be super important in terms
of opening up the market and allowing
more competition to enter so you know I
think the the way in which um the
antitrust lawsuit against Microsoft made
it sure that as we saw the expansion of
the internet age this this next set of
companies were able to enter and inject
more competition I think there are very
reasonable concerns right now that the
critical inputs into this technology may
already be kind of controlled by a
handful of companies and that we may
already be seeing bottlenecks in ways
that could impede Innovation and impede
competition and so what we're doing at
the ftcu right now is really just making
sure we understand the full Anatomy
right what are all of the layers and
sublayers and where do we see some of
those bottlenecks so be it you know in
gpus and compute more generally in Cloud
um how are we thinking about you know
the the data the models the model access
and where we do see bottlenecks in what
instances are those battle bottlenecks
due to you know Supply constraints that
could be addressed through investing
more in production and so some of what
we're seeing DC do in terms terms of you
know the chips act and really trying to
incentivize more production here in the
US USA could help relieve some of those
bottlenecks some of those bottlenecks
may be because you know these these
layers are highly um capex intensive and
you're going to see huge economies of
scale and and data feedback loops in
ways that is going to be more difficult
to inject competition um some layers you
know you may in fact be able to Envision
more competition like such as in the
apps and and what you want to make sure
is that the firms are not using the
bottle next to squash competition in
those layers I think especially when you
have layers that you know there are a
lot of economies of scale um open source
can be a really key Vector of opening up
the market and having more competition
and so we definitely see that as an
important tool that makes a ton of sense
um well with that we did want this to be
really a conversation um with you know
our overall community and it's such a
rare moment to be able to get your time
here just a meeting of the uh best Minds
in the world here so uh with that I'd
like to open it up for questions uh who
here is a brave first volunteer to come
up here and ask a question please and
I'll just say um as we're going to the
question and answer um it's really
helpful to hear that you know the the EO
landed here in a particular way and and
folks had certain negative reactions and
and I'll just say you know that's partly
why I'm here uh I think it's really
important for DCU to be engaging
directly with founders with you know
startups uh and getting a better sense
of you know what are the risks that you
see what do you think the EO gets right
what do you think it should be doing
better and especially given our mandate
from a competition point of view like
what are the things we need to be
looking out
for please uh introduce yourself and uh
yeah uh hi Cher con I'm Alex I'm from a
company called atmo really admire the
work you're doing I think you have a
very bold Vision I think you've taken
really bold action the question I wanted
to ask was about uh the FDC and Venture
capitalists so a lot of us here raise a
lot of money from VCS and a question
which is often put to us when we raise
money is how are you going to build Moes
and how are you going to become a
monopoly and people even use these words
very literally very directly they'll say
what are your Moes how are you going to
be a monopoly and they say in very
explicit terms how will you do that task
of pulling up the ladder behind you
after we fund you and you become really
successful so uh I'm curious of your
thoughts on uh you know what it means
when VC's ask that and what you think
the Nexus between the Venture Capital
world and the FTC should be Peter we
actually have a viral video on the
YouTube uh on our YouTube channel about
uh comp competition is for or
competition is for losers
right awkward
laughter I mean I'll say first of all we
have a complaint database uh we collect
information and are always eager for uh
information
um but no look it's a good question and
look you know it's natural for when you
know companies are are looking to enter
in scale like it's not illegal to want
to be successful right um I think under
the antitrust laws there's certain ways
of competing or undermining competition
that are illegal right and so once you
do become uh you know once you do become
dominant engaging in anti-competitive
practices that are pulling up the ladder
like that is problematic under the law
um you know I'll be curious to hear from
you all like is this Universal across
VCS you know do you see some variety in
VCS we've also heard some concerns that
you know the VC ecosystem itself could
probably do with a little bit more
competition and so um those are things
that we're always interested in hearing
about as well because you know when you
see homogeneity in any layer including
the VC layer that also affects you know
what is and isn't getting funded and you
know one concern that we've heard is
that if VCS are dead set on um exit by
acquisition by one of the big guys what
does that do in terms of potentially
distorting or short Circ The Innovation
trajectory that we should be seeing
right I mean I think historically we've
seen that the Breakthrough innovations
that we've seen come from the kind of
Outsiders right the kind of startups
that are able to see something that's
something that the existing Giants are
not seeing and so if the only things
that are getting funded are what people
are Imagining the existing incumbents
are going to want to buy I worry about
what that does to inov
right and and does that really short
circuit the more breakthrough Innovation
that we should be seeing I mean I have a
concrete example of this that I sort of
Wonder on a daily basis you know I have
an Amazon uh you know sort of uh Echo
and you know large language models have
been out for you know years at this
point like why is it that we can't speak
to you know why isn't there an open
platform that allows you know open AI or
an open source model to come in and
replace uh Siri or replace you know that
should happen but you know a lot of
these conversations sort of boil back
down to well it's someone's moat and
they bought that they they want control
of that so that they can uh make sure
that you have enough toilet paper in
your house right like that's the
definition of
anti-consumer and you know do you think
like even philosophically that's where
the the role of the FTC or the role of
the government sort of comes into play
you know there's fair play and then
unfair play and when it's anti-consumer
or anti-competitive
you know there it's obviously a very
hard job to figure that out but is that
one of the things that you think through
yeah absolutely and I think what we've
seen um through some of the lawsuits
that have come out um again some of the
dominant platforms is that you know we
see a life cycle right and so in early
stages firms can be very Pro consumer
they can be engaging in practices that
help them build up their user base but
once they switch to the model of
successfully pulling up to the ladder
they can really start exploiting their
Monopoly power with IM with impunity
right you can kind of become too big to
care and start screwing over your
customers without real repercussions in
the marketplace that you would otherwise
face if there was competition right and
so I think that's kind of the in some of
these lawsuits the story that's being
told is like we're at the extraction
phase of the Monopoly life cycle and
everybody's losing out right the the
startups that can't enter the market are
losing out but the existing customer
basis is losing out too uh the ftc's um
lawsuit against Amazon yesterday a whole
bunch of additional stuff became public
including the fact that we allege um
Amazon was kind of polluting its search
results page with ads even when they
knew that Those ads were irrelevant and
actually steering people to more
expensive products um similarly in some
of the Google litigation there claims of
practices that seem flagrantly
anti-consumer and so I think um you know
having more competition would make sure
that that's getting addressed too
pep over here had a
question thank you so much Cher con uh
for your time so a lot of us have
benefited significantly from open source
over the years and we've also been
contributors into the space as well the
question I have it's not really clear
reading the EO exactly how some of that
applies to open source systems now as it
currently stands there are Foundation
models that are being released with open
weights with a lot less visibility on
how these things were trained but then
other people are taking these Foundation
models and then forking them fine-tuning
them specifically to make new
ones what is the ftc's perspective on
the applied use of those fine-tune
models and two if a company decides
let's say one of us here to start
training a new model at what point does
it actually become subject to Government
Review yeah it's a good question and you
know the EO was crafted uh with a lot of
other agencies and you know a lot of
input and engagement and you know the
ftc's involvement um is really just on
the competition and and privacy side but
I think those are really good questions
especially on the open um open source
side I will say you know one thing I'm
really curious to hear from you all
about is um in the past especially in
digital markets we've seen what's been
called the kind of open first close
later strategy and so firms will start
off with more open ecosystems uh in ways
that benefit you know businesses that
are able to build on it also help you
know have helped the Platforms in terms
of and that lets them scale more quickly
but then at some later point they switch
from open to closed and that that can
really have devastating consequences as
well are those similar risks here at all
as well and and how would you see see
those playing
out the value that you've helped create
suddenly you're you know being locked
out from yeah I mean it cuts both ways
right so if you're a brand new company
and you're starting something and you're
training a brand new model which quite
frankly not many of us can do because
we're capex
constrained um in the scenario we do
that eventually there may be a situation
where what you're describing comes true
right but right now the foundation
models are
kind of trained and controlled for the
most part by pretty big companies so
they could very easily stop doing that
and now let's take open AI for example
right open AI has a consumer product
it's actually something that's powering
their API is powering my product but the
moment they
stop uh permitting my use case
essentially I'll have to switch over to
something new and that can happen
anytime
right so is it a available API forever
perspective or is it hey you really
cannot do these XYZ things and I mean
what are the constraints on actually
training and using an open- Source model
beyond the 10 billion parameters limit
is it actually possible for all of us
here for example to contribute
engineering time to train an actual open
source model that is in direct
competition with the big ones
right and there's no Clarity on that so
this is a question that I've definitely
been asked a few times and I'm like well
I don't have any
information I can definitely follow
posit it and an opportunity arise
this hi um I just wanted to challenge to
point on Innovation and big players um
some of the most Innovative papers that
we've seen have come out of Monopoly
companies research Labs right um and
there is this concern that if you know
these proposed breakups do happen we
lose the ability to fund these you know
relatively expensive research projects
that might yield something like you know
attention is all you need so what are
sort of the you know FDC and
government's thoughts on that like there
is a real risk that if they lose that
status they stop being able to fund
research that could be extremely
valuable to both open source communities
and Founders so just curious to hear
your thoughts on that yeah it's a really
good question and it kind of goes back
to this age old question of what are the
market conditions that best favor
Innovation right is it Monopoly or is it
competition um and there's long been an
argument by kind of the school
that it's actually Monopoly that's best
favors Innovation because you can sync
your Monopoly profits into all these
lines of research um and then the
Kenneth Arrow School said No in fact
it's competition and you really need to
drill down to the question what kind of
innovation are you talking about right
and and the Empirical research suggests
that monopolies may be better at what is
called kind of incremental Innovation so
kind of you know marginal improvements
on the kinds of technologies that
already exist out there but historically
the kind of breakthrough Paradigm
shifting Innovations have actually come
from Outsiders and so having an
ecosystem that's open to startups and
people who are kind of looking at things
different way and are going to come up
with ideas that the existing incumbents
are not thinking of that that's actually
been a really critical way to have the
more Paradigm shifting Innovations um
more generally I mean you know we're a
law enforcer uh and so we have to
enforce the antitrust laws and those
reflect a choice by Congress to say as a
general matter we're going to favor
competition over a monopoly and so
that's why the laws are designed to
protect competition uh if Congress says
Hey There are some areas where we think
Monopoly is the way to go they can do
that separately but it's not really for
us to say hey we think a monopoly is
doing good here so let's you know allow
them to exist our job is pretty limited
it's just you know enforce the
competition
laws take one over here
oh yes
please hi Cher con thanks for coming to
San Francisco I'm georger Bosa CNBC
you've been on our air before I have two
questions for you my first one is you've
been here a few days now what have you
learned what's been the most interesting
thing you've learned will it change what
you say or what you do when you go back
to DC the second question is one of the
biggest criticisms of regulators is that
they're fighting yesterday's battle so
when you're looking at Amazon and
e-commerce or the doj looking at Google
and search they've moved on to the next
big thing how do you make sure and
there's a lot of anxiety here that the
big players are going to dominate the
next generative AI shift how how are you
looking at that and making sure that
that doesn't happen yeah good questions
I mean that's partly why I'm here uh to
be hearing and from and and meeting with
um Founders and startups and and and
little Tech um because you know in DC
more established companies have very
established ways to be sharing their
thoughts be it with Congress be it with
regulators and it's really the more kind
of little Tech and Founders who
understandably don't have the resources
to go higher expensive lobbying shops um
those are the voices that we don't
always hear from and I think you're
absolutely right that we're at a really
important inflection point uh as you all
know there are a lot of conversations in
DC happening right now about AI about
you know what should be the government
be doing and I think it's really
important that we get this right and in
order to get it right we need to be
hearing from a broad set of people um
and that all that includes you all and
you know already in the conversations we
we met in a smaller setting earlier
today with um some some startups and and
folks who are going to be launching um
new services and it was just already
really really instructive to get a sense
of what they're already seeing in the
market in terms of some of the practices
by these incumbents that could be
risking solidifying their dominance and
kind of locking out some of the new
competitors so I will definitely take
that all back uh to DC and especially as
we want to make sure we're staying
Vigilant in the AI space um those
conversations are definitely going to
inform where we're
looking right
here uh hi Gabriel from coverage cat
here um my question was about uh how the
FTC and maybe the government enforcement
agency is RIT large think about more
pervasive uh price coordination through
software that we see happening across
different types of markets and not just
through software but also things like
consulting firms and whether or not you
felt like the government had the
adequate tools to deal with these types
of anti-competitive behavior or if
Congress needs to you know address these
matters and pass additional
legislation yeah it's a very timely
question and um as enforcers we're
definitely tracking this um there has
been a whole bunch of reporting
including in you know the real estate
space noting how there's um software
that may be allowing that coordination
um the justice department also brought a
lawsuit recently in the agriculture
industry where they noted that this
company called um agrat was basically
collecting pricing data uh from all of
these um entities and kind of allowing
them to coordinate and and set prices in
a way so that lawsuits really important
um I think you know one of the um one of
the interesting questions that we face
is um you know what what price fixing
looks like changes based on you know the
technology that's being used so uh you
know whereas like a hundred years ago it
may have been a handshake in a you know
Smoky room now it can look different
right right and so what it looks like
for algorithms to be enabling that
collusion I think is going to run into
some questions for the courts about you
know one is um kind of Rapid price
matching just competitive price matching
versus colluding um I think some of you
know the the lawsuits that we've seen of
algorithms that are enabling kind of
market-wide collusion may be an easier
case so I think it's a very live issue
you um at the FTC we've been hiring up
with technologists um because we
understand that when we're looking under
the hood we need people and Specialists
and experts to actually understand
what's going on there so already hiring
technologists has made it so that you
know when we're bringing lawsuits there
are certain algorithms that we can call
out that without those technologists we
wouldn't have even understood what those
were doing so you know we're still early
stage in terms of fully being able to
skill up and hire in the ways that we
need but um you know it's its forward
movement um so speaking on the uh D or
like demonopolization I think uh I'm
curious if you've thought about kind of
how the doe looks at universities in
terms of having nonprofit governance um
pretty similar to how open AI is doing
right now I spent a decade trying to
build a for-profit university and kind
of ran into some of this um but I think
in shy of breaking apart companies are
there other sort of structural or
governance based uh regulations that
you're considering to ensure there's
less extraction and more value creation
for
consumers it's an interesting question I
hadn't thought about the kind of you
know nonprofit designation as a key tool
but historically um there have been kind
of a set of regulatory paradigms that
have had a seat at the table so on the
one hand you have antitrust and
competition tools which are primarily
about
decentralization but you've also had um
what have kind of been known as the um
public utility tools which have been
applied more in context where you
realize that competition really wasn't
going to happen right so be it in
railroads or Telecom there's such strong
economies of scale and such strong
Network effects that you're at the end
of the day day going to have a
relatively small number of players and
in that context we've applied um tools
like
non-discrimination um kind of similar to
Net Neutrality but in other contexts
like you can't pick and choose winners
and losers you kind of have to offer
equal pricing equal service to everybody
with the recognition being that if you
have parts of um you know sectors that
are so critical for Commerce you don't
want The Gatekeepers really
discriminating about who has access to
the market and who doesn't uh there have
been other tools like mandatory
interoperability um so to go back to the
question of you know when you have um
concentration and lack of competition
what are the vectors that can open that
up right so open source may be one of
them interoperability might be another
one right and if you're a aing
multihoming that can be a key tool to
inject some competition uh there have
also been tools like uh structural
separations to say you know if you own a
railroad you can also own a coal mine
because otherwise you're going to allow
your coal on the Railroad and kick off
the call of the Independent Producers so
again a recognition that when you have
concentration allowing vertical
integration can also create conflicts of
interest that can have real
distortionary effects on the market so
that um that kind of uh you know public
utility toolkit is one of them another
one has been uh public options so the
government actually standing up its own
service and injecting competition in the
market that way so you know a bunch of
municipalities over the last decade have
actually tried to have their own
Municipal Broadband to inject
competition against some of the private
entities so those are just some of the
other kind of regulatory tools that
traditionally we've looked to when
competition or antitrust weren't enough
I guess one of the things I'm noticing
in your responses is that there is sort
of a uh this desire for sort of a human
flourishing of A Sort um sort of backing
how you're approaching this right like
what is the thing that might actually
help people get better outcomes or and
usually it comes back to the things that
you've been saying like competition uh
you know no self- preferencing like
Level Playing Field that sort of thing
so that just I couldn't help myself to
editorialize so
yeah I mean I think the other fact is
like you know there's always uncertainty
um government's not going to be in the
best position to necessarily be
predicting the future that's not our job
right that's not our expertise and so
what are the best Market structures that
we can help create and protect to make
sure that the best ideas are rising to
the top um and traditionally you know
competition and Fair competition and
competing on the merits has been the way
to do that thanks maybe one over here
Matt
oh yeah thanks Matt to bergalis um I
have a startup I've also spent 20 years
in Democratic politics and I'm very
excited to have you here and what you're
doing um my question is on
alliances and even Investments I'm I'm
curious what your perspective
is uh you know for example is a
hypercloud investing in an independent
AI company is that really about
competition or is that about capturing
spend back to the hyper clouds there's
so many examples I think um in this
industry where the the nature of the
Integrations and the structure of the
Investments might be relevant I'm just
curious what your what your point of
view is on that and what your
involvement might be yeah it's a really
good question and something that we're
thinking hard about um in the past we've
seen sometimes companies resort to what
are known as kind of avoidance devices
so they'll structure a deal or structure
an in investment to try to sidestep um
antitrust review um we haven't looked
closely enough at all of the Investments
happening right now to figure out is
that what they're designed to do but
it's it's possible that there may be
certain loopholes that are um you know
Investments being done for the purpose
of achieving control for the purpose of
exerting influence in ways that may be
undermining competition but it may be
done in a way that's you know not
mapping on 100% to some of the existing
laws so uh it's something that we're
thinking about and I think is very
timely right now maybe we do two or two
more
please hi Chon uh I'm Saba um I had a
question around how you're thinking
about consumer privacy protections um
especially as there's a massive
Foundation models that have been trained
on swats of uh you know consumer data
and uh uh copyrighted data as well
allegedly um yeah I was just wondering
how the FTC is thinking about regulating
that or thinking about
it so we are you know the de facto
privacy enforcer in the United States in
the absence of some some type of kind of
separate Federal Privacy Law um so we've
been very active here and we're very
mindful of the fact that in the same way
that behavioral ad-based business models
that were monetizing people's data
created a race to collect as much
personal data as possible that the shift
to llms and AI could create just another
set of incentives to be endlessly
vacuuming up people's data and so we're
aware that some of those business models
could create incentives that are in
tension with protecting people's privacy
and I think that creates some challenges
for us um you know we've been clear that
there's no AI exemption from the laws on
the books and so we're going to kind of
continue enforcing the laws I think we
do face some challenges um you know just
the other week we held a round table
with creators so we heard from artists
uh authors uh you know fashion models
just people in the creative business who
shared that you know a lot of them have
woken up one day and realized that their
life's work has suddenly be fed into the
these machines and it's kind of spitting
out results that are now harmful to them
or really diluting the value of their
work and it was just really eye
openening to hear how that's already
affecting people um and you know they
were saying things like we are fully
appreciative of how these Technologies
could really help us we're not anti-
progress but we think the fact that
there's no consent model right now where
we get a chance to decide whether we're
opting in or not um could be really
damaging and really change over the long
term people's incentives to create right
and and produce so I think there are a
lot of really fast-moving developments
and we're trying to track them as much
as possible some of them are going to be
in our wheelhouse some of them are going
to be in other government enforcements
wheelhouse but um you know we've been
fairly active on the consumer privacy
space we've been particularly focused on
people's sensitive data so we brought a
lawsuit relating to geolocation data uh
against this company coava that had been
basically making people's sensitive
geolocation data available for third
parties
and so third parties could access fairly
easily you know whether somebody was
going to an addiction facility addiction
recovery facility whether somebody was
going to a reproductive Health Clinic uh
whether somebody was going to you know a
religious place of worship like fairly
sensitive data about people that I don't
think people assume that just because
you're carrying a phone around with you
uh that data will be available on the
open market so that's a lawsuit that's
still pending uh We've also been fairly
active in the Health Data context so
people sensitive Health Data making sure
that if apps are collecting data for the
purpose of providing you some type of
Health Service they're not then turning
around and sharing that sensitive Health
Data with third parties so um we'll
continue to do that
work last one Luther who do
you haven't got the back yet so I'm
gonna go
okay
thank you um hi this is Jason um I'm a
Founder in AI space so all of that's
very relevant um and I have previously
worked at like Google and these Giants
so uh kind of see what they're doing as
well I guess um what I'm interested in
learning about is how uh FTC works with
other government like institutions or
even like other like kind of like EU for
example like they have gdpr I think
their rules are a bit more aggressive
compared to the states um particularly I
was kind of inspired by the case of um
the blizzard acquisition where Microsoft
kind of bought out like the competition
from Sony I I know FTC was like against
that case but like kind of um what's
interesting to note was I looked into
the story a little bit where Microsoft
just negotiated with all of their
competitors like with so uh other like
Studios and then they licensed the
rights to Call of Duty which is like the
biggest kind of thing in tension between
the in the in the case so that um only
like Sony the the defendant or you know
the suan you can say um was in the
inferior Place compared to others um so
sorry there's two parts of questions the
first part is how do you work with other
kind of agency second part was what's
your take on that case and you mind
sharing a bit more yeah unfortunately
that that case is still pending it's on
appeal so I can't say too much about the
specifics but on the first question um
you know the FTC has a long bipartisan
tradition of of building up its
International engagement program and so
there are a lot of you know agreements
in place with other enforcers to be able
to share information um and so we do
that uh at the end of the day we you
know there are limits on how much we can
coordinate because every country has its
own laws every you know case affects
different countries differently and so
oftentimes you'll see countries come out
with different outcomes but behind the
scenes at the very least we can
generally talk to each other share
information and make sure that um you
know we're being good
partners chair Conan thank you so much
for being so generous with your time
thanks so
much K con will uh hang out a little bit
so if you have uh individual questions
or private questions uh you
know