The Biden administration’s effort to more aggressively regulate big tech took a considerable hit last week. But this was never going to be a quick, or straightforward, process. On the latest Pivot podcast, Kara Swisher and Scott Galloway discuss where lawmakers and regulators go from here.
Kara Swisher: Earlier this week, a federal judge threw out antitrust cases brought by the Federal Trade Commission and 40 states attorneys, against Facebook. The lawsuit asserted that Facebook had social-media monopoly power with its acquisitions of Instagram in 2012 and WhatsApp in 2014. The judge said the lawsuit was brought too late. He said the FTC could try again within 30 days, but they’d have to bring more detail. Facebook stock was, not surprisingly, up 4.2 percent, and the company passed the $1 trillion market cap for the first time. It had been hovering below that for a very long time.
Scott, you had talked about judges being the issues in these antitrust cases and in other cases against tech.
Scott Galloway: Yeah. The ruling was that it took you too long. But it highlights the need that, with the current system of antitrust and current interpretation by this current set of judges, we need new laws.
Swisher: That is correct.
Galloway: Antitrust law is loosely based on consumer harm, and the primary metric for evaluating consumer harm is whether prices rose, and we’re talking about free products. So we’re trying to regulate — I don’t know what the term is — coal in an alternative energy universe. Our laws need updating. And I think Lina Khan’s first job is a big test, because she’s going to have to rewrite the complaint. But it just shows, with the current antitrust law, and with the current bench of judges, we’re not going to get there. And there’s just no getting around it, it’s a setback. It’s clear that this is going to be a multiyear thing. Although the thing I found encouraging was that the two people who came out and said, clearly, we need new laws were representative Ken Buck, a Democrat out of Colorado, and Josh Hawley, a Republican senator, so …
Swisher: Along with Democrats, yeah. They know they need to rewrite these antitrust laws.
Galloway: People from both sides agree that the laws need to be written. So I think we’re going to make progress, it’s just going to be a slow grind here. They’re going to have to update the antitrust laws, which they have done before. But as it currently stands, it’s going to be … it’s happening all over. Stuff’s getting thrown out in Europe. These companies aren’t set up to be evaluated in an appropriate way. We should go back to evaluating them on market power, not on consumer harm, so to speak, because who is the consumer here?
Swisher: Yeah, it’ll still be tough. Legally, this is going to be very tough for all these regulators, and they waited too long. There’s a tweet with a list of how many openings all of these companies have in public policy — hundreds of people — which is going to be used to impact both regulators and judges. And these people, they’re loaded for bear. These tech companies are loaded for bear, and they’re going to use their money and power and influence. So the legislators really do need to move quickly and to get some of these laws passed. Eventually, I suspect some of them are going to go to the Supreme Court, but it’s going to be a really interesting couple of years if government can stay together and do something about this.
But again, not a surprise, and I don’t think this is going to be the first time that judges are going to overturn things that regulators are attempting to do. What do you think about Facebook becoming a $1 trillion valued company?
Galloway: I think it’s the fifth now. I mean, these companies, they’re just such incredible business models and they’ve demonstrated their ability to, at this point, overrun government. And even if government is able to push back, it’s going to be years, not months. Look, a great investment strategy is to invest in unregulated monopolies. What do I do with my money? Well, I don’t know. I’ll just find a monopoly that’s unregulated. That’s a pretty good investment strategy, and it continues to be. I don’t see anything slowing these companies down right now.
Pivot is produced by Rebecca Sananes.
This transcript has been edited for length and clarity.