 Thank you, Barry, for inviting me here and thank you everyone for coming. What an amazing event. Really eye-opening. I was standing next to a young woman before who kept turning around and saying to me, I didn't know that. I didn't know that. And a lot of it I didn't know either. So I think it's just really powerful. It's wonderful to see so many people here. One of the things that we are hoping to focus on in this panel is not only looking at the ways in which we are seeing monopoly behavior, but what to do about it. So this is kind of step two in what are our legal tools, what precedents exist out there, and how we're supposed to behave moving forward. So I'd like to introduce this incredible panel. Lena Kahn is a second year law student at Yale. She's also a fellow here in the open markets program. And she's written a lot about these issues about consolidation, about Amazon, and is just one of the great semi-journalist researcher intellectuals working on this topic right now. And then we have Maurice, who is a professor of antitrust law at University of Tennessee. He's the co-founder of the Data Competition Institute, and Maurice Stock, sorry, say your last name. He's also the author of Big Data and Competition Policy, which is out this year. So I don't know if that's going to be available on Amazon. And then we have Jonathan Cantor, who is an antitrust partner at Codd Walleter, which is a fun word to say. Did I say it right? Correct. And he is a co-head of the firm's global technology and industry team, and he also worked in the Bureau of Competition at the FTC on the Microsoft case that all of us are so aware of. So with that, let's just begin. Lena, let's start with Lena. Thanks, Haley, and thanks to Barry and the open markets program for putting on this important event. I was fortunate enough to work with Barry for a few years, and so it's a real honor to be back in a much fancier office building and with panelists whose work I so admire. So I guess I want to start off by just saying that I think that in many ways the kinds of challenges that Amazon poses today are analogous to the challenges that we faced 100 and 120 years ago when technologies of the industrial age, like the railroad and the telegraph, similarly had enabled new levels of scale and had led to tight concentrations of power, which these firms were then using against both consumers and producers to discriminate against them. And what we did back then is declare that these new technologies were forms of infrastructure on which all these other businesses had come to depend, and we adopted public utility regulations and forms of antitrust laws to kind of curb this power. I think the insights from our experience of that era of the industrial age can prove very instructive for the challenges we're facing in the information age. Of course, the specific application will differ, but I think the general principles will hold. As Al said, I think in one major way the threats and challenges posed by both Amazon and by platforms are totally unprecedented, and that I think stems from the level of control that these firms have over data and information. So one way that I first got interested in these issues was a few years ago I went to the annual convention held by the National Retail Federation in New York, and over there I saw that, you know, I'd expect they had a whole floor that was just devoted to retailers who were figuring out the cutting edge trends in both online and physical retailing. But then they had a second floor that was entirely taken up by pricing companies. So this is an industry that I didn't know existed. Pricing companies are the firms that help retailers figure out how to operationalize their data. So both retailers and data brokers are constantly collecting data on us, you know, based on our zip code, based on where you're hovering on the screen as you browse, based on how many days you keep some item in your shopping basket, and pricing companies are the ones that go to these retailers and tell them, okay, this is how you can use this data against consumers and against producers. And from talking to them it became clear that the holy grail of online retail is price discrimination, which is a term for when companies charge all of us a different price for the same good. And it became clear just from that conference that there are an enormous amount of resources being poured in to figuring out how to do this. So what I want to do today is just briefly offer some of the ways in which Amazon and some of these other retailers are or could be using their data to discriminate, and also start sketching out why this might be a problem. I should say that in not all of these instances do we know for sure that Amazon is doing these things. These practices are really hard to detect. What we do know is that Amazon has the capability to do these things, that it would largely be in itself interest, and that right now it would also be totally legal. So on the consumer side, the main threat is price discrimination, which is when each company charges each of us an individual price. There are forms of price discrimination that have been routine for long periods of time, like charging senior citizens and teenagers cheaper movie tickets. But this kind of price discrimination is totally new. It's called first-degree price discrimination, and until now it was mostly a thought experiment for economists because there was no real way to implement it in any systematic way. So the research on this is limited, but the research that has been done shows that online retailers are already implementing price discrimination. There was a 2014 report that found that of 16 major retailers, around eight of them, have already started doing this thing. There was a Wall Street Journal investigation that found that Staples.com was showing consumers different prices based on their zip code, which was pegged to how much competition there was in the area, which meant that a rich consumer got to pay less for the same stapler that a low-income consumer had to pay a lot for because low-income consumers often don't have much competition in where they live. Researchers also found that e-commerce sites do what's called steering, which is when they manipulate the order of their search results to try and steer you to one product and not another. They found that Orbitz and Expedia do this based on what kind of computer you use, so Mac users are routinely showed higher prices than Microsoft users. I think going forward, one challenge will be identifying when companies are actually implementing these practices, in part because they already fluctuate their prices wildly hundreds of times a day. The consumers have kind of lost any expectation of a stable price. It also became clear from when I was at this conference that retailers are very anxious about consumer backlash around this, and as a result, they're employing a whole host of much more sophisticated tools to implement this than simply just showing us all different prices. It'll mostly happen through very personalized discounting, very personalized coupons, and so I think that's another reason why this will be less visible to us than it should be. So that's potential discrimination against consumers. There's also potential discrimination against producers, both the retailers that sell directly to Amazon, and then the independent merchants who use Amazon's platform to sell to us. So on that side, we've already seen price discrimination against producers, against publishers. As we've heard, Amazon can use its control over information to squeeze publishers for better terms. In Bradstone's book, The Everything Story, he talked about how Amazon actually categorized publishers by how dependent they were on it, and then used that information to extract better terms. A second way that Amazon uses its data and insights is to enter into direct competition with the retailers who use its platform. So Amazon Marketplace is where third-party vendors are able to list their goods, and it's actually a huge part of its business. I think something like 60% of the value of all retail goods last year came through this program, and what these sellers have found is that Amazon basically uses the Marketplace as this petri dish to identify what products are popular. So you have all these independent sellers tinkering, experimenting, and when it looks like a product is doing well, Amazon will kind of swoop in and undercut them. And producers are very worried about this. I had the chance to interview a lot of them, and there are entire forums and kind of books written about how to address this issue and kind of grapple with Amazon in this way. And it's not price discrimination exactly, but I think it's another good example of how Amazon's control over data can have huge, anti-competitive implications. So these are just some of the ways in which Amazon could be using data. I think there are a whole host of other ways that we haven't really figured out. Maurice and some other great scholars are starting to work on ways in which this affects competition, which I think is another thing that is very understudied right now. So whether we think this is a problem I think is an open question. It should be noted that a lot of economists would say the price of discrimination is actually good, the idea being that it lets rich consumers kind of subsidize poor consumers, but I think there's good reason to be suspicious of that given that what we've seen is the exact opposite. Like with the Staples example, we see low-income consumers being charged more. Historically we've also seen price discrimination as being a tactic for unfairly expanding your monopoly because it means that a company can use the fact that it doesn't face competition in one area to subsidize the areas where it does face competition and kind of expand that way. I think more generally this introduces a fundamental question about how information is organized in society and how our markets do or don't function. The kinds of information asymmetries that are emerging between Amazon and the public are quite staggering and I think this has huge implications for how our markets work. Traditionally one of the major arguments in favor of open markets was that they decentralize information, they distribute information and hence markets were democratic. I think the way in which markets are moving today with these huge imbalances of power and imbalances in information and knowledge means that we're actually moving away from a world in which markets are democratic. We instead have Amazon and a handful of other platforms that know everything and we by comparison know very, very little and not only that but we're also unable to share information with each other because each of us is increasingly going to be experiencing a totally personalized price and experience. So in closing I think the stakes of this question are quite high. I think how much information Amazon has and how much knowledge it has and how it's able to use this is still very much in its nascent stages of being understood. I think regulators haven't really begun to understand the implications of this. Insofar as they are studying data, they're really just looking at consumer protection which is important but it really doesn't get to the kind of systemic and macro issues at play. Alright, well thank you very much for inviting me. When Jonathan a little bit over a year ago asked Allen and I to look at this issue about big data and competition policy, there really wasn't that much thought about it so Allen and I wrote our book which we'll be coming out later this year and what we found is that these online platforms can deliver significant benefits. If you go to conferences on the sharing economy, you hear about Uber, you hear about Airbnb and they raise tremendous benefits but sometimes what's lost or what about the concerns and one of the things you just heard is that what is the intersection between big data and these platforms? Big data is characterized by four V's, the volume, variety, velocity and value of data and you could see why Amazon was attracted to books. It was attracted to books because books provided them valuable data on affluent intelligent readers and George Packer pointed that out originally in his article and what then are the antitrust implications when one company then accumulates a lot of data on consumer preferences and so there are many issues that this raises and I'll just raise four. The first involves entry barriers and network effects. Generally with antitrust, if entry barriers are low then we don't really think that there should be an anti-competitive problem because if someone tries to exercise market power people can come in and enter. Network effects aren't bad. A network effect is when your utility increases as other people use that product as well. So as more people use a phone, the better it off you are because now you can call more people but network effects also can allow the big to get bigger until they dominate the market and with these data-driven online platforms you not only have the traditional network effects like Facebook, more people that joined Facebook the better off it is. You also Alan and I point out you have these three other data-driven network effects that really increase the stakes. You have network effects involving the scale of data the scope of data and the spillover effects on one side to the other and what this means is that the more data that Amazon has or Google or Facebook it's at a relative advantage to anyone to come in and compete because their algorithms won't have access to this data won't have the opportunities to learn necessarily won't have the opportunities to recommend for example other types of books or other articles that you may be interested in. So network effects could then shelter these online competitors so competition isn't just necessarily one click away. The second concern is that these platforms are often an important gateway just like the search engine or Amazon between one group and another group and you then have all this data that's flowing through this bottleneck and you have the capacity then to discriminate and we heard really one way that you can discriminate is through price and then the other way you can discriminate is people think that the algorithms are objective, they're neutral but Amazon for example has been accused of favoring particular books in which it makes more profits and so you have this degradation and quality that consumers may not be aware of whereby consumers are being told oh these books might interest you and it's not really that it's an objective or even there's a high correlation it's just that it's more profitable. The third concern you have with these online platforms is they should be neutral I mean the online platform should be neutral but what happens is you get this thing called the frenemy relationship and you see this with any dominant online platform that vertically integrates and starts competing with some of its members so Google for example when it was a search engine but then it started competing with some of the sites that it was listing and so it's friends as well as enemies and this is particular with online like for example the mobile phone platform where Google through its Android and Apple through its iOS needs friends, it needs independent apps to come onto its platform and that's good for you but then it starts competing with them and it has an unusual relationship and one of the concerns I've seen with Amazon it has that frenemy relationship with publishers because on the one hand it needs publishers it needs their books but then it starts competing against the publishers and here you might then have perverse incentives that you can have degradation in a way to favor your product over those of your competitors and that's not really competition on the merits and then the final concern is well what's at stake and I thought that the first panel did a really nice discussion of this is that ordinarily and I trust over the past 30 years has increasingly migrated to what's measurable and it's not because what's measurable is what's important it's just that it's measurable so it increases in importance and what isn't measurable has sort of fallen off on the wayside so you look at a lot of the financial mergers we were looking at what would be the likely impact on price and narrowly defined markets we didn't really consider systemic risk because it's not really measurable and when you look at the antitrust tools they're really good at looking at price effects and narrowly defined markets they're not very good at looking at non-price competition such as quality or privacy concerns and privacy protection could be viewed as quality and that's a big problem with these online platforms where often on one side of the platform the product is offered for free so your price tools don't really work that well and what are then the implications when one company gets a competitive advantage through data and wants to continue obtaining that data it starts viewing then privacy protection as a threat also it views users gaining greater control over that data as a threat and then finally when you're looking at what's at stake here my antitrust professor was Bob Potowski who is a former FTC chair and he wrote one of the leading articles the political content of antitrust and he mentioned that you know look we're not dealing with ordinary wares here we're not dealing like with cosmetics or things like that we're dealing here with the marketplace of ideas with books and what are the implications then when you have one company that can have such an important control over the flow of information and here I mean this is when we were at the DOJ we would look at newspaper mergers we would also consider this the competition on the editorial side as an important component but that seems to have been lost over the years but it's nonetheless a significant concern so I'll just conclude with there was this one study that was done on search engines and how they can sway elections by how they rank news stories on presidential candidates and it found that search rankings could boost the proportion of people favoring any candidate by more than 20% more than 60% in some demographic groups so what are then the political and social costs when you have a company that controls an online platform that serves an essential function for the marketplace of ideas and what are the risks involved with that Thank you Thank you I would be remiss if I didn't start out with a couple of remarks about my fellow panelists and a trust lawyer has been practicing now over 15 years and started his career at the federal agencies you often think about what's coming next and sometimes you get discouraged and a little downbeat about what you perceive as deficiencies in areas of antitrust thinking and enforcement and then you look at someone like Lena who's young and optimistic and thinks big ideas without apologies and that's terrific and that's a sign of the future and we need more people like Lena and her work here to really move us forward into a new golden age of antitrust enforcement Maurice also neglected to mention his article that he wrote with Alan Grunis that built on the piece by former chairman Patofsky about the marketplace of ideas and I kept coming back to that article in my head as we listened to the panels earlier today because to me that is one of the most critical aspects of this discussion. It's not just measuring, as Maurice said in a very narrow way with blinders on narrow price effects it's about figuring the impact on social welfare and when you talk about the impact on social welfare you have to think about access to things like ideas, books, images, photography, music, news I mean these are the arteries of democracy and if we have platforms that have a chokehold over these ideas and have conflicts of interest and how they bring these ideas to consumers there's a big problem one that may not be measurable by Chicago school economics but are still important and need to be factored in when thinking about antitrust So taking a step back I was looking at the agenda and the title was Is there a case? and that's what I'm supposed to talk about Is there a case? But to start I think for me it's about is there a will? I'm an antitrust lawyer and people talk about how we're in an era of reinvigorated antitrust enforcement We see the DOJ blocking Comcast, Time Warner Cable we see the FTC stepping in to block Staples Office Depot once again and you can AT&T T-Mobile it's great time to be an antitrust we're finally seeing enforcement Well I would say that you know antitrust merger enforcement merger enforcement is alive and well antitrust enforcement is barely on life support when was the last time you can remember a major antitrust agency bringing a monopolization case the reason you can't remember it is because they haven't done it we haven't seen one since the administration came in with a promise of more enforcement so when I sit here and folks talk about wanting to see more action the problem isn't just one of Amazon it's a problem of will political, policy, legal will to take on the tough cases to bring the tough cases and create precedent we've seen the Supreme Court step in with a few decisions that seem to define boundaries about what kinds of cases the agencies can bring but what we haven't seen after that are the agencies testing those boundaries bringing four, five, six, seven cases figuring out exactly how far that Supreme Court precedent really can go instead what we've seen is calcification and these cases take on outsized significance so when we take a step back here and we talk about well are the antitrust agencies going to do something in this case about Amazon the real question that needs to start is are the antitrust agencies going to bring section two enforcement cases because the answer is no then we should know that and then we should take a step back and say well is something else necessary is regulation necessary are new tools, are new laws necessary but if the agencies are going to take the position that the laws as they exist today are sufficient to address these concerns then they have to have the will political will, policy will, legal will to actually step forward and enforce that so now let's look at some of these issues we're talking a lot about platforms online platforms as Lena said the antitrust laws came about because of railroads, they came about because of oil companies that provide the essential infrastructure for our economy well today we have the same thing in these online platforms they are the railroads of the modern era and they play a central role in building a thriving economy but as Maurice said they're very prone to significant network effects positive feedback loops and that's why you see monopoly after monopoly dominant company after dominant company folks out in the tech world might talk about Joseph Schumpeter and they might talk about the notion that you're always living on the edge because you're worried about the next company that's going to come along well I would disagree with that notion as being comforting to me that's the problem we don't want to go from monopoly to monopoly we want to have competition here and now it's competition that leads to really the remedy for a lot of the problems that we're talking about today because they allow consumers they allow participants in the market to hold the platforms feet to the fire I don't like the way you're dealing with me so I'm going to take my money I'm going to take my content I'm going to bring it elsewhere but you can't do that if you don't have competition and that's the problem the problem that we should be focusing on is preserving rules that allow platform competition to emerge so you think about some of the themes we've heard today yes they're concerns about prices yes there's but it's the conduct that the antitrust laws should be focusing on so what are the areas that are a problem okay we've heard things about exclusive dealing and exclusivity well that's straightforward antitrust the antitrust laws are capable of dealing with that exclusionary discrimination right not just price discrimination in of itself but discriminating in order to exclude rivals that is actionable conduct that the antitrust laws should be able to address we talk about conflicts of interest when a company that owns a dominant platform also competes on that platform and engages in conduct to exclude a rival that is what the antitrust laws exist to do but we haven't seen that level of enforcement and what's at stake it's consumer prices it's innovation a lot of times the companies we're talking about including Amazon are great innovators they do wonderful things and that's fantastic we shouldn't deprive them of their ability to do that we should encourage them to do that but the problem is just because you innovate in one area doesn't mean you should have blanket immunity to exclude others with impunity right so what we are trying to preserve is that innovation arms race we're trying to preserve the ability of someone to come along and challenge Amazon with the next best idea or four or five companies to come along and do that to Amazon to Google or to an Apple but instead we're not seeing that why because of some of these exclusionary acts that lead to barriers to entry that impede the ability for these competitive alternatives to come about in a meaningful way so you ask what can you do about it what are the remedies well for starters you have to identify the problem and you have to be willing to address the problem in order for there to be remedies and so bringing a case frankly is among the most important things I remember when I started my career in private practice you get lots of phone calls from companies wanting to stay on the right side of the law and these are companies with large market shares saying can I do X, Y and Z you would do an analysis and help them figure out okay this is what you can do if you want to be a law abiding corporate citizen you don't get those calls today because there's no deterrent as a business you would be silly actually in some instances to pull back on your behavior because of fear of section 2 enforcement because nobody's bringing any cases so simply bringing cases will start to create a deterrent value second is you need a recognition that there's more at stake here for these types of platforms one is they're multi-sided pricing for example you might have pricing on one side is designed to exclude rivals from developing elsewhere you have to focus on not just the consumer facing aspect of the market but you have to focus on the supply aspect of the market you have to focus on the network effects you have to look at more than just price right in this market you have to think about ideas the marketplace of ideas free expression again these are the things that are fundamental to our democracy the issues that people talk about whether it's news photo, consumer opinions these are the kinds of things that people are concerned are being stifled by some of these platforms it's the most fundamental information in our economy the last thing is well if you do find a problem well two more things one is you have to deal with conflicts of interest you have to start understanding that when platforms have conflicts of interest they're going to behave as more re-sarticulated in a way that it's not necessarily optimal for users or consumers or social welfare they're going to behave in ways that are optimal for their bottom line and that's okay if there's competition because competition will create checks and balances the last thing are remedies and remedies in these kinds of conduct cases can be challenging it's why you need early intervention frankly before markets are too foregone and before you have to unwind a large dominant company which can be very challenging to do behavioral remedies can work but there are also limits to behavioral remedies some people favor structural remedies which could be on the table it really just depends on the circumstances we're here talking about Amazon today we're talking about some of these other platforms I'll stop short of saying that any specific remedy is right for any one specific situation other than to say that you have to think about how bad is the conduct how high are the barriers to competition and how foregone is that market and what do you need to do really to restore it because when we're talking about our modern-day railroads if we don't address these concerns we are creating a significant problem for ourselves in terms of a thriving economy and democracy and it may sound alarmist but it's the truth and something needs to be done thank you all of you I have the lovely problem of a moderator I want to ask all of you about 50 questions immediately since we don't have all that much time all of you teed off exactly what I want to talk about here which is the first thing is public perception and I mean John you just touched on it but it's I don't think that out there in the world there's the sense that this is a problem and this is something that Frank talked about too we all use Amazon we all it's just what we do with it and the prices are low the prices for books are lower than they've ever been we can get anything we want for $9.99 so there's this sense that well even if it is a monopoly maybe it's not a problem and it's this other side it's the squeeze on the suppliers it's sort of a revelation I think to a lot of people and once that if Walmart can tell Coke what sort of artificial sweetener to put in its diet beverages and Walmart has the power to tell Levi what sort of cotton it can use in its genes then Amazon can tell a publishing house or an author what sort of content she can put in her book I mean and that's when we get into these topics that sort of make you cringe from a general democracy perspective which is a lot what Rick and Jeffrey talked about as well so that's the first thing public perception how do we change that and is it changing is this left right populism are we at a moment the second thing is what the sort of things that we're seeing the sort of monopolies that we're seeing coming from these from Amazon right now what specifically how is that specifically a violation of the laws that we have now however archaic and you know Brandeis was facing off against J.P. Morgan and now the FTC is facing off against our modern version of Railroad I mean how do you categorize Amazon today and the third is and all three of you talked about this a little bit but what do you do about it actually what do you do about it do we start smashing to smithereens do we start regulating like utilities do we consider common carriers an option do we you know just restrict certain abilities to negotiate with suppliers you know how actually do we move forward from here and so each of you answer that enormous question and then I guess I'll check the time and we can go to questions too I think one of the first things that we have to do is resurrect very traditional antitrust principles I think it's the thing that Jonathan really focused on which is that there are certain forms of conflicts of interest that should just not exist the main one being that if you are a platform you should not be able to compete with the businesses that are reliant on you this is a principle it also animates other areas of law like banking law where there was traditionally a separation between banking and commerce for the same reason the idea being that banks should not be able to compete with all of the companies that depend on them with funding for funding I think that's just a very primary principle that for whatever reason antitrust agencies no longer seem to apply it was something that was also an issue with the google investigation which FTC took years on and then they saw that they had a plausible case and they ended up folding so I think that's the first thing that we do and I think when it comes to that you really do you should have structural remedies on the table I think we've seen a whole host of evidence that behavioral remedies don't actually go far enough that firewalls are often not effective I think one of the main points that I was trying to get at is that these are problems in and of themselves but the fact that all these companies that are collecting all of this data exacerbate all these problems tenfold and so the ways in which companies can disfavor their competitors and the companies that depend on them are infinite in part because they have all of this information on them so I think we need to both resurrect the traditional principle that you shouldn't be able to compete with companies that are dependent on you and then also identify the specific ways in which data exacerbates this problem so Richard Hofstadter when he said whatever happened to the antitrust movement he first noted that originally in 1890, shortly thereafter there was a populist movement without cases and then with the second part of the FDR administration up through rather bipartisan through Eisenhower and then Nixon you had antitrust cases without necessarily a movement and now we're sort of in the third phase where you don't have cases and you don't have a movement so where does that leave us well first, I think that if you look at the concern about crony capitalism and firms too big to fail I think that there is a concern on both sides the left and the right that we now are in an age where there are a few firms and the playing field is not is not equal and not that we're saying that everyone should be equal but at least then that everyone has an opportunity a fair fight in the marketplace and that you're not going to use unfair tactics to prevent that so one aspect I would say with consumer perception is to make antitrust relevant why should we care now there's just sort of this frustration people feel that they have a lack of control over their privacy they also feel that there are companies that are entitled to these benefits but they don't feel necessarily any sort of empowerment so one thing I think Jonathan and Lita both pointed out and say look there is the antitrust laws you're meant to enforce them how come you're not enforcing them which takes us into the second question what can you do what are the antitrust cases that you can bring and hearing today what Jonathan pointed out there's just not the fear of deterrence because there were more like Alan and I looked at there were more people prosecuted under the migratory bird act than under section 2 of the Sherman Act 16 years there have been only two cases that the Bush administration and the Obama administration brought collectively against monopolies and if you look at just a number of investigations that have been open since the 1960s it's just steadily decreased the Nixon administration brought more civil non-merger cases than the last few administrations combined so I think then it really is a matter of political will is to say why aren't you enforcing the laws that exist and going to like when hearing about the exclusive dealing arrangement exclusive dealing is fine when like I have an exclusive dealing arrangement with my university that I won't teach elsewhere it's fine when there are many small players or there's lots of competition but if you have one firm that's dominant in the market and is imposing these exclusivity provisions that the authors find unhelpful that's a red flag I mean that's one area second area would be predatory pricing and the like the third thing is then what about the remedies and one remedy that is was meant to prevent this problem in the first place is active merger enforcement and there used to be this thing called the incipiency standard it's still part of the statute that we were supposed to through mergers prevent these problems from even appearing through merger review to prevent companies through mergers there's no point where there is this trend towards concentration and you have these problems so one thing that the agencies need to do is to beef up their merger enforcement John Kowalka has this great book that looks at the available post merger retrospectives and they found that most of the time the agencies got it wrong and so one thing is beef up and I trust merger enforcement and the second is to start bringing the section 2 cases like Jonathan mentioned and then you can start thinking about what are the other remedies like for exclusive dealing you can't have an exclusive dealing arrangement in a while that covers it do something, anything I think is where you want to start and that will change perception and there's no reason why innovation and antitrust enforcement have to be at odds with one another it's up to the agencies, it's up to people who believe in antitrust enforcement to explain why in fact antitrust enforcement leads to more innovation and it leads to a greater expression of speech and talk about the importance of things like journalism and authors and those in consumer opinion those are, that's free expression and people like it and people enjoy it and I think with Snowden and a few other episodes folks are starting to appreciate the dangers that come along and that's that perception will change over time when people start to see the benefits of competition but you have to walk before you run and right now there's really no program there's no statement of principles there's no no guidance that the agencies are providing other than by their action and if their action is inaction then that speaks volumes and I think that's really where you have to start and then also not to lose sight of where we started with the antitrust laws why they exist to begin with and then take it, look at it through a modern lens antitrust lawyers are always very fervent in their defense of the antitrust laws are malleable enough and enough to apply to modern society and as trust modernization commission reached that determination a few years ago but maybe they're not maybe the observation that Maurice made about section two enforcement is research suggests something other than that if the agencies and folks really believe that the antitrust laws are nimble enough then you have to show it or else the deterrent value falls off and once that deterrent value falls off really the whole purpose of the antitrust laws starts online I also think the problem is actually going to get a lot worse we've mostly been talking about Amazon in the context of its online retail business but there are at least two other arms of business that it's massively expanding that are also massively dominant one is its role in physical infrastructure and its delivery in warehousing it's going into direct competition with tracking companies it's basically becoming essential infrastructure both in a physical sense as well as the online retail it's also expanded significantly in its cloud services so it's by far the largest cloud server and a whole host of startups are dependent on it and are now seeing Amazon actually go into direct competition with them so I think as more and more and more people become subject to a form of Amazon's power the public perception will have to shift at some point is section two powerful enough to address the non-physical infrastructure it should be and I think this is where a lot of the scholarship that Maurice has done and Chairman Patofsky and others have come in and it's really been in many respects the underlying philosophy behind a lot of the FCC's work over the last 20-30 years and the answer should be yes so I think economics provides a lot of value in terms of defining how you approach antitrust enforcement and scholarship but I think it's gone too far the other way everything has to be measurable to a certain degree and if there are tools or if there are things that economists feel they can't measure they just assume it away and what happens is the focus becomes too narrow the assumptions become too big and the impacts get ignored so you have to start taking a step back and really starting to think about some of these things like the impact on social welfare defined broadly but also the impact or the importance of user behavior because one of the issues at play here when you talk about discrimination whether it's on what Amazon's recommending whether it's in the app store on Apple or the search engine on Google these platforms have to a precision perfect ability to understand user behavior and to manipulate user behavior and a lot of the assumptions that I think a lot of traditional economists make about users are sort of back in the 60's when someone might look at one store and then they might look at the store next door and go there but they don't take into account the fact that user behavior online is very different and easily manipulated and users move in very counter-intuitive ways sometimes and little things like putting up a book recommendation or putting a search result at the top and someone else at the bottom can have massive impact on outcomes and so starting to appreciate some of these other ideas and looking at them through the lens of section two is probably a great deal but that just hasn't happened yet I also think with section two it is true that the law has been grossly enfeebled and it's very possible that bringing section two cases you will lose in the courts but I think it's still important to bring the cases and lose in the court so they are able to show to the public and show to Congress that this law is broken and I think the main problem right now is that there's huge risk aversion and it's also not being shown to the public that we need something new but also section five at the FTC which is a consumer protection statute that's supposed to go beyond section two but instead of using that as a tool what we've seen the agencies do is voluntarily limit how they're going to enforce it so even the tools that might arguably exist have been redefined to essentially render them somewhat meaningless I could just with section two I mean it's both a criminal and a civil statute even though the DOJ hasn't prosecuted criminally and in Europe the Europeans are very much concerned about privacy and so one of the issues is why not just leave it to the privacy agencies to deal with it and the competition authorities so have the structural power and that's really key and so antitrust has an important role because the consumer protection agency the privacy agency they can perhaps find Google or they can find Amazon but those finds are relatively modest but the real heart of it comes to antitrust and that's where you can get the structural relief the divestitures the prevention of mergers and the like that no other agency really has that capacity so I live in Northeast DC and I can only use PEPCO it's the only utility that serves us same thing with DC water and gas same thing with Verizon there's also no bookstores anywhere around and is it too much to compare Amazon in that way is the only way I can get my book is through the only way I can get my participation in our democracy is through Amazon too much to compare it to utility go ahead there is this interesting thing like Google mentions that if we ever degrade our search results our users and they would go elsewhere now the European Commission is investigating them for degrading the search results one of the problems with these network effects is that you develop a scale that it may be really hard that you may know that for example Google may be degrading the search results but it still provides for many other types of searches better results than let's say duck.go how many of you use duck.go how many of you even know duck.go so there you've got these scale effects that you might like the convenience of Amazon also that Amazon's algorithms are much further along that they can provide for you recommendations and other things that you might find helpful that a smaller competitor can so even though you're not necessarily like a utility through these network effects they can have such an advantage that it becomes then really hard then to to compete but that in and of itself is not necessarily problematic because the network effects can benefit but once they start adding exclusivity provisions or other measures to prevent people from switching over then that's a concern. Yeah I mean a lot of those utilities have existing regulations that prohibit a lot of the kinds of exclusionary conduct it's not to suggest that they're all without their own problems and there are issues that are you know addressable by antitrust and other laws but you know Maurice is right one of the challenges is when companies that have that same kind of influence over their respective markets are engaging in exclusionary conduct that limits the development of platform competitors you know that's a different breed of problem and one that at least until you have a regulatory regime in place it's probably only addressable by antitrust so that's why all eyes are probably on the DOJ and the FTC with respect to these issues so we have to go to questions now anybody in the audience how about back there you in the white shirt something more specific than structural remedies sort of what cleavage is if you're talking about a breakup of a company like Amazon something modest like the hardware side of you know Kindle and Fire TV being broken off or having to sell audible or something broader like the sort of tripartite division that Lena made between the retail online presence cloud services and physical infrastructure I mean that could be three different companies what are some specific breakups of Amazon that you think would be realistically accessible by the DOJ and some sort of aggressive scenario where you were made Attorney General tomorrow and decided to do everything you could so to all three of you I'll go first on this one I think it would be premature to say what the remedy should be before we first address all the different harms so for example if it's exclusive dealing do we need to have a structural breakup I wouldn't take structural breakup off the table but what I would first want to find out is you know there was a letter that was given to DOJ right you have these concerns about a company with market power on both sides both for sellers as well as a buyer what then I would then go and start investigating see what are the concerns that actually we can gather evidence and what we can prove in court and then I would say what is the remedy that is necessary structural remedies may be the case where you can have this sort of divide let's say that you can like for example you can provide a search engine but you can't have let's say vertically integrated businesses those have to be divested so you don't have that conflict of interest that might be then a structural remedy but I can't tell you right now these are the structural remedies I would impose until I had fully understanding what are all the anti-competitive concerns then we can then talk about the punishment I completely agree with Maurice one of the issues that often comes up is someone say oh well there's really no solution to the problem so you shouldn't bother dealing with it at all and I think the point we're trying to make is that there are a wide range of solutions ranging from not very invasive to very invasive and the necessity of any one solution really depends on the findings but the point I think is really more a principle which is you can deal with these things there are solutions so you shouldn't be deterred from taking action simply because the challenge of coming up with a solution seems to be too big I agree you would have to have findings initially but I do think that the principle can actually help identify where the problems would be the most obvious one being a vertical integration problem so if you're publishing you shouldn't also be retailing if you're hosting third party merchants you shouldn't also be competing with them I think that can get you quite far and could actually expose where the fissures should be that you would break up let's take our next question I'm Roxanna Robinson I'm the president of the author's guild and I want to thank Barry for putting this on this afternoon I have two comments that would be a question but it's actually been raised so I'm very interested by this issue one was just the fact that Amazon has presented itself as a place where what's called the long tail would always be available so all of us writers would be so happy to have our books always available whether or not they're in book stores my last two books are still in print in paperback from my publisher if you go to my Amazon page and look for them it will say paperback 1425 or new and used from one cent so how in the world could my publisher and I survive when my books which are in print are available for one penny and those are real prices I have in fact ordered a book for one cent they charge four dollars for shipping so that's where they make their money but that's not where my publisher and I are making money but that's one thing that Amazon does under the guise of being this altruistic company that is making it possible for writers to survive the other interesting thing is and this is directly to what Lena was saying is I am doing research and I wanted to buy I bought years ago a copy of a civil war reminiscence it's called reminiscences of confederate service by Francis Warrington Dawson I wanted my research assistant to have a copy and so I went to Amazon to see how much it was I got a list of about ten sources all kind of crazy places you know books of Walla cheap go books things that I had never heard of 48.95, 52.68 59.43 so I wrote to my assistant and said I want you to have a copy of the book but I don't want you to pay that price she said I've already ordered it I said for what she said 9.95 and I said for where she said Amazon so I went back and took a screen shot of my screen showing that these are the only prices Amazon will let me buy that book from for my history on Amazon is that I use it very rarely but I do use it when I'm buying books for research and so they know that I will pay 30, 40, 50 dollars for a book that I can't find elsewhere I then thought of looking up in my own copy which is a paperback to find where the book was published it was published in 1980 it's still in print I can buy a new hardcover for $15 which is not on my Amazon page so if you would like data I have the screen shots and I will show you and as far as I can tell that's discriminatory pricing and they know what my record is and they think that I will fight for that book and they are only showing me the places that are selling it at those inflated prices so I'd love to hear your thoughts on that I'll start which is it's a compelling anecdote as you think about these things there's the from an antitrust minds perspective you think about exploitation and exclusion and you can price discrimination can be the exploitation of that market power going unchecked and it could be a problematic and anti-competitive symptom of practices that are designed to limit competition and so when you think about discrimination you should think about one in the respective well this is evidence of harm there's the other kinds of discrimination which can be exclusionary discrimination which is designed to essentially discriminate in favor of companies that deal with rivals or refuse to deal with you on the terms that you want to deal with or by retaliation for example that's a second category and so as you think about looking at this through a traditional or even a progressive antitrust frame it's helpful to understand both aspects no the short answer is no there is it is so we've got this book out that's also coming out on algorithms and the rise of algorithms and one of the things that we look at is this move towards perfect price discrimination that Lena explained very nicely so as these platforms acquire more data about you the choices that you're offered the prices that you're given are going to differ now if you want to have a fun debate you could bring in a lot of neoclassical economists and they will say no price discrimination can be beneficial and one justification would be like college tuition we all accept price discrimination there but it serves a greater social goal that yes I know that there are other children whose families are paying less in tuition than I am or there may be paying more in tuition than I am but it helps serve this goal and the university is not seeking to profit off of that it's serving a greater goal to bring a diverse background and it's actually going to be beneficial for my son or daughter because it's a more enriching environment so we don't say price discrimination is per se bad because we accept it at times the problem here is you've got really two problems one of them is that the justification breaks down it's really here for profit maximization to get as much money out of the pockets of the consumer to the company to figure out how much you're willing to pay and second it doesn't necessarily benefit the poor in fact the poor can be more vulnerable like in the Staples example that Lena gave it was the poor that didn't have many outside options that were being charged a higher price and that then is a real concern because now you have this behavioral exploitation that Jonathan pointed out that they can now figure out what the weaknesses are of particular consumers and they can get them to buy more things that they ordinarily might not buy at higher prices and that's not necessarily efficient even for under neoclassical economic theory but it's not illegal I guess I would argue that it's important to identify whether Amazon is or isn't doing this but I almost feel like that's the wrong question the fact that we've let Amazon have so much power that it can do this and we would be subject to that power means that we're already in a really bad place and so kind of the conversation of is Amazon doing this, is it not doing this I think is the wrong way to frame the question at the end of the day we unfortunately are out of time here but I'm going to put the pressure on the three of you I want you to just leave us with one tweet with what you want people to walk home with just a sentence 140 characters bring back antitrust bring back antitrust hashtag antitrust bring back antitrust hashtag antitrust I would say bring back antitrust thank you for organizing this and also put pressure on your own front you're very influential in this room all of you have power start engaging this conversation to the enforcers why aren't you doing what you're meant to do and you can help spark the debate thank you very much well I just wanted to say thank you all for coming and I know you're probably wondering what next steps are because there are a lot of questions raised here today and I know you all don't want to just leave it hanging I don't know what the next steps are going to be I do know that if the government does not act this is just the beginning and I am very confident that in the long term we're going to win but anyway thank you guys for coming