Antitrust in Congress: Interview with Senator Amy Klobuchar

Editor’s Note: As part of our ongoing conversation about the future of antitrust law, we were delighted to catch up with Senator Amy Klobuchar, senior Senator from the State of Minnesota. Chair of the Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights, Senator Klobuchar has long been an advocate for reform of antitrust and competition policy, and she has introduced a number of bills designed to meet the competition challenges of our 21st century economy.

This interview was conducted for Antitrust on September 28, 2021, by Editorial Board member Ellen Meriwether. On behalf of the Editorial Board of the Magazine, and especially on behalf of our readers, welcome Senator and thank you for speaking with us.

Antitrust: Many believe that antitrust is at an inflection point. You certainly take that position in your new book, Antitrust, noting rising concentration, dominance by Big Tech platforms with related privacy concerns, and greater income inequality than ever before.

My first question is: How did we get here? What do you consider to be the principal causes for these conditions?

Sen. Klobuchar: I go back even farther from where we are now to the very beginning. In the very beginning, the reason that many people came to our country way back is there—yes, political freedom, religious freedom—but they also came for economic freedom. An interesting story that I point out in my book is that the Tea Party was about taxation without representation yes, from the early colonists, but it was also about not wanting to buy from the monopoly tea company.

That concern continued. It ended up that we did not have a specific antitrust provision in the Constitution, but the Founding Fathers were really concerned about monopolies. At some point, Jefferson said in a letter: Don’t worry about it. It’s going to get taken care of in our Congress. Kind of sounds like now.

In fact, it took a hundred years, and then it did get taken care of to some degree. What happened was that there was a political movement, which gets to where we are now. Back then it was the Grangers, the ag movement in the Midwest. They started passing state laws—which, by the way, has some repercussions here today because that’s what going on with antitrust bills in states like New York—because they couldn’t get action in Washington. There were union strikes and riots and all kinds of things, and small business owners didn’t have any choice in whom they bought from.

So then the Sherman Act passes. There was about a ten-year period of dormancy before Teddy Roosevelt rides his horse into the White House on antitrust. You have him, then Wilson, and Taft. There was the Progressive Era and they actually start big time enforcing the Sherman Act, later the Clayton Act, the antitrust laws.

That’s how you see eventually the breakup of Standard Oil, the first case actually brought against a company in Minnesota, with James J. Hill involved with the rail companies.

Then they make a scene and you start having more competition. So that works for a while.

Then you’ve got the breakup of AT&T and a very aggressive movement to take on some of these monopolies, which interestingly, again with some relevance to today, crosses party lines. That lawsuit went through many different administrations with support—and opposition, but also support—from both parties.

Then you get to the current day. So one of the reasons we are where we are is we haven’t updated our laws, which we did in the past with everything from the Clayton Act to Hart-Scott-Rodino. Yet, we have seen this upheaval in our economy in terms of more tech. It has been one of those cataclysmic events, good and bad, where you have dominant tech platforms—with Google when it comes to searches and Facebook when it comes to social media and Apple when it comes to the phones and technology, and Amazon when it comes to online shopping—but we haven’t really adjusted to it.

And, at the same time, you have some judges who have followed Judge Bork’s theories and began demanding more and more proof from the plaintiffs to establish anticompetitive conduct. That made it harder and harder to bring and win cases under both the Trump and Obama administrations.

Antitrust: So is it your view that we need legislative changes to address the challenges we now face?

Sen. Klobuchar: My personal view is that those recent court decisions are not consistent with the original intent of the Sherman Act and the Clayton Act. But if people think we are just going to be able to wait for the judges to change or start looking at this differently, that’s not going to happen.

I think the answer is to give the resources to the agencies, put some creative out-of-the-box thinkers in charge of the work, and then make some legislative changes, and they can be modest changes in my mind—changing the burden of proof, doing things to make it easier for the government to bring the cases.

Antitrust: Are we at a tipping point here?

Sen. Klobuchar: We are not in a crisis like, say, a hurricane in New Orleans or a financial collapse like we had when we passed the Troubled Asset Relief Program (TARP) or a pandemic when we passed the American Rescue Plan and the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act, and other things where people have tended to come together, Democrats and Republicans, in a crisis.

This is just out there lurking, getting worse and worse and worse, all kinds of behavior that makes it hard for small competitors. And if we don’t do anything because it’s in that category of long-term important things we should do that are not front-page news every day—if we don’t do anything, then it is going to reach a crisis point. And I think you’ve already seen it, with misinformation, with anti-democratic movements, with how people have been abused on these platforms with privacy violations, and Congress has done nothing.

Antitrust: Thank you for your answer.

Our readership is very interested in hearing about the bill you introduced earlier this year, the Competition and Antitrust Law Enforcement Reform Act (CALERA).

But before I go there, I want to ask you something a little more general. Do you think there is general agreement that we have a monopoly problem in the U.S. and do you see this as an area where there may be a consensus with those across the aisle?

Sen. Klobuchar: Yes and yes. I think we know the facts. We have seen more and more concentration in the industries, not just tech, in places like pharma, like online travel, like ag and others that you wouldn’t expect.

John Oliver once did a segment on this for half an hour, which I can tell you is much funnier than anything I’ll say. At the end of the whole thing he talked about the consolidation in everything from cat food to caskets, and he said, “If this is enough to make you want to die, good luck, because there are only three casket makers left in America,” and now, by the way, one bought the other, so there’s only two.

The point is that you’ve seen a tremendous number of mergers. The five most powerful tech companies alone have completed more than 700 acquisitions combined since 1987, and so many of them were just allowed to go through without a pause.

The problem is—I will just quote Mark Zuckerberg from one of his emails that were discovered in the House hearing when he talked about the potential acquisition of Instagram: “These businesses are nascent, but the networks are established, their brands are already meaningful, and if they grow to a large scale they could be very disruptive to us.” And in another email he said he would rather buy than compete.

So you have this pattern. Disruption is supposed to be good in tech; that’s what tech is supposed to do—disrupt things. Dominant monopolies want to actually stop that disruption because they just want to buy everything up, including companies that they believe could compete with them at some point.

So that is where I think the public gets that things are too big. The polls show that people are not happy with big business, even when you have businesses in competitive markets, but they do know that something is wrong when they are not protected, and their kid is in tears because of reading things on Instagram because there are no bells and whistles to protect them, or their bank account gets breached because the tech companies have lobbied against federal data protection and privacy legislation, or their insulin prices go way up for no reason, or they are on Lyrica, which has gone up nearly 50 percent in just five years. All of those things make them know that something is wrong.

In terms of the reaction from Washington, yes there is bipartisan interest. We just passed the State Antitrust Enforcement Venue Act with only a few dissenters out of the committee. That allows the State Attorneys General to keep their antitrust cases where they filed them, instead of having them moved to, say, perhaps California.

Senator Grassley and I have also passed a bill for more funding of the antitrust enforcement agencies; adding over $100 million in funding and to change the merger fee structure, which unanimously went out from the committee, and it has now passed the Senate and is over in the House. I was trying to do that for two years and we had no possibility, even with the Trump administration including Makan Delrahim and Mark Meadows, supporting us, and we were trying to get it done at the end of the year, but we ran into trouble in the House.

The point is that there is bipartisan support. That’s why you see the Facebook and Google lawsuits that were brought under the Republican administration and are being continued by the Democratic administration.

We just have a problem because on both sides there are whack-a-mole lobbyists, whack-a-mole problems, money everywhere like candy, and it’s really hard with our merry band of antitrust people who believe that we need to make antitrust cool again to take this on. But we seem to be having some success.

Antitrust: Thank you.

Moving over now to your bill, broadly, it includes reforms related to merger analysis, provisions targeted directly at exclusionary conduct and various provisions relating to strengthening enforcement and cooperation among the agencies.

Do you have a view as to what aspects of the bill are the most important to get done first?

Sen. Klobuchar: Sure.

It’s a broad bill—and there are a number of Democrats on it, by the way, including Mark Warner, who is a much more moderate Democrat in our party because he gets the problems with competition.

I would say some of the most important things have been siphoned off on their own, which is what I’m doing right now—I don’t have to have a monopoly on good ideas.

Some of what we are doing right now is working with the House and with Republicans to put out parts of the bill.

There is the funding piece. We have already passed one funding bill, with Senator Grassley. He and I are working on a series of other bills.

You also have the app bill that I just did with Senator Blumenthal and Senator Blackburn, a conservative Republican, on taking on the app stores.

These targeted things in different industries are important. But moving over to my bill, the pieces that I think are most important are:

First, the funding, because you can’t take on the world’s biggest companies that we’ve ever known with duct tape and Band-Aids. And there is not just my bill to do the funding; you could also put funding in this reconciliation package and in other measures that lay ahead, including the annual budget. It doesn’t matter how many good people you put in charge; if you don’t have the funding, it’s going to be really hard to take on big tech and other large monopolies. So I would say funding is really, really important and can be achieved in many ways simultaneously.

Secondly, going after exclusionary conduct by monopolies with respect to what is happening currently within some industries. You have a situation where they are excluding others from competing, by virtue of their access to Big Data that their competitors don’t have access to, and in other ways. This can be a real problem.

And then the third thing is just being willing to look back, which is part of going after exclusionary conduct. I mean come on, that’s what the AT&T breakup was about, right? They went back and looked at what had happened where there was both vertical and horizontal dominance, both of equipment and then across the country with phone service. So making it easier to look back would be important.

And then, finally, the mergers that are coming before us. My bill would strengthen the enforcement of mergers, and I think that would be really good.

One of the provisions shifts the legal burden to the merging parties when you are dealing with really big mergers—for example, transactions worth more than $5 billion and mergers that significantly increase market concentration. I’m not talking about all mergers. The bill would require the merging parties to prove that the mergers do not create what I call “an appreciable risk of materially lessening competition,” as opposed to the “substantial” language currently used in the Clayton Act. So the bill proposes both a shifting of the burden of proof from the government to the parties and a change in the standard for evaluating mergers in what I consider to be a modest way.

I believe if we don’t do something to change the laws, anticompetitive mergers are going to keep happening, without a lot of hope of stopping them in the courts. Maybe there is some hope of stopping them in tech, because of the unique nature there, but when you look at it across the board, the court decisions have made it really hard to bring cases.

Antitrust: Just following up on the merger provisions for a minute, your bill proposes to change the standard from “where the effect may be substantially to lessen competition or tend to create a monopoly” to “where it creates an appreciable risk of materially lessening competition or tends to create a monopoly or a monopsony.”

I recognize that you thought about that language for a long time. How do you think that shift in language, which some people say is modest, will make a difference in outcomes for merger enforcement going forward?

Sen. Klobuchar: You know, I remember talking to Makan Delrahim, who headed up Antitrust at the Department of Justice for the Trump administration, and he thought that—I don’t know if we talked about the standard as much—but he thought shifting the burden would be really helpful for challenging those big, big deals.

I just think it makes a difference, not only with the standard the courts will use, but it also gives the courts some guidance on where the country is right now on this, and brings us back to the reality of what the antitrust laws are supposed to be about.

Bill Baer, who was one of Makan’s predecessors, who headed up Antitrust in the DOJ during the Obama administration, said, “Some of these deals are coming to us that shouldn’t have even gotten out of the boardroom.”

By changing the standard, you may just change the way people look at this within large companies, away from: “Well, I guess maybe it’s okay if we merge with these guys and we’re at 90 percent of the market.” “Oh, hey, T-Mobile/Sprint will get rid of the kind of scrappy fourth competitor and just have three mobile network providers.” Or how about online travel—“We can buy more and more companies,” and now only two of them control 90 percent of the market. Or the discussion in the middle of the pandemic when some of the restaurant delivery services were talking about merging that would have created in some markets 60–70 percent market shares and less competition at the same time that our restaurants were struggling, and now they were going to have the power to charge higher rates for delivery. I could just keep going down the list of what has been going on.

I think changing the standard is the way to create a shift in how these cases are being considered, and it makes it simpler for some judges who believe that they are—and may be—bound by certain precedents in a case, to think: “Oops, new kid in town, there’s a new law, I can look at this differently.”

Antitrust: You have already touched upon one of the questions I was going to ask, which is: What do you say in response to those who point out that the changes you are proposing relating to mergers aren’t really necessary because the government now generally wins its merger challenges?

Sen. Klobuchar: I think the government—and anyone in antitrust would tell you this—they had to put a pause on early termination of merger reviews at the FTC because they’re so overwhelmed by the number of filings. The “merger mania” that is now, post-pandemic, starting up again, was going on in the past. The enforcers just aren’t taking on everything they would like to take on, that is for sure, and they are not able to analyze them. Because of the lack of resources, they are only able to focus on the most egregious cases, which is why they have a high win rate. But that doesn’t mean the laws don’t need to be changed.

And now, with this new sophisticated tech market, you have to analyze it in a different way. We haven’t even confronted the fact that these app stores now have replaced the Web—we had an amazing hearing on this. App stores have replaced websites. People spend four hours a day on some kind of app. Apple is the totally dominant carrier when it comes to app stores for Apple phones and Google dominates the others.

What has happened is they are charging 30 percent when people buy some services on apps downloaded through their app stores, and they are charging these fees for some apps but not others. There was a very interesting discussion of why Uber didn’t get charged, but Match.com, which was one of our witnesses, and Spotify, which is trying to compete with Apple Music, get charged 30 percent. The answer from one of the witnesses for the tech companies was, “Well, it’s cars, it’s rides,” so then Mike Lee said to the dating service, “Why is this any different than something else?” There is this artificial distinction they make between apps that provide digital services, which the companies that control the app stores could and often do provide, and those that offer off-platform services. For the first category they charge exorbitant payment processing fees, for the other they charge nothing. So you’ve got this sort of hypocrisy in how the charges are being made that affect the ability of app businesses to compete, often against the app store owner’s own apps.

Then you also have the possibility and the reality of platforms promoting their own products over those of their competitors, and finally, competitors are unable advertise the fact that buyers can get less expensive products on their own websites.

What’s interesting about the Epic Games case is that while the judge found a violation under California law involving some of this anticompetitive conduct, she found no violations under federal law.

It just goes to show again, the law is screaming for a change. So the roundabout answer to your question is that the government should be bringing cases and testing different theories under U.S. law, as they have done in Europe and other places.

Antitrust: Critics of additional antitrust oversight and enforcement claim that increased government regulation undermines the things we want to incentivize—for example, creativity, entrepreneurism, investment, etc. Proponents of more aggressive antitrust enforcement believe that corporate consolidation through lack of regulatory intervention has allowed big to grow bigger, stultifying innovation and entrepreneurship.

Would you like to make your case for why we need more regulation and intervention to incentivize the things we want to incentivize.

Sen. Klobuchar: I do not challenge the fact that these companies have been successful. They most likely can be described as the most successful companies in the history of America in terms of their market share, in terms of the first ones to go over $1 trillion—I could go on and on. They also have employed a lot of people, they have given us interesting and helpful and cool products, including the Fitbit I’m wearing and the iPhone that’s sitting next to me.

But that doesn’t mean that we just say, “Yeah, you can go do everything you want,” because, as history has shown us, when companies get to a certain dominance, then government always is a check-and-balance to make sure we keep rejuvenating capitalism.

I’m not saying to get rid of these companies. I’m saying maybe we need to force them to divest some of their assets if they use their dominance to harm competition.

In terms of what this means for customers, I want to have more creativity and the next Google and the next Apple and others like that need to be free to compete in their markets.

Why can I show harm? Well, I can sure show harm in pharma with the prices up higher in our country than anywhere. Literally, you can’t get as high prices for drugs in other countries. For drug after drug after drug, we have higher prices than other countries—for simple drugs like EpiPen and insulin. So there you see direct harm, and that’s why there is so much anger about that.

You have seen it with cable rates. You have seen it when farmers in the middle of the pandemic had no place to sell their products when one of the food processing plants was shut down because of Covid-19. They want to go somewhere else—and guess what? There is nowhere else for so many of them to go, and they had to euthanize their cattle and their hogs.

And then you’ve also seen something else, which may be unique to tech. That is that we don’t see new companies, like Instagram for example, have a real chance to compete against companies like Facebook, to develop the bells and whistles needed to protect privacy or stop misinformation. Why? Big tech has bought everything in sight. They’ve gobbled them up. Waze—oh, that was cool—that got bought out too, right? You can just go through the different products and they tend to get bought out and that leads us to where we are now.

If you want to see harm, I was standing here on January 6^th, I was in one of the very rooms where they invaded. That’s harm—when a democracy is so out of sync that people are believing lies that they see on social media. Over 60 percent of people who haven’t gotten vaccines say it’s because of something that they read on social media or that’s where they get their news. That is serious harm, not only to them themselves but to our nation.

So we need to do something. I proposed a limited focus on making changes to liability when it comes to what is on these media platforms—remember other media platforms have to police their stuff more—but doing that so they actually are liable, so they have an incentive to stop misinformation from happening.

The monopoly problem is the same: there are just no competitors coming to beat them out by offering safer or better products.

Antitrust: Following up on that, do you think that requiring data portability would be part of the solution to some of the Big Tech problems you have identified? Are there other solutions that you can identify with respect to Big Tech in particular?

Sen. Klobuchar: Yes, I think that the fairness on data is important. Data is tricky because you have privacy concerns. One of the things we learned when Apple took the pro-consumer step of being very clear that people could opt-out of having apps track their online activity across other apps or websites, the early reports said 75 percent of their customers said they wanted to opt out. I think some of these other platforms have to do the same thing.

I think that access to data gives these companies so much power—you have to acknowledge this is an unfair competitive advantage. So you would have to find a way to share the data while still protecting privacy.

Another way to do it: We found out that Apple makes $50 off of every user in America, much more than in any other country, because our data is used to help fuel their algorithms and their ad business to make Fifty bucks every quarter from each American user, that’s from their own reports.

You could start taxing them for that data. You could start giving some of the money back to the consumers that they make a profit off of. We are profit centers for them. So there are many ways to assess the unfairness of a company profiting off of people based on use of their data.

Antitrust: Do you think it is time that we reassess the goals of antitrust policy, and is antitrust policy equipped to address societal ills you have identified, and others?

Sen. Klobuchar: I think there must be many approaches to this. Antitrust policy isn’t going to give us everything we want, that’s for sure.

You’ve got to do things like look at some of these non-compete agreements that are made when people leave jobs, and how that limits their ability to find other employment or better wages.

Local regulations also make it hard for small businesses to go into business. Mike Lee and I have worked on this. The barriers are so high because of standards that are put in place. We’re not here talking about safety standards for nurses and doctors. We are talking about things like hair braiding and the like. This was an interesting one where the Obama administration was in the same place as the Koch brothers in terms of trying to make changes there.

There are barriers to entry making it hard for women and minorities when you don’t recruit them or make them feel like they can be part of the workforce in certain occupations.

There are so many things. But is antitrust the only answer? No.

I do think you should change the name to “competition policy” rather than “antitrust policy” because that’s what it really is—and inasmuch as I named my book Antitrust, I thought it was a kind of a metaphor for what’s going on everywhere in our country—but “competition policy” is a better thing to call it.

Competition policy is going to play a major role in this, and should play a major role in this because you can do all these other things I talked about, but if you still have monopolies or duopolies, you’ve got problems for capitalism.

I am a strong believer in capitalism. I was a clear moderate on the debate stage in the last presidential election because of my private-sector background and my belief in capitalism.

But I also believe if you want to keep it strong and you want to keep it available to everyone and you want to make it work for our democracy and keep our democracy strong, there’s got to be some checks-and-balances.

Adam Smith himself, the godfather of capitalism, as he talked about the “invisible hand” and his belief in private competitive markets, said that you always had to watch out for what he called the “overgrown standing army” of monopolies, and he kept saying it over and over again.

Maybe that’s a good place to end, with where we began.

Antitrust: Thank you, Senator. We are very, very grateful that you took the time to speak to us.