After Google and Meta: What Comes Next for Antitrust Policy with Jon Nuechterlein and Bill Kovacic

Scott Wallsten: Welcome back to Two Think Minimum, the podcast of the Technology Policy Institute. I’m Scott Wallsten, president of TPI, and today is Monday, January 5th, 2026. This fall saw two major court decisions that disappointed advocates of aggressive antitrust enforcement against big tech. Judge Mehta declined to break up Google, and Judge Boasberg rejected the FTC’s case against Meta over its acquisitions of Instagram and WhatsApp. My colleague John Nuechterlein led a conversation with Bill Kovacic, former chairman of the FTC, to unpack what these rulings mean for competition policy. I joined the conversation as John and Bill discussed the legal reasoning behind the decisions, whether conduct remedies can be effective, the FTC’s surprising response to its loss in the Meta case, and whether this builds momentum for new legislation. They also look at what we can learn from the EU’s experience with the Digital Markets Act. Here’s the conversation.

Jon Nuechterlein: Good morning. This is Jon Nuechterlein with TPI, and we are delighted to host Bill Kovacic this morning to talk about recent antitrust developments. There were two major developments this fall that disheartened advocates for a more muscular U.S. competition policy. The first was Judge Mehta’s decision not to impose major structural relief of the sort that the government sought. The second of those developments was Judge Boasberg’s rejection of the FTC’s antitrust case against Meta after five years of litigation. We are delighted to get Bill Kovacic’s views this morning about what these decisions reveal about current U.S. competition policy and how they might influence the debate about whether new legislation is needed to address the market power of dominant tech platforms. So, with those words of introduction, Bill, maybe it would make sense for you to kind of walk us through the basics of these two cases.

William Kovacic: Thanks, John, and thanks to Scott and TPI for the opportunity to talk about these developments. In the last year of Donald Trump’s first term as president, the two U.S. antitrust agencies brought the formative cases that Jon has just referred to: a monopolization case involving Google and its presence in the market for search, and a monopolization case against Meta that focused principally on Meta’s acquisition of Instagram and WhatsApp early in the 2010s.

In the Google case, the district court, in an opinion issued by Judge Mehta, found that Google had indeed engaged in illegal monopolization, principally through its insistence on exclusivity provisions related to the placement of its search engine, and focusing most carefully on its relationship with Apple and the iPhone. The judge found that, indeed, they had imposed improper exclusivity provisions, but then he turned to the question of remedy, and the remedy, in some sense, was not as bold as perhaps the language in the original opinion had suggested. Now, his first opinion did have cautions built in. He began his opinion on liability by pointing out that Google had achieved its preeminence not simply through bad behavior, that Google had provided a valuable new service of great utility to its customers. And the court, in a sense, framed the problem by saying, I want to fix the anti-competitive issues that are at hand, but I don’t want to destroy the company and disable it from continuing to perform valuable service by introducing new products and services.

The remedy opinion was more cautionary. The big issue that had been presented to him is whether major structural relief, as Jon has described it, would be essential not only to deny Google the fruits of its past illegal conduct, but to clear a path for new competition in the future. And the Department of Justice had proposed that Google be required to spin off Chrome and/or Android. Judge Mehta declined to do so. He said he was willing to impose a collection of conduct-related restrictions dealing with exclusivity and some remedies involving data-sharing mandates and the syndication of search results. And in a recent final judgment on remedy, Judge Mehta has sharpened some of those requirements. So, he did impose conduct-related solutions that do have, I think, some real punch to them.

But he stopped short of imposing the breakup, and he did so for a couple of reasons. One is the emergence of generative AI as an important new competitive force, which he emphasized was not in the original complaint, wasn’t in the original proceedings on liability, but, as he put it, emerged as an important consideration during his hearings on remedy. And he saw generative AI as offering possibilities for opening up markets and allowing competitors the ability to compete more effectively with Google than any had anticipated. And he includes generative AI in his ultimate order, but he sees that as a basis for caution in deciding whether a bolder remedy would be necessary.

He also points to a Supreme Court jurisprudence that, in many respects, suggests that caution is appropriate. The government relied heavily on Section 2 monopolization opinions drawn principally from the 40s, 50s, and 60s that appeared to favor broad, bold intervention in markets to correct monopoly problems, up to and including divestiture. The language of these opinions is somewhat heroic in its indication that courts should not be shy about imposing more drastic remedies and that unless courts are open to more drastic remedies, the whole purpose of enforcing the statute would fail.

At the same time, the Department of Justice tends not to emphasize much more recent opinions, some of them involving Section 2 of the Sherman Act, some of them involving Section 1 of the Sherman Act, that strike a more cautionary pose. Cases like Trinko, which talks a bit about the importance for judges not to impose mandatory dealing requirements that they cannot oversee and apply effectively. And most recently, the NCAA v. Alston Section 1 case, in which the Court closed its opinion with a number of comments about remedy. Comments that emphasize humility on the part of courts in formulating remedies. Comments that emphasize that there must be some degree of proportionality between the severity of the harm found, the severity of the misconduct, and the severity of the intervention.

Judge Mehta refers to those decisions, especially Alston, on a number of occasions in his original remedies opinion and points out, “I don’t have an unlimited remit here, and I’m nervous as a single federal judge in imposing a more sweeping remedy in light of these cautions that come from the Supreme Court, as well from the DC Circuit in the litigation involving the Microsoft monopolization case in the 1990s and 2000s. I’m wary about imposing the broader mandate.” So he declines to do it.

Scott Wallsten: Let me ask, you talked about the legal reasoning behind it, the legal reasoning he gave, but you also pointed out that he said that the emergence of generative AI was a factor. So, I mean, to what extent is he also taking into account consumer welfare issues, rather than just strictly legal questions?

William Kovacic: I think he has his eye very clearly on the well-being of users of these products, and he’s unmistakably concerned that, on the one hand, that Google will not be able to stifle the development of new products that would be useful to consumers but, at the same time, that Google not be disabled from providing services that users would like. So, the focus on users is, I’d say, central to his opinion. His discussion about giving competitors a greater ability to operate in these markets is also linked to the well-being of consumers. Now, he doesn’t offer a broad definition, a technical definition of what we would mean by consumer welfare or the consumer interest, but that is the interest that he mentions most frequently in the decision.

Scott Wallsten: How do you think he’s doing on balancing those two, balancing legal precedent or legal logic and consumer welfare?

William Kovacic: I think the legal logic, in many respects, operates from the view that the consumer interest is paramount. Now, the modern decisions do not define this problematic modern term of “consumer welfare.” If you go to a panel, as we all know, and you start out by saying “consumer welfare,” people drop the gloves and start fighting right away, without the benefit of a definition. And you can identify a concept of consumer welfare that’s broader, that necessarily includes dynamic considerations involving innovation and competition for laborers. You can define it more elastically beyond what some commentators have said in the past was a needed focus on output and price effects. My sense is that courts are attentive to this broader notion that includes other benefits that consumers derive from rivalry. But it is the consumer focus, however we define that precise term, it’s the consumer focus that’s paramount in these decisions.

Jon Nuechterlein: So, Bill, part of the reason we’re excited to have you here this morning is to talk about what some present as a trade-off between ex post antitrust enforcement and ex ante regulation. And you mentioned the Trinko case in connection with the Google remedies decision, and that strikes me as interesting, because Trinko was a case expressing concern about the proposed use of antitrust for a regime of forced sharing of the assets of a dominant firm. That is actually the sort of remedy that Judge Mehta did impose in this case, in requiring Google to share some of its data assets with rivals. That does raise questions about the competency of courts as opposed to regulatory agencies to superintend the details of how such sharing regimes will proceed. How do you think that this is going to play out, assuming that the remedy remains intact after appeal? Do you think that the court’s going to have an easy time imposing that sharing regime, or are there going to be intractable issues that arise?

William Kovacic: The short answer is no, it’s not going to be easy. Judge Mehta agrees that there should be established a so-called Technical Committee that will perform a crucial role in deciding how the specific elements of the judgment are to be interpreted and applied. This Technical Committee, in many ways, offloads lots of the day-to-day supervisory obligations that a federal judge might otherwise have to bear. At the same time, he accepts, in his most recent remedies opinion, the idea that Google should be able to contest before the judge himself some of the decisions made by the technical committee, and he notes with great reluctance at the end of his latest remedies opinion, “I don’t want to be involved in that. I don’t want that business. That looms as a major headache. [These are my words, not his.] But I think I have to be willing to do it.” And, he says, “I think Google has to be able to contest some of the decisions made by this Technical Committee, and I’m ultimately going to be the party to whom they return to interpret this.”

I think this administrative burden is inescapable. You can outsource some of it to this intermediary that’s been established. But it points to a recurring problem in the big Section 2 cases in the history of the U.S. Sherman Act experience, which is that individual federal judges have been given extraordinary discretion and responsibility to shape the competitive environment in the future. But on many occasions, going back decades, individual federal judges have expressed anxiety about doing this.

Charles Wyzanski, in the famous United Shoe Machinery litigation, had a short essay in one of his opinions that said, “nobody elected me. I have a couple of law clerks. I did famously bring in an economic expert, Carl Kazen, to work on one of my cases. But I have a small team, I don’t do legislative hearings, I conduct evident evidentiary proceedings, but the great burden of doing this is on my shoulders. And, by the way, the Supreme Court jurisprudence is clear that says, I, the district judge, have considerable discretion and deference owed in the decisions I make.” And he says, “that is an awesome burden. I do not want to destroy individual sectors. Where can I turn?” So there’s an evident anxiety in the older cases. I think there is an evident anxiety in this case, and also in the ad tech case against Google that Judge Brinkama is conducting now, where she is deciding what the remedy ought to be. You look at lots of the questions that she poses during the remedy hearings, such as “what’s the timetable,” “how long is this going to take,” “how hard is this going to be to carry out?” There’s an evident apprehension about doing that.

Now, it’s interesting that the Congress in 1914, when it created the Federal Trade Commission, anticipated this. There was a a great deal of consternation about the remedies imposed in the Standard Oil case and the American Tobacco case. And Congress created the FTC and said, “we’ve got to give district judges some help with this, and we’re going to adopt a provision, Section 7 of the FTC Act, that says a district judge in a monopolization case involving the Department of Justice can request that the Federal Trade Commission serve (in the language of the time) as a master in chancery to provide advice and guidance on the execution of the remedies— perhaps to perform this role of the Technical Committee in the older days, but at least to bring to bear its collected research- and case-related experience to bear on formulating the remedy.” Congress anticipated that there’d be a repository of knowledge about how to do this, how to deal with tricky questions involving access to data, mandatory sharing, such as compulsory patent licensing. They built the framework to do this.

In 111 years, it’s been used exactly once. That was in the Corn Products case in 1916, in which Learned Hand was the district judge. Hand was familiar with the creation of the FTC Act’s remedial mechanism. He said to the FTC, “Come in and help.” By the time the FTC had prepared its report, the case had settled. That was the last time that this device was used. You could have imagined an ongoing relationship between the FTC and DOJ, in which the FTC, in effect, would have become the remedies agency and the remedies expert, so that it would have been able to appear and assist district judges in bearing this responsibility.

It’s a long answer to your question, Jon. I think the implementation questions involving access—and there are major access remedy provisions built into this framework—are going to be difficult. They’re going to come back to Judge Mehta. Judge Mehta also acknowledges that the government can come back and challenge Google’s compliance before him with the order.

Scott Wallsten: We have some experience, like you said, with these technical committees, Microsoft, for example. What do people think, generally, of how effective they’ve been? Are they good maybe for edge cases? Do they help with compliance? Are they generally ineffective? Is there sort of some consensus on how well they work? Because you can see all kinds of potential problems with them, too.

William Kovacic: I don’t think there’s much consensus, because we know very little about how they operate. Of all the areas that scholars have dug in to gather information about how the antitrust system operates, this is terra nova. We don’t know a whole lot about what kind of deliberations take place during the course of the work of a technical committee, and by that, I include the work that so-called monitor trustees have done in overseeing the execution of remedies in merger matters. We have a long experience with this, but we have very little systematic study of how they’ve worked and perceptions of how they work from the point of view of the affected firms, the enforcement agency, and ultimately, from the point of view of the larger public in assessing how well the technical committee has executed its tasks, and with what effect on the market.

Scott Wallsten: Does the court ever consider what a successful committee might look like? What it’s supposed to measure? How would we ever know?

William Kovacic: I think the court, generally speaking, is happy to run away from these kinds of matters as fast as it can. It’s got other work to do. I think the courts are concerned that the more that they get drawn into the process of monitoring and, in some general sense, overseeing the work of the technical committee, the more they’re going to be drawn in to operating as the ultimate remedial arbiter, and they don’t want to do that.

Jon Nuechterlein: Also, at some point, their functions can blur into the domain normally associated with regulatory agencies. So, I’m thinking of Harold Greene, for example, who was the regulator-in-chief of the telecommunications industry between 1982 and 1996.

William Kovacic: I think you’ll have a better sense of this than I do, Jon, but my impression is Judge Greene not only did not regret that role, he relished in it. That is, it’s not something he wished to avoid, he looked forward to it, compared to Judge Waddy, who initially was the judge assigned to the case and became ill, so the case was handed off to Judge Greene. Judge Waddy’s illness was a crucial event in the development of the case. You went from a judge who wanted nothing to do with it—indeed, I think at one point had asked the Federal Communications Commission for its advisory opinion about whether antitrust enforcement had a role to play in this domain—to having a judge who essentially said, “bring it on,” and enjoyed the role of overseeing the implementation of the modified final judgment. I think Judge Greene is somewhat of an anomaly in that respect, but that’s an example of a judge who said, “I’m happy to perform this role.” Maybe too happy to perform that role over the long term.

Jon Nuechterlein: You mentioned the FTC before, and I want to pivot back to the Meta decision. So, we talked about how advocates of aggressive antitrust enforcement are disappointed with the Google Search remedies, even though they got part of a loaf in terms of the data-sharing regime, but they didn’t get divestitures. So they are citing that as a data point in claiming that antitrust is not capable of bringing Big Tech to heel. The other data point that they’ve been citing increasingly is Judge Boasberg’s decision in the FTC’s Section 2 case against Meta, which ended up focusing on whether Meta committed an antitrust violation when it acquired Instagram in 2012 and WhatsApp in 2014. The basis for his rejection of the FTC’s case turned on a provision of the FTC Act, Section 13(b), which limits the FTC, when it goes to court to seek relief, to cases in which it can show that the defendant “is violating or is about to violate any provision of law.” And Judge Boasberg concluded that the FTC couldn’t show that, because even if Facebook might have been a monopolist in 2012, or indeed, even if Facebook might have been a monopolist in 2020, when the FTC filed suit, it couldn’t show that Facebook was still a monopolist in any well-defined market in 2025 when the decision was announced. What do you take away from this opinion in terms of what it means for the FTC in particular, or for the future of antitrust policy in the U.S. in general? Does this decision help fortify calls for new legislation that would strengthen antitrust enforcement tools?

William Kovacic: The FTC made a crucial strategic judgment in how and where it would litigate the case. It had the option of bringing a so-called administrative enforcement proceeding through its own internal adjudication mechanism, commonly referred to as “Part 3 adjudication” (that’s the part of the FTC rules that lay out the procedure for adjudication). It could have done that. Had it done that, it would not have faced the technical limitation that appears in Section 13(b) of the FTC Act that appears to suggest that the timeframe for assessing the existence of monopoly power is close to the moment of the decision of the case, not to look at an earlier period of the case, or to consider whether there are residual anticompetitive effects of a monopoly position that was built earlier with residual effects that carry forward. The FTC would not have faced that limitation. It could have argued, for example, in its Part 3 proceedings, that, indeed, Meta has faced greater competition, but that the effects of the monopolization linger on, and those have to be cured. It could have relied on its famous “unfair methods of competition” jurisprudence to introduce that theory of harm. It could have done this. Why didn’t it do so?

Jon Nuechterlein: Another way of phrasing that question is, if it thought that a court was the proper place for such a suit, why didn’t it just rely on DOJ to bring the case, given that DOJ is not subject to the statutory limitation?

William Kovacic: I’m afraid that goes to a fundamental weakness in the nominal joint venture that is our federal enforcement system. That is, for the FTC to turn to the Department of Justice would require a different conception of how the joint venture operates. Instead of being a joint venture where the baseline is a degree of wariness and suspicion, if not tension, to one of cooperation and collaboration. Where you would have, as part of this larger tech effort, wouldn’t it be interesting if there’d been a common team, a tech litigation team, where you sit down at the end of the previous decade and say, what are our enforcement priorities? Which firms, which theories of harm, what should we be doing, and who should do it? That is a common joint operations strategy effort that would engage the two agencies in looking at all the paths that we could use, all the theories of harm, and who ought to do it.

We simply haven’t seen that kind of collaboration except in the oddest of circumstances in the history of our system. That would have been a natural possibility that I think you could imagine the Department of Justice taking up, but instead, earlier in the previous decade, \\you had a negotiation between the FTC and DOJ over who would handle which firms, and there was an allocation, and the FTC decided to stick to that.

I think the reason they didn’t use the Part 3 path is they wanted the state of New York and a couple of other states to be parties in the case. The state of New York joined them in the monopolization case in front of the federal district court, in front of Judge Boasberg. Their case gets knocked out, so the FTC is alone. If the FTC had brought its case as a Part 3 case, the states could not have participated. So, to the extent that you wanted the states in, you had to go to federal court, but the FTC passed up an opportunity to use this distinctive capability that is its very own, and decided to go into federal court with the limitations. I wonder, Jon, how clearly the FTC litigation team even considered this potential risk of bringing the 13(b) case on their own.

Scott Wallsten: So to take a slight detour, and then come back to this, do you think that recent changes in the institutional structure with the FTC becoming more like an executive agency, potentially, could change this dynamic between the two?

William Kovacic: I think to the extent that the governance mechanism is linked more directly and completely to the wishes of the President, and that, say, Humphrey’s Executor is cast aside (the protection against removal, except for good cause), I think you raised, naturally, the debate once again about what’s been called the One Agency Act, or the consolidation of antitrust authority in DOJ. Now, the FTC has some distinctive capabilities that might not fit neatly into the competition mandate of the Department of Justice. The ability to do market studies, for example, the rulemaking capability, which could be upgraded to make clear that the FTC has competition rulemaking authority. I don’t know how readily those are absorbed into the work of the Department of Justice, but you open a path with the pending repudiation of Humphrey’s Executor for a renewed debate about why we have two public agencies in largely the same policy domain. I tend to think it’s a step in the direction of consolidation.

There are narrow parochial interests in Congress that would prevent that consolidation. Simply put, the Commerce Committee in the Senate does not want to give up the revenue stream that comes from overseeing an agency that oversees companies that give them electoral resources now. They’d be reluctant to do that if they didn’t get something in return. That’s historically been an insurance policy for the FTC when it comes to dual jurisdiction. But we’re in a time where I think those basic questions are up for grabs. So, I think it becomes a step in the direction of unifying antitrust enforcement authority in the Department of Justice. If I had to guess, by the end of the decade, that’s where we’ll be.

Jon Nuechterlein: As you point out, part of the impetus behind that movement is the sense that these two agencies are redundant, at least insofar as the FTC is performing an antitrust function as opposed to a consumer protection function, which doesn’t have a counterpart at DOJ. But with respect to antitrust, it used to be the case, back in the golden era, when you were, for example, the Chair of the FTC…

William Kovacic: And then when you were General Counsel, that was an era of pure gold, yeah.

Jon Nuechterlein: The Era of Good Feeling, as we like to call it sometimes.

William Kovacic: Cosmic happiness, yes.

Jon Nuechterlein: In those eras, the FTC was viewed as a bipartisan agency that was less given to ideological swings as administrations changed over. Those days are probably behind us, and I could have said that last year as well as this year. But as a data point in the politicization of the FTC, I think it’s worth talking about the FTC’s reaction to its loss in the Facebook case.

So, Judge Boasberg is well known to the American public now, not just because of the Facebook case, and not even primarily because of that case, but also because he was the judge that issued a TRO against one of the mass deportation orders. And that angered President Trump when that happened in the spring. President Trump called for Judge Boasberg’s impeachment, and one of Trump’s followers in the House duly introduced articles of impeachment the next day; it was obviously politically motivated. It was one of the rare times when a Trump outburst caused the Chief Justice to issue a public statement in which he said, quote, “For more than two centuries it has been established that impeachment is not an appropriate response to disagreement concerning a judicial decision.”

Okay, so that’s necessary background for understanding what the FTC said in response to Judge Boasberg’s decision in its case. An FTC spokesperson told the press, quote, “We are deeply disappointed in this decision. The deck was always stacked against us with Judge Boasberg, who is currently facing articles of impeachment. We are reviewing all our options.” Unquote. I guess, Bill, a few questions for you about this. First, is it fair to assume that this spokesperson wasn’t on a frolic and detour but passed that language by senior FTC leadership?

William Kovacic: It is very sensible to assume that that was approved by the Chair. That is, for these kinds of press releases, that goes to the Chair’s office, and for something as white-hot as this kind of comment is, that would almost certainly be approved by the Chair.

Jon Nuechterlein: Have you ever seen the FTC issue a statement like that in the wake of any previous FTC loss?

William Kovacic: No, and in looking back through the history of the agency, you don’t see this. The typical response is one I guess we’re familiar with, which goes, “we’re disappointed with the outcome, we are considering our options,” period. That would be the extent of it.

The only more recent example of this I know of is that when the FTC before the Supreme Court lost the AMG Capital Management case, which ruled that the FTC lacked authority to obtain equitable monetary relief in cases brought in federal court under Section 13(b) of the FTC Act. The then-acting Chair of the FTC, Rebecca Kelly Slaughter, who figures in the Humphreys Executor reexamination going on now, said, “we’re very disappointed,” and then went on to say, quote, “the Supreme Court ruled in favor of scam artists and dishonest corporations, leaving average Americans to pay for illegal behavior,” unquote. AMG was a unanimous 9-0 decision, not a close match. Among the members of the Court at that time was Justice Breyer, who’s the best friend that the FTC had at the time on the Court. I suspect that when Justice Breyer and his colleagues were thinking what to do in the case, they didn’t say, “should we side with scam artists and dishonest corporations or with victimized consumers?” That’s what’s at stake. I don’t think you have a note in the conference saying, “let’s side with giant corporations.” Chair Slaughter’s comment was a rash and intemperate observation. I can remember as Chair, and I wasn’t in the job for very long before we lost the Rambus case before the DC Circuit, and my comment at the time was, “we’re very disappointed with the outcome, and we’re considering our options.”  I don’t think anything is gained from throwing the acid in the face of the referees in the case.

So we might ask, why did the Commission’s press office issue the statement it did after the Meta decision? My sense is that the audience for that comment is 1600 Pennsylvania Avenue and not anybody else. This is a way of the FTC saying to the White House, “we’re on your side. And we are with you in fighting this battle against what we believe to be an intemperate judge who is hostile to everything we’re trying to do.” By the way, if you anticipate an appeal before the DC Circuit in this case, or you anticipate having other cases before the district court, you might take into consideration there are a number of members on that court who respect and like Judge Boasberg.

What have you gained by this kind of flamethrowing? I can only explain it as messaging to the White House, messaging that says, “we are with you in our fight against all judges who oppose our agenda.” This is just part of it. Completely intemperate comment, and far more, far more pointed and conscious than, say, Acting Chair Slaughter’s statement of disapproval about the outcome in AMG. I think that Acting Chair Slaughter’s comment was just an outburst of frustration, where you should have thrown the draft statement in the drawer, and said, “tomorrow, I will edit it,” and it goes out with a blander comment. There’s nothing to be gained, I think, generally, in this field in criticizing the referees. It’s not a matter of getting a makeup call later on. It’s just dangerous and inflammatory, but if your aim is to please observers in the political arena, then it makes perfect sense.

Jon Nuechterlein: One of the interesting developments in DC these days is that it used to be that messaging was directed at all sorts of people in DC. People in Congress, people in the White House. There’s really only one person to whom people are directing messages, at least in Republican circles these days.

William Kovacic: Yeah, and I think it’s especially vivid at the FTC, where the Chair, Andrew Ferguson, when he talks about the FTC, invariably refers to the “Trump-Vance” FTC, as though the formal name of the agency had been changed, and that  the new name had been hung above the entrance at 6th and Pennsylvania.

Jon Nuechterlein: Well, and that also just raises questions about why there needs to be more than one arm of the President in antitrust enforcement.

William Kovacic: I see no need. The institutional differentiation that we observed until recently was designed to test an alternative mechanism, and not to eliminate the President’s influence. The president has a number of sources of influence in the operation of the FTC and similar agencies. It was just to limit the extent of that influence and to create an alternative model for operation. Those differences are being wrung out of the system completely. It’s hard to make the case for having two federal antitrust institutions as those differences are eliminated.

Jon Nuechterlein: So, you mentioned the One Agency Act, which is legislation to, to follow. There’s also a couple of bills that Senator Klobuchar introduced, or has introduced: noe recently, one a couple years old that needs to be reintroduced. Here’s how she responded to the FTC’s loss in the Meta case. She says, quote, “I disagree with today’s ruling and hope the FTC will appeal. The court’s opinion makes clear that our laws are not keeping pace with advances in technology, and that we must pass legislation to take on tech monopolists and return competition to digital markets. Now there are no more excuses for not passing this legislation.” She was referring to, as I mentioned, a couple of proposed laws. One of them is called the Competition and Antitrust Law Enforcement Reform Act, or CALERA, and the other is the better-known American Innovation and Choice Online Act, AICOA. You’re familiar with these pieces of legislation, and I’m wondering if you could just briefly describe for us how they would change competition policy in the U.S, and how likely it is you think that we’ll see a renewed push for enactment of such legislation in light of the Google and Meta decisions?

William Kovacic: I think that Senator Klobuchar is right, that we are going to see a renewed debate, which will draw upon a coalition left and right in the Congress to look at new legislative measures. The most formidable of these is the so-called AICOA legislation, which would establish an ex ante regulatory regime that borrows in its spirit from the Digital Markets Act in the European Union and establishes a set of specific prohibitions applying to major information systems platforms. It would allow the platforms to offer defenses for alleged misconduct, but it would seek to use a more formal, regulatory mechanism to identify clearly what dominant platforms can and can’t do. The other piece of legislation would seek to amend provisions of the Sherman Act, essentially to modify the approach, the interpretation that the Supreme Court has given in modern decisions such as Trinko, to expand the range of conduct that might fall within the operation of Section 2 of the Sherman Act.

Again, I think she’s right that we’re going to see a renewed debate about these items. When the opportunity arose in 2020 to adopt legislation when perhaps the coalition was strongest, they weren’t able to agree on exactly what specific measures ought to be adopted, and that probably will remain an important stumbling block here. I’m not sure that they can overcome that concern.

I think it’s also probably not quite right to say that recent experience clearly shows that we need a new framework. You can think of how the existing framework, applied somewhat differently, might have been effective. I think we tend to undersell the influence of behavioral remedies. There’s a long history in the Sherman Act of regarding those as being a poor, distant relative to really effective remedies, breakups in particular. Anything short of a breakup is seen as a failure. That wasn’t the case, I think, in the Microsoft settlement in the early 2000s. It wasn’t the case in the settlement of the AT&T litigation in 1956 that gave rise to the original final judgment. There are a number of instances in which the actual implementation of conduct or mandatory access remedies are seen later on as having beneficent effects and being useful. The difficulty is you don’t know right away. It’ll take a while to see that happening.

Judge Mehta sharpened some of the remedial elements of his broad outline of remedies in his latest opinion. And again, they involve some mandatory access, prohibitions on certain forms of exclusivity, syndication of search results—all designed with a conscious eye to making sure that Google doesn’t dominate the use of generative AI to reinforce its position in the marketplace. We simply won’t know for a while about how these work.

Footnote, we’re probably in for two years of appeals here on these decisions, certainly through the DC Circuit, maybe to the Supreme Court. Maybe the Supreme Court, for the first time since 1973, reviews a monopolization case brought by one of the federal agencies. It’s been over 50 years, perhaps they’ll come back on this. So we’re not going to know for a while, but I think generally, conduct-related solutions tend to be undervalued. They tend to be more effective than you think. The problem with them is they don’t create a big bang right away. So you don’t have an observable outcome that you can point to. I think if you’re a bit more patient about the market outcomes with the remedies in place, if you made some of these other adjustments, dealing with, say, the remedial role of the Federal Trade Commission, if you could engage judges more actively in managing cases—take the Microsoft case brought by the DOJ in the late 90s. The case was filed in May of 1998, the trial began in October of 98. Judge Jackson finished the case through remedy in early 2000, and the DC Circuit issued its decision on appeal in June of 2001. That’s barely more than three years from the initiation of the case up to and including the first round of appeals. So I think if we drew more on this experience, we could get it done faster, maybe more expertly, more confidence for judges. But I think the perception, not entirely accurate, is that this mechanism has failed, it doesn’t deal adequately with dynamic markets, and we need something else. And we can also ask how easy it will be to apply any regulatory framework that’s put in place.

Jon Nuechterlein: I might also point out that the Meta decision is not a terribly useful data point for determining whether antitrust is too slow-moving to address competition problems in fast-moving markets. Antitrust has a mechanism for addressing acquisitions that may lessen competition. That’s Section 7 of the Clayton Act, which the FTC could have invoked in 2012 and didn’t. Instead it waited eight years to file suit to challenge that merger. And so, you could just as easily view that case—to the extent that you think the merger was problematic—as evidence that the tools were there, just the enforcers didn’t take timely advantage of them.

William Kovacic: I don’t want to indulge in simply an academic bias for research. I think there would be an enormous value to a reconstruction of those enforcement decisions—maybe Google DoubleClick as well, and the parallel decisions that took place in the case of Google DoubleClick in the European Union, and in the case of Instagram, WhatsApp, in the United Kingdom—to look not simply at what was done, we know what was done, but to know why, to have in mind why, especially in the FTC’s case. The FTC had in front of it what seemed to be provocative emails in which then-Facebook’s chief executive officer explains precisely why you want to buy Instagram, which is a small company without much of a track record, but a very interesting product, where the CFO of the company says, “why are we spending a billion dollars on this scrawny new enterprise, with an admittedly good product,” and the CEO says, “well, it’ll be a good complement to what we’re doing, but they will decide, they’ll realize soon enough that they can be us. And if we wait, it’s going to cost a lot more money to fight them off then than dealing with them now.” I guess, I guess both you and I, Jon, in looking, if we saw those kinds of documents, it almost makes your fingers burn a bit. That is, what’s going on here? I mean, have we seen precisely the indication of a scenario in which you don’t want the incumbent to acquire this capability. I’d like to know more about why the agency let it go. And again, it’s during the Obama administration; it’s not the poor Republicans who were perhaps inclined to use light touch in these kinds of matters. It’s the Barack Obama administration. Why, why weren’t these pursued? Not with the point of saying, gee, you made the wrong call. But saying, why did you make the judgment that you made here?

Jon Nuechterlein: I’m happy to say that I joined the FTC the year after that decision was made, so I can’t speak to it. But I can speak to a different case involving the antitrust doctrine of actual potential competition, and I will tell you that the law in that area is notoriously pro-defendant, and it is difficult for the enforcement agencies to prevail.

William Kovacic: As the FTC discovered in challenging Meta/Within…

Jon Nuechterlein: And Steris is the case that I’m thinking of.

William Kovacic: Yes, yes, extremely hard. And, see, I think part of the narrative that’s built up over time, and certainly emphasized by the Biden administration, maybe carried forward to some extent with the Trump appointees, is that this was a grievous failure of enforcement, not simply because the judgments made turned out to be erroneous, but there was an element of moral dereliction, almost—a lack of courage, a lack of foresight. And I think that simplifies the problem in a way that we would object to. If a student wrung out that complexity in writing an exam question, we’d say, answer my question, not the one you’d prefer to answer. And I think in many respects, we don’t understand this. And even more, to bring in the foreign authorities who looked at this with the same degree of detail, maybe with much stronger enforcement instincts, certainly the European Commission. Why did they stand down? Not because the U.S. authorities told them to, but why did you decide not to intervene? That’s a conversation worth having.

Jon Nuechterlein: So I’m glad you mentioned the EU, because I think that will bring our discussion to a productive conclusion. We talked before about the bills that Senator Klobuchar has introduced, and both of those take the form of amendments to the antitrust laws, Under both of those proposed statutes, the antitrust enforcement agencies would take the lead in prosecuting violations. Generalist courts would still decide whether violations had occurred, and would then superintend remedies. But as you know, there have been other proposals by the Stigler Center, by Senator Elizabeth Warren, and others, to take a more radical step, which would be essentially to create a new digital regulator. A new regulatory agency that can impose prescriptive regulation, common carrier-style regulations, on dominant tech platforms. And, that would closely parallel what we’ve seen in the EU with the DMA, with the Digital Markets Act, which you mentioned. The DMA recently came into force, and I think it would be useful to have you walk us through what the justification was for enacting the DMA against the backdrop of what was already a fairly aggressive antitrust enforcement regime in the EU, and what the experience has been in the early years of applying the DMA. Is this sort of regulatory approach useful in curbing market power before it can do real damage to markets? Is it preferable to antitrust enforcement because it can move faster and is ex ante as opposed to ex post? Those are the rationales we hear from defenders of the DMA.

William Kovacic: I think the intellectual lineage rested heavily on the view that traditional antitrust enforcement technology had failed. That the European experience with their equivalent of our monopolization prohibition—Article 102 of the Treaty on the Functioning of the European Union, which prohibits an abuse of dominance—that it was not up to the task, it was not flexible, it was not adroit, that you got hopelessly prolonged proceedings—I guess the starkest example is the long-running monopolization litigation involving Intel, which has gone two decades (seems to be coming to a close)— that this is not fit for purpose, and we’ll do much better if we have clear conduct prescriptions. We’ll borrow them from our traditional antitrust enforcement framework; that is, the specific conduct prohibitions for the so-called gatekeepers, the large information systems platforms, are derived from enforcement experience. They are cast in the form of per se prohibitions with no defenses. And the rationale for the per se provisions is the assumption that we’ve learned from our past abuse-of-dominance cases that these are far more often than not harmful, so we’re going to prohibit them outright. The view would be, the expectation would be, that by providing this clear guidance in advance, it would give dominant enterprises an unmistakable set of guideposts to follow in deciding how to formulate their behavior. It would facilitate compliance. You’d get a much quicker resolution of different matters, so you’d have a system that worked effectively by getting you compliance by laying out what the milestones were, and providing a faster process to function.

I would say before the U.S. Congress were to adopt such a mechanism—or the other interesting variant, the Digital Markets Competition and Consumer Act in the United Kingdom, which is just getting underway, which doesn’t rely on per se prohibitions, but it is an ex ante process—you’d want to study these international experiences very carefully. And I think what you’d see in the case of the European Union is they are not easy to apply. You have an initial phase in which you designate firms as being firms with gatekeeping capacity. And then you scrutinize whether or not they’re abiding by the prohibitions in question. There’s some room for flexibility in that process—that is, there’s a negotiation, a discussion that takes place between the enterprises and the European Commission enforcement officials, that gives the European enforcement officials some ability to respond to efficiency arguments, to characterize behavior as being inside the prohibition or outside the prohibition. I think we can anticipate adjustments over time, but at the moment, does it work? Is it effective? Too early to tell.

What we do know is that it’s not cheap to do. It requires a significant dedication of capability, which the European Commission did not have in place when they launched it; they’ve been playing catch-up. And it raises the question for us in the U.S, who’s gonna do it? Do you give it to the Federal Trade Commission? Do you say, you have greater experience in rulemaking generally, we’ll give you an express rulemaking mandate to implement the commands in the statute, we will augment your team, your technical team and others, to do the work. You’ll be the people to do it. Oh, yes, at the same time, we’re probably going to move the formal antitrust enforcement authority down the street to the Department of Justice. That’s going to be an awkward relationship in deciding the relationship between traditional Section 2 enforcement and the implementation of the U.S. ex ante regulatory regime. If you’re going to create the regime, maybe that’s a reason that you do not kick the FTC out of the antitrust enforcement business altogether, too, if you’re going to set this up.

I think that what you’ll find in looking at the experience is it’s harder than you think to create it. The results so far? Still trying to determine what those results and outcomes are, and whether or not the application of this is inspiring caution on the part of the platforms that gives entrants or fringe firms the opportunity to expand. I think the European Commission is working hard to try and get answers about that. They’re quite proud of the mechanism they’ve established. They offer it to adopters globally and, certainly, praise its general design and operation. But there’s a lot to be known yet about it.

Scott Wallsten: So, like you said, it’s still early, so it may not be fair to draw conclusions, but there are things like the Draghi report, right, which have criticized this general approach. And that was an EU report, which they promptly ignored, and so they don’t seem to be particularly interested in the evidence, but, you know, that’s their problem. Has that had any influence on the discussion here, do you think?

William Kovacic: I think that many observers have been focusing on what Draghi had to say about barriers to innovation. Some of those are rooted in member state prerogatives that frustrate the attainment of the broader goal of a single unified market, especially in areas such as transportation, energy, to take a couple of examples, communications being another. The European framework does not have the unifying mechanisms that we have in the United States to accomplish that.

But I think a part of the Draghi Report that is quite provocative and is of interest to the U.S. community as well is Draghi’s cautions: are you, in a large sense, too much focused on regulatory controls and not enough on giving firms freedom to adapt, adjust, and innovate? Now, that’s not a direct criticism of the DMA, but when Draghi’s talking about excessive regulatory controls and complexity, inevitably he’s drawing attention to that. I would say there’s a fierce resistance—especially within the Competition Directorate in the European Union, especially on communications-related issues—to that Report and the inferences to be drawn from it.

You can see DG Comp in talking about its forthcoming new merger guidelines, probably out a year from now in final form, speaking about the need to respond to dynamic competition concerns. They are using some speeches and discussions to respond to the suggestion that the system has to be more flexible and adaptable in dealing with innovation-related concerns. But I think if you peer into the soul of DG Competition in particular, they see all this talk about the need to focus on innovation, and they’ll agree with the need to create the common market and build that more effectively, but the suggestion that antitrust has fallen on its face because it doesn’t care about innovation, that’s a perspective that DG Comp rejects.

I suppose the concern that the European competition officials have is, will they be bypassed if they don’t respond to this more directly. Will policymakers bypass them? Because, in many ways, policymakers are saying, how do we know it works? Tell us, tell us what competition has done. Give me your five greatest hits, where competition is really promoting innovation. What are they? What are your enforcement cases that have made a difference? Don’t give me 100, give me five. And show me how that is helping in our efforts to promote growth and innovation. That’s a debate taking place in the European Union, in the United Kingdom. In thinking about new legislation, that would be part of the debate that happens in the U.S, too.

Jon Nuechterlein: This has been incredibly illuminating, Bill, as always. And I asked Scott before we invited you to this whether it was too soon to go back to the well to get your reactions to recent developments, and I think we’ve collectively concluded that we should err on the side of going back too often to the well.

William Kovacic: Thank you for coming back to the well. It is bottomless. It has all kinds of water in it. It’s, it’s a fantastic well. A last thought is, you know how are we going to be persuasive in these global environments? It’s something you and I have talked about. Are we going to exert influence mainly through trade negotiations and threaten tariffs, or we say, you’ve got to back off on this kind of program. Tomorrow, one of the House subcommittees is having a hearing that’s sort of styled as, “are European enforcers targeting American companies in a discriminatory way, and what do we do about it?” That’s going to be in the background as well, and that’s not going to be a polite discussion.

You know, our credibility is seeping away in the eyes of foreign officials. At the OECD meeting in early December, they had a session they call the Global Forum on Competition, where they invite observers from many countries, but then they have the smaller group of OECD members and observers. And, you know, the U.S.—they all pay close attention to everything that’s happening here. They look at every intervention. They look at the President pardoning an official of a company that is said to have been the ringleader in a bid-rigging scheme for the construction of public buildings in Texas, on the basis of a golf course encounter by a lobbyist who’s helping the guy out. My guess is that Gail Slater, the head of the Antitrust Division, found out about that sort of late in the process. And how would you like to go to the DOJ team who worked on that case and explain to them why it’s okay? Things like that are just so jarring in the eyes of our foreign, of our foreign counterparts and observers. Not to mention the auction that’s going on now with Netflix. It’s a hard time to draw attention to some of the substantive arguments and keep the spotlight focused on those.

Jon Nuechterlein: Agreed.

William Kovacic: Discouraging.

Jon Nuechterlein: Yes. All right, well, on that downer note, I think we’ll need to conclude. So thanks again.

Scott Wallsten: Thanks so much.

William Kovacic: As Scarlett O’Hara said, “I’ll think about it tomorrow, because tomorrow’s another day.” She’s not an antitrust person, but she could have been.