Today's number: 42. That's the percentage of consumers who say they didn't know Lay's chips are made with real potatoes. True story. I'm thinking about starting a boy band with other lovers of potato chips. We're calling it Panic at Nabisco.
These are my favorite jokes. It's the terrible dad jokes. Those are my favorites.
Yeah. I think we should lean more into that.
We do things out of order here for some reason, but we just interviewed Jonathan Kanter from the FTC and I literally saw my future. Um, you're going to be chair of the SEC, I'm convinced. And then Jonathan Kanter is going to get like five minutes with you every other week over, you know, a Diet Coke or Crystal Pepsi or some stupid drink you drink or whatever, or kombucha, whatever.
Such a strange vision that you popped into your head.
Well, yeah. And I'm going to be your driver because you're going to feel sorry for me and you're just going to sit in the back seat and scream at me that I'm going the wrong way to Dallas. I think you're going to be abusive of me in my senior years. That's when you're 40, I'll be 74, and I see you just humiliating me and I will have lost all my money for a third time and you'll feel sorry for me and make me your driver.
I doubt that'll happen. I think you'll be doing very well. I'll be coming over and caring for you.
I don't see that. I think men leave. That's why my advice to you is keep having kids until you have a daughter. Because I wish I'd realized this when I was younger. Daughters come home and take care of their dads. Boys take off and find some other woman to rule their lives and they're not allowed to be in your life any longer. That's true. That is very true.
I have daughters.
Yeah. Actually, my grandma recently made that point. I was visiting her and she has this friend and she was saying, I just feel like she needs someone to take care of her and the trouble is she doesn't have a daughter.
When I moved, I'm virtually single now. When I moved in with my mom when she was very sick, there was at the Del Webb active living community in Summerlin, Nevada, and we got a letter saying it's come to our attention that you are cohabitating with a man who appears to be under the age of 50, which is against the bylaws of the Del Webb resort community guidelines. And so I had to march down there and say, 'Actually, I'm her son. My mom's very sick and I moved in to take care of her.' And of course, they were like very like, 'Oh, no problem. We understand now.' And they said, 'There's a support group for kids taking care of their parents.' And I went once and they had it at the clubhouse and it was me, a gay guy, and 12 women.
There were straight men. I don't know if I'm sure I'm committing a hate crime here, but straight men don't appear to be that interested in taking care of their parents. Or at least that's what I took away from this caregiver meeting of kids who were involved in their parents' lives at this place.
I'm impressed that you decided to do that. I feel like it's a very, I don't know, mentally healthy thing to do. Go to a support group and talk about problems. It doesn't seem very Scott Galloway, but it's...
Well, I was hoping I'd meet hot chicks. Um, 'Oh my god, he's so sweet. He's taking care of his mother. I'll give him a random moral sex. I mean, he seems like such a nice man.'
Ah, welcome to Prof G Markets. Today we're discussing antitrust. Uh, yeah. No, this was how bored I was. I was living with my mom and her rabid alcoholic friend who showed up with a Scottish terrier and 12 bottles of Johnny Walker Red. And it used to get so strange. I'd be like, I got to get out of here. And I read that there was a caregiver support group and that was my best option in the afternoon to go just listen to other people talk about their dad's stage eight prostate cancer and just like, 'Oh, what cancer does your parent have?' Um, but it was... Did I tell you about this? Let's talk about me, Ed. During the day, I'd hang out with my mom and Carson, her friend, and we'd watch Jeopardy and Everybody Loves Raymond and I'd take my mom for a walk and I'd manage her healthcare. My mom said that she wanted, you know, her only thing on her bucket list. I asked her near the end, what's on your bucket list? She has one item on my bucket list: I want to die at home. So, I thought I can make that happen. And then at night, I'd go down to the Strip. I'd take a 20-minute Uber and I'd party with entrepreneurs and strippers and I'd get ridiculously fucked up, too fucked up to go home. So, I'd get a room at, I forget what it was called. I think it's called the Delano now, but back then it was called something else. And during the week, you could get a room in Vegas for like 29 bucks. And I'd wake up and I'd go have the buffet breakfast and I'd cruise home to Everybody Loves Raymond and rapidly drunk Carson who was fucked up by 1 or 2 p.m. And at one point I walked in on Carson. I came into the living room to see what was going on. And Carson, this 78-year-old woman, was topless with one of the maintenance workers on my mom's couch fooling around. And the really strange thing is it seemed almost normal. I was in such a Wes Anderson film at this point. I'm like, 'Okay, here's my mom's 78-year-old friend with big fake tits and a guy fully clothed with a shirt that said like Manuel on it fooling around with her on my mom's couch.' And it didn't even seem strange. It didn't even seem strange. Anyways, what's the S&P doing today, Ed? What's the S&P doing? And you wonder why I'm fucked up. You wonder why I'm fucked up. I have a lot more questions that I can't get to because we have to get to this conversation with Jonathan Kanter. We have to talk about this boring thing called antitrust.
I want to hear more about Carson.
Let's get on with this. This is not CNBC.
Okay, here was our conversation with Jonathan Kanter, former assistant attorney general for the antitrust division of the US Department of Justice. Jonathan, great to have you back on Prof G Markets. Thank you for being with us. Always a pleasure.
So, we really wanted to bring you on to get your reaction to what is happening in AI. Um, we've discussed potential antitrust concerns when it comes to AI before. Uh, we've been talking about it going way back to when we realized that all of these board directors on all of these different AI companies, they all serve on each other's boards. And then it kind of progressed to these AI companies or these big tech companies investing in AI startups and then swallowing them up and taking their employees and oftentimes taking their profits. We saw that with Scale AI. We saw that with Inflection. We even saw that with OpenAI. Um, and now we're getting to a point where they're all financing each other through these circular deals where you invest in an AI startup and then the AI startup turns around and spends that investment money on your chips and on your compute. It's all getting a little bit shady, is what we would say. And we have a lot of concerns in the community, in the investment community, that we are seeing a bubble. So that's sort of the picture that we're seeing. We want to get your reaction as a preeminent antitrust expert. What do you think of what is happening in AI right now?
I think this goes right back to why the antitrust laws were created in the first place. The trust in antitrust laws referred to the oil trusts and the railroad trusts and the sugar trusts and the like that had these tentacles in all different businesses. So you had these holding companies, these trusts that were invested in all sorts of different industry competitors and rivals and they were pulling the puppet strings. You can go back and you can see these great cartoons of the day of the octopus, the antitrust octopus, who had their tentacles in all these different businesses. And so what did the United States Congress do? They created and enacted something called an antitrust law. And that antitrust law is designed to break up interlocking board directorates. It was designed to prevent these holding companies from having their tentacles over all the different competitors. Now, as we sit here in 2025 at the dawn of a new industrial revolution around AI, we have the exact same thing happening, which is a small number of companies led by modern-day versions of J.P. Morgan, J.D. Rockefeller, and others who are putting their tentacles in all of these different businesses through these circular investments, creating the exact same circumstances that led to the creation of the antitrust laws in the first place.
So when you look at the big players here, who would you consider to be the new Rockefellers, the new J.P. Morgans? Who are those players that you think are the most apt to compare?
OpenAI certainly sits at the center of all this. But you have Google, you have Amazon, you have Microsoft, and you certainly have the likes of Elon Musk. And then the other new linchpin in a lot of this is Nvidia. And so if you look, for example, take Anthropic, right? People hear of Anthropic and Anthropic sounds like this nifty, neat, independent competitor, but who are some of the largest investors in Anthropic? Amazon and Google. Who are some of the largest investors in OpenAI? Microsoft. And then you now have shareholdings with Nvidia, AMD, and you know, you can trace this out and what you see is an interdependent network of companies who are behaving almost as if they're one business to some degree when they're supposed to be fierce competitors.
What is the danger here with all of this? I mean, collusion might be a strong word. It sounds sort of conspiratorial, but what we're describing is these very, very large and powerful companies that are cooperating with each other instead of competing against each other to build market power. They're investing in each other. They're becoming friends with each other and sitting on each other's boards. I think colluding probably describes what's happening here. What is the danger there? Because on the one hand, you've got this fear of a bubble that they're kind of creating their revenue by just going out and saying, 'Oh, we'll invest in you and then turn around and pay for our products.' But then on the other hand, maybe this is an effective monopolization strategy. Maybe this is how the Rockefellers of the past built up market power. And ultimately, I mean, those were good investments because generally speaking, investing in a monopoly can work out. I mean, where is this all headed?
Yeah. So there are a number of different risks. Let's unpack them. First is resiliency risk. Our economy is extraordinarily dependent on a small number of businesses. The Magnificent Seven or 10 or whatever number fits the moment. But the companies we just mentioned are propping up the US economy and markets globally. If they're all interdependent and there is an issue with one of them or one of them turns out to be significantly overvalued or if there's fraud or one fails, there can be this cascading effect on all the other dependent companies which are in turn propping up the market and could force us to enter into a collapse. So the resiliency risk, even if you set aside all the competition concerns, is something we should be really focused on as a country. Second is we are at our best as a country and we compete best globally when we have fierce competition domestically. And so we want these companies duking it out to innovate, to outdo each other, whether it's in terms of the safety of their foundation models, the accuracy of their models, the innovative nature of their chips, and so forth. And so we want competition to force people to do a better job, to innovate faster, to put more money back into the economy. And this becomes a shortcut sometimes, this cross investment, this circular investment. Finally, I would say we want more money being reinvested back in the US economy. One of the things that struck me when I was at the Department of Justice is just how much money is going back and forth among these companies. Let's take one of our more famous cases, which was the Google search case. At the heart of that case were payments by Google to Apple of over $20 billion a year. Right? This is not money that's being reinvested back in the US economy. It's money that's going to and from these companies and you see the same thing happening with chips. Compare that to take a company like Apple. It spends substantially more in stock buybacks than it does in R&D. And so across the tech sector, we are not seeing enough money being reinvested back in the US economy. Instead, we are seeing it used to prop up share price or to spend money back and forth among the other dominant firms. And that is, I think, a risk and something we should discourage, not encourage.
I agree these circular deals are a kind of sleight of hand. That the concentration of power creates this anti-fragility, but in terms of money actually going into the economy, you're seeing a lot of people, investors, and you would argue with 10% of the population owns 90% of the stocks. There is an extraordinary amount of capital going into capex that is going into the economy. Right? We're going to spend more on data centers this year than I think on new office building construction. We're talking about new nuclear plants, redoing the grid. So there is, my understanding is, somewhere between one and a half and $2.5 trillion that will likely go into the economy. One, do you acknowledge that there is an extraordinary amount of capex that is going into the real economy?
So let me start by saying first I do very much agree. I'm not anti-AI. I'm not anti-technology. I think these are, you know, the US has been the cradle of innovation and these are amazing companies and amazing innovative technologies that are exciting. And yes, there is a tremendous amount of investment. My concern though, however, is a lot of that investment is being distributed among a small number of companies. And so when you think about data centers, yes they're important, yes they're necessary, but a lot of that money is going to buy chips and they're not creating lots of jobs back in the US economy. And so the value is being captured by a small amount of folks who also include people who invest in the stock market. But there is also a lot of money still sitting on the sidelines. If you look at the big tech companies, they still sit on tremendous amounts of cash. A lot of that's offshore. And a lot of money is being used for things like buybacks. What competition is supposed to do is it's supposed to maximize the amount of that money that is being put back into the economy through R&D, through job creation, and through lower prices. And so all of these things can be true at the same time in my view.
So we're sort of, and we've got to educate young Jedi, uh, what is it? Jedi. What's the student? Let's look up Padawan. Young Padawan Ed here.
We're just older and smarter, Jonathan. That's what I'm trying to say.
I agree. See, now we're talking.
There we go. Now we're speaking each other's language. We're about the same age. You were actually at the FTC in the late '90s looking at this train wreck. I was in the caboose in the train wreck and, you know, raising money for internet companies. And I remember a bunch of us had an e-commerce startup called Red Envelope where we were trying to get an investment from AOL who would invest $10 million in us in exchange for us spending $10 million in AOL's marketplace. And they were doing these kind of, like, I don't know if you remember PurchasePro, but it feels very similar. Smells like teen spirit. It feels very similar again, these round-trip related party transactions. And then when the company got in trouble and could no longer make the payments to AOL and then AOL had to write it down. It took a big hit to their earnings and then, I mean, it was just like the unwinding was almost as fast as the downward spiral was almost as fast as the upward spiral. When you look back at how the dot-com implosion played out and you try to project this, is what I'm hoping. I think a lot of people see nothing but upside and have trouble actually visualizing the downside. Can you talk a little bit about what happened in 2000 and if and how it relates to what might happen here?
I think there are two things that pop out for me. First is valuation rather than profits. And so at the time there was this euphoria, in some degree rightly so, that the internet was going to change the world and it was going to create all this opportunity. So what happened is everybody started imagining every internet company or every good idea would somehow translate into a very profitable business. And you saw these inflated valuations based on this outsized optimism about what these technologies could achieve. And then there was the rationalization where a lot of these companies may have had good ideas but they weren't likely to generate the kind of money that was necessary to justify those valuations. And so I think that's one thing that happened and whether we experience that now, it's hard to know, but it certainly does feel the same way. The second is the interdependence and that's kind of the point I was making at the outset, which is the companies we're talking about here, again, I don't want to overlook the fact that many of them are great companies and they do lots of great innovative things, but resiliency is an important part of the equation here. And if there are so many dependencies among so many companies that are so powerful and there's one failure, I mean, look what happened with Enron and some of the other failures of that era, it took a lot of other companies with it. And so I think we want to make sure that we're not too exposed by having all these connections among various different companies.
Well, I'll put forward a thesis and you tell me where I might have this wrong. Because what I find is as long as the markets are screaming up and the majority of investors don't really remember '99, it's very hard to create any sense of urgency or concern as long as you keep seeing your 401k going up. But you have essentially, if these companies could get cut in half, Amazon and Cisco went down 90% from '99 to 2001. That doesn't mean they aren't great companies. Amazon since then has gone up 40 or 50x, but they went down 90% from their highs in '99. Say these companies get cut in half. And by the way, if you woke up tomorrow and didn't know what had happened to these companies the last two years, their run-ups, they wouldn't look cheap even if they got cut in half. That represents a 20% decline in the S&P, which represents a 10% decline in total market cap globally. That strikes me as almost no way to avoid a recession if in a short period of time you had 20% of the S&P eroded and 10% of the global market cap go down. Am I overstating the danger here? And then I guess the follow-up question is if you do see a lack of resilience or kind of an economy that's becoming fragile, other than, I guess it's do we break them up, what do we do, how do we rationalize this market for what I would call a soft landing?
I characterize it more as resiliency risk and let's hope that we don't have a crash, let's hope that things stay on the steady. But I do think there are things you want to put in, have circuit breakers in your system to help mitigate resiliency risk. And some of those are things like antitrust laws. And the antitrust laws are not just about penalizing the monopolist or holding a monopolist accountable like at AT&T or Microsoft or Google years later. Antitrust is also about acquisitions used to gain power. It's also about something called interlocking directorates and it's a little-known part of the antitrust laws that we revived when I was at the agency. But you're not supposed to be on the boards of competing companies. It's about cross-ownership and investments that help again keep independent companies or companies separate from each other so you don't have these kind of cascading economic effects that can result in a downward spiral. I do think we need to be responsible about dusting off some of those laws and making sure that we are protecting ourselves. I'll also say to your point, Scott, which I very much agree with, and I've been pounding the table on this for a while, is we are too dependent on a small number of companies. My view is we need more public companies. We need more companies going public. We need more businesses starting not to be acquired, but to build, thrive, go public, and become the next great US company. And I think we kind of lost our way. And that is a difference between the late '90s and early 2000s. The path to prosperity was to build a company then take it public. And I think now the path to prosperity is to build a company and either have it be bought by private equity or bought by a big tech company. And I think that's an unfortunate development. We'd be a lot better off if we had more companies making a go of it.
We'll be right back after the break. If you're enjoying the show so far, be sure to give Prof G Markets a follow wherever you get your podcasts.
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We're back with Prof G Markets. When I look at these interdependencies, there's a sense in which this is actually beneficial and that this is the way that markets should be headed. How do we draw these lines as to what is actually good competitive behavior? What level of monopolization and the intention to monopolize and to accumulate power, at what point does it become a problem where it actually causes an issue for markets? It's sort of a general question, but how do we draw that line between you are competing in a good way, you're trying to buy up your competitors, you're trying to compete versus you are causing issues in the markets?
