Amy Klobuchar Leads Senate Judiciary Committee Hearing On Antitrust Policy And Reform

Thanks so much, Madam Chair. I too enjoy working with you, and one regret I have for this Congress is that we didn't take better advantage of the term 'Klob-chair,' which sort of encapsulates all the aspects of the title. There aren't many names that fold right into a chairmanship.

No, I used it at the beginning of last Congress.

And I do remember, I think it was the same hearing or at least a related one that you were talking about a minute ago. You pointed out very astutely that one of the songwriters, everything he said sounded like a country music song, and it didn't even require alteration. He kept talking about how he just wanted to earn enough money through his songs to be able to take his family out to dinner on a Friday night and to church on Sunday, and it literally sounded like a country song. As the end of this Congress and the end of the Biden administration come to an end, we're, I think, on the cusp of turning the page on the 'big is bad' mantra and rhetoric, and look forward to a new Congress and a new president, Trump's second term. Today's hearing gives us an important opportunity to talk about bipartisan enforcement actions and legislative reforms in antitrust policy, and I agree with the chairwoman's assessment that on this committee these issues normally transcend party. I would love, in fact, to be able to work 'transcendentalism' into the committee title somehow if we could do that, although it might be even more wordy than it is now. Now, during President Trump's first term in office, both the Department of Justice and the Federal Trade Commission identified some significant harms posed by monopolistic practices and the concentrated power within big tech companies, and the impact that those things had on our economy. This led to a comprehensive review of the largest tech platforms, and that review culminated in the filing of some enforcement actions supported by a bipartisan coalition of state attorneys general against Google for illegally monopolizing internet search and advertising, as well as lawsuits against Meta, Apple, and Amazon. These trillion-dollar companies, if left unrestrained in that regard, not only stifle competition but also suppress public discourse through ideologically motivated censorship. Enforcement actions against big tech are not only—these are far from the only bipartisan initiatives that we've seen in this area. Antitrust enforcers have increasingly scrutinized the competitive risks posed by, among other things, vertical mergers, the combination of companies operating at different levels of the same supply chain. The Trump administration's challenge to AT&T's acquisition of Time Warner marked a truly pivotal moment in vertical merger enforcement. Although AT&T ultimately prevailed in court, the case highlighted the potential for such mergers to harm competition by restricting access to essential content, potentially slowing industry innovation. The Biden administration has continued this rigorous scrutiny of vertical mergers, exemplified by the FTC's successful challenge to Illumina's acquisition of Grail, which could have stifled innovation in some very critical, pivotal, life-saving cancer detection technologies. In Congress, we've taken significant steps to support federal and state antitrust enforcement offices through recent legislative efforts, and additionally, we're advancing bipartisan legislation to modernize and update our competition policy and address some of the complexities of today's digital economy in ways that are natural extensions and applications of our existing antitrust law. For example, the State Antitrust Enforcement Venue Act, signed into law in December of '22, empowers state attorneys general by exempting their cases from previously existing laws that would have otherwise required them to be consolidated into multi-district litigation. So this challenge enables states to litigate their cases in their preferred venues, enhancing their ability effectively to challenge antitrust violations, and it protects and enhances the state's authority to pursue justice on behalf of the consumers in their states. Additionally, the Merger Filing Fee Modernization Act, also signed into law two years ago, updated the filing fee structure for mergers, aligning fees with transaction values and providing increased funding for FTC and DOJ antitrust. By requiring disclosures of subsidies from foreign entities, the law also strengthens oversight of foreign influence in mergers, safeguarding our national interests in additional ways. Last year, I introduced a bill, the bipartisan legislation that I call the America Act, which was co-sponsored by Chairwoman Klobuchar. Google ties advertisers' access to internet users to the mandatory use of Google's own advertising technology tools. This tying practice forces publishers to adopt Google's advertising technology, leaving digital content creators unreasonably beholden to Google's vice grip over their company's revenue streams and very often their very existence. Google's conduct has deprived creators of competitive markets, and it really, left unrestrained, poses a long-term threat to digital content creation. So when one firm acts as buyer, seller, and auctioneer, the entire marketplace becomes subject to that firm's whims, stifling innovation unless it somehow happens to align with that monopolist's interest at the moment. The America Act promotes competition in digital advertising by introducing some transparency requirements, requirements that would reduce costs for advertisers, and of course, preventing conflicts of interest. Additional legislative reforms include streamlining antitrust enforcement. The One Agency Act would consolidate antitrust authority under the Department of Justice, and this would reform the process as a whole by eliminating some inefficiencies, duplication, and inconsistent enforcement standards between the FTC and the DOJ, because the substantive standards and the processes one has to go through shouldn't vary by the vicissitudes that can turn on something as simple and random as a coin toss. By establishing a single antitrust agency, we'd harmonize enforcement efforts, create a fairer and more level playing field, and ensure predictable, transparent actions with all challenges adjudicated in federal court. In the coming year, with the new Congress and the start of President Trump's second term, we have a chance to champion robust and principled enforcement efforts and to advance essential legislative reforms. Now, these measures will not only reinvigorate antitrust policy but also unlock innovation, drive sustained economic growth, and protect American consumers. And finally, once again, I want to thank Chairwoman Klobuchar for her dedicated and principled leadership to this committee as its chair. I look forward to continuing our bipartisan work together on this committee. Thanks very much.

Yeah, I would like to say a few words. I already spoke to the panel and said I had a 3:00 meeting I had to go to, and I'm not here to introduce Professor Newman—not former, but I do want to say a few words about him. I understand that he grew up in Iowa, Hayfield, Iowa. He told me that's Garner, Hayfield High School, attended Iowa State University, University of Iowa College of Law. I appreciate hearing his views, Professor Newman, in particular your concerns that there hasn't been enough of a focus on agriculture and food supply markets. I agree with you. For years, I've been pursuing our antitrust enforcement agencies to carefully scrutinize agriculture concentration, possibly anti-competitive and monopolistic practices in the agricultural industry. The Senate Judiciary Committee also has convened hearings on meat supply competition, consolidation, and seed and agrochemical industry, and grocery store mergers. Ms. Coy, I know that in your written testimony you also highlighted agriculture and hope that the antitrust agencies will double down on preventing and reducing consolidation in agriculture. I'm pleased that you both share my concerns that there's a need for more antitrust. I've also been very interested in vigorous antitrust enforcement with respect to other industries: drug competition, PBMs, high-tech are all just some of the areas that I've been focused on, and I think in those areas Senator Klobuchar pointed out how we work in a bipartisan way in this committee on that. And I want to say to the chairwoman that we'll continue to work together in this bipartisan way as we have on a lot of issues. I guess I thank you. I yield the floor.

Chairman Klobuchar, Ranking Member Lee, thank you for inviting me here to be a witness here on the future of antitrust law in the coming administration. As you said, I'm a professor of law at Notre Dame Law School. I have my Notre Dame colors on. I'm very excited that Notre Dame is in the playoffs. I'm not excited that I spent $75 in Ticketmaster fees for a $150 ticket. I also served, as you said, as Deputy Assistant Attorney General in the Department of Justice. For the past few months, we have had a national debate on the merits of economic populism. It may be fashionable in elite circles on the left and on the right to deny, discount, or discredit these impulses, but they are real and they have had dramatic political consequences. As an emerging party of the working class, Republicans are moving away from orthodoxies that reflexively support big business and toward an open discussion about tariffs, unions, and antitrust. The Republican term for this is common sense economic populism. Such populism is wary of the abuse of power in the hands of the government or business. It embraces free markets and competition on the merits. It is skeptical of government intervention in the markets, but is also skeptical of corporate power, especially the kind that colludes with the government to harm consumers through the passage of anti-competitive regulations or, as we've seen recently, the blocking of pro-competitive regulations. FTC nominee Mark Meador recently posted a meme in which libertarians are skeptical of tyranny.gov but not tyranny.com. Economic populists share no such confusion. How will economic populists govern? The new leadership in the Trump administration will make good on the promises of common sense economic populism. This approach will be neither Bork nor Brandeis, but pursue its own path of economic freedom from the abuse of political and corporate power. In terms of priorities, one should expect that the new administration will focus on markets that most directly impact the cost of living of the average American. Consumers spend 88% of their expenditures on just six major categories: housing, transportation, food, insurance, health care, and entertainment. The Biden administration focused on many of these core industries, and the Trump administration will continue along a similar path. In terms of intensity, one can expect the new administration will vigorously enforce the antitrust laws, recognizing the fallacy that markets self-correct. They know that barriers to entry are real, that network effects are common, that markets are prone to tipping and consumer lock-in. Under-enforcement ignores the durability of market failure and the harm that such failure causes. Anyone who is faithful to the text and history of the antitrust laws must be skeptical of Robert Bork's agenda promoting under-enforcement. With the incoming leadership of Gail Slater and Andrew Ferguson, we should assume a rebuttable presumption that the antitrust cases filed by the Biden administration will be pursued by the Trump administration. It will do so relying on a broad understanding of the consumer welfare standard that includes price, output, quality, innovation, or anything else that impacts consumer demand. To the extent it changes course, it will do so only where the Biden administration has pursued novel enforcement theories with difficult facts that have failed in court. The most notable point of bipartisan consensus, it's already been mentioned today, is rigorous enforcement of antitrust laws to address big tech monopoly abuses. Both President Trump and Vice President Vance share strong skepticism toward big tech, with Trump describing big tech as running wild for years and Vance stating, 'I think you have to break these companies up. They have become monopolists.' The nominees to head the DOJ and the FTC also share these concerns. Congress can have a constructive role in addressing big tech monopolies. It can pass pro-competitive legislation that was just mentioned, like the America Act or the American Innovation and Choice Online Act. Such legislation could have passed in 2022, but for over $250 million that was spent by big tech lobbyists to block such measures from even coming to the floor after supermajority votes out of committee. It also could hold hearings on potential big tech remedies in the pending litigation and the unethical manner in which they have defended their monopoly abuse. On mergers, the incoming Trump administration will challenge anti-competitive horizontal and vertical mergers. That approach was taken in the first Trump administration and to an even greater extent in the Biden administration. What likely will change is a reversal of the general skepticism toward mergers and acquisitions. Consent decrees, for example, were strongly disfavored in the Biden administration. The reasoning was that simple injunctions are easier to enforce than complex settlements. That is true, though, of course, only if you win. Such an approach has undermined the possibility of reasonable settlements. Innovators have expressed widespread frustration with the Biden administration's hostility toward startup acquisitions, and I think this may be the point of largest difference between the two administrations. The Trump administration will balance hostility toward big tech with sympathy toward innovators and startups. If startups cannot exit, they will not be funded. Last year had the lowest exit activity for startups in a decade, and the government hostility is perceived by them to be part of the problem, and that may change soon. Thank you, and I look forward to your questions.

Thank you, Chair Klobuchar and Ranking Member Lee, for the opportunity to appear before you today. As Senator Grassley pointed out, I grew up in Iowa and I attended the University of Iowa College of Law. After graduating, I joined the U.S. Department of Justice Antitrust Division as a trial attorney, and antitrust has been my professional life's work ever since. Today, I'd like to talk about four areas of new antitrust consensus that I think crosses party lines. I want to be clear that I don't think these are the only four areas, but I do think there are four especially important ones. The first is understanding the serious harms that can occur in zero-price markets. For a long time, our antitrust community had a blind spot: markets without prices didn't seem to be markets at all and were therefore unworthy of our protection. The first signal of a new approach here actually came in 2019 when then-Assistant Attorney General Makan Delrahim began sounding the alarm about under-enforcement in these markets, and a salvo of groundbreaking lawsuits, both by federal enforcers and state counterparts, against Google and Facebook followed in 2020. Now, these zero-price markets, they do lack prices, but these bipartisan efforts recognize that harm from monopolistic conduct in these markets—harms like excessive advertising loads, degraded privacy, or an overly concentrated marketplace of ideas—can be massive. Those cases had another thing in common besides involving zero-price markets: they were also big cases against big tech firms. They weren't narrowly limited to a particular instance or type of conduct, and that's important because it can, among other things, help a judge craft an appropriate, effective, and fully effective remedy. Now, winning a big, worthwhile Sherman Act case these days is not easy. In fact, the original FTC complaint that was filed against Facebook in 2020 was dismissed. But instead of abandoning that complaint, as previous new leaders have occasionally done before, one of the first things Chair Khan did was to dust off that complaint, strengthen it, refile it, and this time it survived a motion to dismiss. That case is headed to a trial. DOJ's complaints against big tech firms like Apple and against Google's ad tech practices and structure really continue this big tech, big case tradition that began under President Trump and, if anything, accelerated under President Biden. I would include in that group the FTC's case against Amazon, that was yet another big case that was joined by a big group of bipartisan states. Now, many of these cases involved so-called vertical restraints. For a long time, those were not high on our list of things to go after, but that economic thinking has changed. Restraints imposed by dominant firms on suppliers or customers can be quite harmful, and as we start to look ahead, I think it's worth noting that vertical restraints imposed on labor markets, which economists are now finding to be perhaps surprisingly uncompetitive many times, are an area where future antitrust efforts could have a big, important impact. Speaking of vertical conduct, another area where there's a new bipartisan consensus is around litigating to block vertical mergers. The agencies have filed a number of cases, I think building on the first foray, AT&T-Time Warner in 2017, that challenge vertical mergers and try to block them. All those efforts haven't been successful, but a number have, and I think when you're trying to achieve a new enforcement priority like this one, having the track record the agencies have in such a short amount of time is actually really remarkable. Another area, and this is an area that's near and dear to my heart as someone who grew up in Iowa, is the importance of agriculture and food supply markets. In high school, one of my first paying jobs was working for a small—and at the time it was actually the smallest in the country—independent soybean research company, and I drove very small tractors and I drove very small combines, and we researched soybean genetics. It was a company founded by a local farmer. Today, that company doesn't exist anymore; it was bought up by one of the giants. And the town where I grew up, the town where I went to middle school and to high school, that town is slowly dying, frankly. Concentrated corporate power is not the only reason for that, but it is one of the reasons. And I joined the Antitrust Division's Transportation, Energy, and Agriculture Section specifically after graduating from law school to try to do something about what I had seen. And the leadership at the time had been saying some really encouraging things about antitrust enforcement in agriculture markets, but that turned out to be, at the time, mostly just talk. I mean, fast forward to 2022, the FTC and a group of state enforcers, including my home state of Iowa, filed a big, important case trying to protect farmers against a couple of chemical giants that were depriving farmers of low-cost inputs. Both the FTC and the DOJ have also taken action to keep food costs down for consumers. The Antitrust Division sued a company called Agri Stats for driving up—and allowing big meat processors to drive up—cost of meat for American consumers. The FTC, for its part, along with another bipartisan group of states, just successfully blocked the Kroger-Albertsons mega-merger that would have driven up food prices for American consumers and driven down wages for American workers. Now, all that being said, I do think a lot of work still remains to be done in these areas. So looking ahead, that's why I am especially excited about this new consensus we're here to talk about today.

Thank you so much. Thank you, Senator. For over 100 years, attorneys general around the country have united to tackle consolidation. In my nearly 20 years' experience as a frontline antitrust enforcer working with both Republican and Democratic attorneys general, I have seen firsthand on the ground how effective antitrust enforcement can be when we embrace our diversity of opinions and tackle consolidation and anti-competitive conduct head-on together. One note before I begin: my testimony is mine alone, and I do not speak for the state attorneys general nor the federal antitrust agencies. So first, a bit of background. State antitrust enforcement is often called the third leg of the antitrust enforcement stool, and state attorneys general enforce the Sherman and Clayton Acts as well as their own state antitrust laws, some of which, like Iowa's—which seems to be the state of the hearing—predate the Sherman Act. Indeed, many state constitutions, like Tennessee's, treated monopolies with contempt from the outset. The earliest challenges to monopolistic practices were brought by state attorneys general who learned early on the virtues of many hands making light work and bipartisanship, which became the foundation of the National Association of Attorneys General in 1907. My former role as chair of the Multi-State Antitrust Task Force involved helping states work together in a process very similar to this august body, through negotiation and discussion, to achieve the best results for the citizens of our states. In fact, I often compared myself to Senators Schumer and McConnell, besides our obvious resemblance. When leading cases, I would cajole, discuss, and bear witness to my sister states' complaints. We often take for granted how difficult this kind of multi-state consensus can be, as the attorneys general have, to put it mildly, widely varying views. Even more importantly, there are also separate sovereigns. But because of our differences, the states' relationship with each other has remained tremendously strong. For eight long years, I led the states in a lawsuit against the makers of Suboxone, where 42 states sued to ensure that the market for this important opioid treatment drug was not monopolized by one company. It was crucial when we ultimately settled that case for $12.5 million in the summer of 2023 that we had such diversity of viewpoints to ensure that we were jury trial ready and didn't have to settle for less. That consensus was not easy, but it speaks to the general view that bipartisanship is the name of the game in antitrust, and while it's difficult, it's always worth it—not for touchy-feely reasons, but because one of the secretly genius aspects of having mixed groups of states work together is that we genuinely do not agree. And so when Minnesota and Utah and North Carolina and Hawaii battle with Arkansas, Delaware, Rhode Island weighing in, by the time consensus is formed, the work product has been thoroughly vetted. And while it can be clunky and slow and exhausting for participants—a feeling that I suspect this committee might relate to, not having a decider—results in cases that are more provable and persuasive to judges. Often folks like to simplify this to red states and blue states, but frankly, this shorthand is essentially meaningless, as these cases go before judges, and I have personally won and lost cases before federal judges nominated by presidents of both parties and have not found the party of the appointing president to be determinative, which is probably the point of an unbiased judiciary. But it is not in pharmaceuticals only where state bipartisanship and our strong relationship with the federal government has played a crucial role in antitrust enforcement. We've talked a little bit about agriculture, and I think that is a quintessentially nonpartisan issue. In my experience, working as a very junior staffer for the U.S. Senate many, many years ago, I would say it's a much more regional issue. And nowadays, with the help of a grant from the United States Department of Agriculture, state attorneys general have been working with their federal counterparts to ensure that we have a safe and redundant food supply by ensuring that each step in the supply chain is competing by being the best rather than through monopolistic practices. It's my hope that in the next administration we do see our antitrust agencies, as Senator Grassley pointed out, double down on reducing AG consolidation in agriculture, from meatpacking to dairy, and from seeds to pesticides. And of course, it is not only the agencies that have done great work; this committee has done great work on bipartisan work on antitrust. And the State Antitrust Enforcement Venue Act, which we in state world call SAVE, is a great example of how this committee has made a sea change in the way we prosecute these cases. Senator Lee's SAVE bill originally was promoted by attorneys general who came together under Texas's leadership to protest the removal of the Texas v. Google case from Texas to New York. Justifiably irritated with having to face a New York judge, Attorney General Paxton rallied his colleagues across the political spectrum and across the country, and ultimately succeeded in having 52 attorneys general of 56 write a letter to Congress to protest defendants' ability to force state AGs to litigate their cases wherever defendants decide. Thank you for passing that bill in 2022. Your work on that statute has proved invaluable. The Google AdTech Texas case moved for a change of venue, which was granted. The DOJ AdTech case stayed put in Virginia, and the long-running states' generic drugs price-fixing case finally had a breakthrough when it returned to Connecticut, where it was filed. And so again, while I don't speak on behalf of the attorneys general, I feel comfortable that they would not object to me saying thank you so much. We needed SAVE for litigation against big tech, which we have focused on for years. And as past counsel for the state of Wisconsin on many of the big tech cases, if not all of them, there's only so much I can say about them, but I can say it's remarkable. We've talked about before how these cases were brought by huge groups of attorneys general and the federal government, but I will note five cases against Google, with Google search having combined 52 attorneys general litigating with the U.S. Department of Justice, Facebook, Amazon, and Apple all filed by large groups of bipartisan states, and the Apple case is led by New Jersey. Oh, if Senator Booker just wants to give him a shout out. So with continued diligence in agriculture and against big tech, and a strong working relationship with the state AGs who have long embraced the virtues of...

Yes, sure. So bipartisanship is so important. I mean, it helps us plead stronger cases. We make sure that we are, when we are establishing the legal foundations for the case, we have fewer outrageous claims, fewer claims that are less palatable to a broad variety of attorneys general. It's things you wouldn't think about, like witnesses. Certainly, you know, if you are bringing a case in, for example, you know, Connecticut, you want to make sure that you have people who would understand what it's like to be on the jury in Connecticut, right? So you want to make sure that you've got good bipartisan and broad support there. Settlements, honestly, having states that are not going to just go along to get along because they want to support their sister states of the same party and are happy to stick it to them, it's great.

Yes, absolutely. And first, if I could, I'd like to thank you for your work on that. It was a shot in the arm for a couple of agencies that had been, you know, underfunded, I think, relative to the overall growth of the U.S. economy for a fair amount of time. Let me say at the outset that the agencies do an amazing job with what they are given, but they can only do so much. And so when you see something like a spike in merger activity, the agencies go into triage mode. They have to, you know, you would be neglecting your duties if you didn't review all those mergers. So the workload can skyrocket, as it did in 2020, 2021. If the agencies aren't effectively funded, those people reviewing those mergers are going to have to come from somewhere. And when they start looking around and see these big tech cases, I think that could be an attractive place for them to start moving people away to just try to deal with all these mergers. So the structure of the bill, I think, makes a lot of sense to me as a former enforcer, that it would increase fees as merger filings go up. All that being said, you know, I think at the end of the day, these cases are big, they're hard, the agencies do a lot with what they're given, but I'm not sure they're there yet.

So as I said in my written testimony, health markets are one of the most important areas in which consumers are impacted in terms of cost. The cost of health care in the United States is dramatically higher than it is in almost every other country, and it is a huge percentage of the budget of the average American. The lack of competition that happens in the healthcare industry is quite frankly remarkable. In addition to the comments that you made, there's also the recent investigation litigation against PBMs. That's a huge additional area of significant concern, and I think there's a general sense that the healthcare markets are broken in terms of the way competition functions, and this kind of litigation is essential for the markets to be corrected.

Thanks so much. Professor Alford, I want to start with you. As you recall, the Department of Justice and state attorneys general sued Google over its alleged abuse of monopoly power in the advertising technology market. There are those who look at that and say that that shows that our current antitrust laws are sufficient and no need to adjust anything based on modern technologies and how modern technologies might be being abused because this action has been brought. So I was wondering if you could discuss how reform measures like the America Act could address competition in, for example, the advertising technology market as part of the solution in addition to the pending litigation. So, you know, as a conservative, I know you have the same viewpoint. Generally, we prefer litigation over regulation, but there are instances in which litigation is simply not sufficient, and this is one of those areas where the litigation against Google is focused on a very, very narrow category of misconduct by Google in a very specific market, and yet Google is a monopoly, as Senator Hawley has said, in multiple different markets.

Exactly. Take YouTube, for example. There's nothing in the case at all about YouTube, probably because the market definition is unclear and getting over the 60% threshold that you would need is difficult. And therefore, both the DOJ and the 17 states didn't even include YouTube in the discussion. And yet, if your legislation would directly address the same exact conduct in the video advertising market, I also would credit you for the legislation for a whole other reason, which is in the event that the DOJ is successful in the coming weeks in the ad tech case, which I hope that they will, they will use your legislation as a model for the kinds of remedies that may be appropriate. So it actually signals what should be happening with respect to remedies.

Great. Now, drawing on your expertise, your time serving as Deputy Assistant Attorney General in DOJ Antitrust, how, in your opinion, would the One Agency Act eliminate inefficiency and enhance our antitrust enforcement efforts in this country?

So as I said in my written testimony, the major concern from my perspective about having dual agencies is we know it can be done successfully because that's the way it's done in every other country in the world. We're really the only major competition authority that has two agencies. So we know it can be done right with one agency. The biggest inefficiencies, I think, as I said in my testimony in writing, is the clearance and conflict issues that come up. They come up in very small ways on specific merger reviews, and the discussions often during the 30-day window that you have for second requests, often several of those days, numerous days, are just about clearance before you actually review on the merits. But more importantly are the big macro questions like who should take leadership over artificial intelligence. Even though the relationship between Lina Khan and Jonathan Kanter is wonderful, they both strongly wanted to take leadership on artificial intelligence, and they've had many, many conversations about that. In the Trump administration, we had months and months of discussions about big tech and who's going to lead at the FTC side. So that takes a lot of effort to try to just resolve those sorts of issues on the macro level, especially given that in many markets, especially many of the newer markets, it doesn't fit neatly into things that one agency or the other has followed. It's sort of neither man nor horse, but like the centaur, pieces of both, like vertical mergers, Amazon purchasing Whole Foods. I mean, you have different agencies traditionally doing different things. It seems odd that you would have one agency taking beer and another taking hard liquor. I mean, there's a lot of oddities that happen with the clearance arrangement.

Right, usually you don't see that outside of a state alcoholic beverage commission.

Yeah, beer, that's true.

Well, unless they had the non-alcoholic stuff, I would assume the real thing must taste a lot better than the non-alcoholic stuff because that's not very tasty. Professor Newman, you touched on zero-priced markets in your opening testimony. How do you think, what do you think is the best way to contextualize zero-price markets and how to understand them in the context of the consumer welfare standard? There are those who would take that to its logical conclusion and take Bork decades ago and say that that means the consumer welfare standard would just leave zero-price markets alone. Tell me your view.

So I think that a lot of the harms that we see from a lack of competition in zero-price markets actually are surprisingly very analogous to the more familiar types of monopoly overcharges we've long seen in positive-price markets. It just requires us to really wrap our minds around the fact that even though there's no price tag attached, we are paying for these things, right? We quite literally pay attention when we use these things. We pay attention to ads. We pay by surrendering our privacy. And if a monopolist doesn't face enough competition to keep our cost low, our attention cost or our privacy costs low, then you're going to see a monopoly overcharge just like you would with a positive-price market. So in that respect, the consumer welfare standard applies on all fours within zero-price markets. If there is no overt price with the price tag that you can see, you are the product, or to phrase it differently, you are paying, you're just paying in a different form, paying with your time, your eyeballs, your mouse clicks, your data, and that too can and does, it's fairly easy in fact, to translate to a dollar value.

And so you would agree then that that does have a price, and because it has a price, it's not accurate to say that zero-price markets are somehow existing outside of the universe of the consumer welfare standard.

I think that's exactly right, and I would go maybe even a step further and say, you know, we're used to thinking of money as being a very valuable thing, but what's more valuable than time or attention or privacy or information about ourselves? So yeah, these are familiar harms in a sense, but they're really serious ones.

Right, perhaps law professors who sometimes practice antitrust should be able to calculate their billable hour rate into that, but we'll leave that for another hearing. Thank you, Madam Chair.

Thanks, Madam Chairman. First of all, thank you and Ranking Member Lee for the last two years of really remarkable leadership on this panel. We've had tremendously valuable hearings and a lot of insight, and I'm hoping that we will all continue working together in a very bipartisan way as we have done on many of these issues. Ms. Cooley, thank you for all your great work. I was attorney general until about 2010. You were overlapping during part of that time, and some of the most productive and valuable work done by attorney general offices is in the antitrust area, and you've been a leader. Your office has worked cooperatively with Connecticut. So thank you for all you've done. How would you assess the general work now of attorney general offices? Are they continuing to be a vital force in antitrust enforcement?

I think absolutely. We're seeing a revolution of attention to state antitrust enforcement, not only in state attorney general's office but also in state legislatures. We're seeing state AG shops expand in antitrust. We're seeing funding for these groups in bipartisan fashion. We see it in Minnesota, we see it in Tennessee, we've seen it in Indiana and Utah and other states. So yeah, I think it's really improving. It is really important for the public to understand that state enforcers can do antitrust cases. We have that power to enforce federal law, and the appetite for antitrust varies at the federal level from administration to administration, whether it's Republican or Democrat, but state enforcers can be a constant there. So I think that's very important.

Mr. Newman, you make, I think, a very important point about the zero-price markets issue. And I ran into this issue when I led the coalition of states in an antitrust action against Microsoft. And I was very proud, I was really enthusiastic, and we brought the lawsuit, we filed it in Washington, D.C., we enlisted the antitrust division to come along with us. I went home and people were saying to me, why did you sue Microsoft? It's free. You know, why are you threatening this company that charges us nothing? And I think it's very hard to convey how antitrust can have an impact, or more precisely, lack of competition can have an impact in denying access to markets, in squelching innovation, all the negatives that can result. And we know, for example, that Google and Apple now dominate the mobile markets. I don't have time, and I don't know that there's interest for me to go into a long description of why that's bad, but I do think that our antitrust laws have an application there for the benefit of consumers. And last session of Congress, Senator Blackburn and I introduced the Open App Markets Act, which would set fair, clear, enforceable rules to protect competition and strengthen consumer protection within the mobile marketplace, where right now Google and Apple have such a stranglehold. We're going to introduce that measure again, the Open App Markets Act, which would set rules also to open new competition for alternative markets like interoperability requirements and opportunities for app developers to offer lower prices to consumers. By the way, the measure was very bipartisan. In addition to Senator Blackburn, it was co-sponsored by Senators Graham, Durbin, Senator Klobuchar, and other members of this committee. My question for you is, do you share the assessment about what role upfront rules like the Open App Markets Act or Senator Lee's America Act could play in restoring more vibrant competition and consumer protections in digital markets?

Well, yes, I think absolutely legislation has an important role to play here. Antitrust law enforcement is a really powerful tool, but it is law enforcement as such. It tends to be slow, it tends to involve a single case, and when you've got something like an app ecosystem, the significance of all the conduct on all the developers for the American people, I think demands in this case a pretty broad approach. And just to take one example, one of the things that jumps out to me from the bill is the requirement that a powerful app store operator can't prevent a developer from truthfully communicating price information to their own users. I think that's a no-nonsense, just slam dunk, right? I think there are some other things in the bill that I think would do some good as well.

Yeah, I think there's just a lot in there that could solve some serious problems here. Thank you. I'm out of time, but I look forward to continuing this work in the upcoming session and working with all of you and our leaders. Thank you.

Thank you, thank you, Madam Chair. Thanks to Senator Lee for calling this hearing. Thanks to the witnesses. Professor Newman, let me ask you just a question or two about Amazon. You're aware of Amazon's use of independent contractors, I bet. Is that fair to say?

Yes, that's fair.

Amazon calls their delivery service partner program, or they should say they call their independent contractors their delivery service partner program, or DSPs. Does that sound... are you familiar with this broadly speaking?

Yes.

So these, as I understand it, this delivery service program employs about 300,000 people, and according to Amazon, none of these 300,000 people, their delivery service partners, so-called, actually work for Amazon, which is convenient because in reality Amazon exercises enormous control over these delivery service partners. They control their contracts, they control every aspect of their business, they tell these partners, these independent contractors, which vendors to use, which routes to follow, you name it. They even monitor the performance of individual drivers, and in some cases, Amazon unilaterally fires the driver. So my question is, does that really sound like, on your understanding of the law, does that really sound like a classic independent contractor? If the company, if the parent company is exercising that degree of control over the vendors, over the individual drivers, does that sound like a truly independent relationship to you?

Well, not being a labor law expert, I'll give you my antitrust opinion. That does not sound like a traditional relationship.

Now, yeah, it doesn't sound like it to me either, but it does sound convenient for Amazon in a couple of respects. I mean, first, it means that if these are all independent contractors, they don't act, they don't, legally speaking, they don't work for Amazon, then that means that they can't organize for work and working conditions and better wages. Is that right?

I think that's right, yeah.

So it's a great setup for Amazon. It's less clear to me why it's such a great setup for their non-employees, but the folks who aren't technically Amazon employees, but yet just happen to work every single waking hour just about for the company. Does anybody else want to weigh in on this? Ms. Cooley, do you have any views?

I'm similarly not a labor lawyer, but yes, I can see why that would be concerning.

Don't you think that it also gives Amazon an advantage over other companies like UPS? I mean, UPS employs their drivers, they have to be responsive to their drivers, they have to negotiate with them. By treating them as so-called independent contractors, Amazon doesn't have to do any of that for any of their drivers, right?