The News
When Adobe’s $20 billion deal for smaller, scrappier rival Figma collapsed in 2023 under global antitrust scrutiny, investors set to reap billions complained loudly about Biden’s enforcers.
Then-FTC Chair Lina Khan was “not a rational human being,” venture capitalist Vinod Khosla said, and Reid Hoffman urged Kamala Harris to fire her if elected. Marc Andreessen said regulators like Khan and DOJ’s Jonathan Kanter were “punitively blocking startups from being acquired.”
It was the Justice Department, under Kanter, that had investigated Figma’s case. Now out of the chair, Kanter has a simple message for Andreessen, Hoffman, and Figma’s other investors, groups that netted as much as $7 billion each in the IPO.
“You’re welcome,” he told Semafor in an interview this week. Kanter and Khan see Figma’s early thriving, as a public company worth $44 billion rather than an Adobe offering, as vindication of their antitrust approach, which was the most robust in decades.
While both have pointed out that only a small fraction of deals were ever challenged, their crackdown had a chilling effect in Silicon Valley and boardrooms across the world. They particularly focused on Big Tech, worried that it would use its power and huge piles of cash to build an uncrossable moat around AI.
“The Mag Seven, in my view, should be the Mag 70. So I’m very excited for Figma,” Kanter said.
Kanter and Khan’s expansive view of antitrust — as protecting not just end consumers but other players, from book authors squeezed by consolidating publishers to buyers in the largely invisible ecosystem that places ads across the web — has given way to the Trump administration’s muddled approach. Populist factions in MAGA that are deeply suspicious of corporate consolidation, embodied by Vice President JD Vance and informal advisor Steve Bannon, have notched few wins. And the recent firing of two Justice Department executives, related to corporate lobbying for approvals of HPE’s acquisition of Juniper, has put a political cloud over competition enforcement.
“It’s a big problem if decisions are being made based on political favors and lobbying,” Kanter said. “We were extremely careful and mindful of that when we were in office. I hope the current leadership at DOJ and the FTC have the same ability.”
This conversation has been edited for length and clarity.
In this article:
The View From Jonathan Kanter
Semafor: At a high level, what do you make of the Trump administration’s approach to antitrust?
Jonathan Kanter: Are we going to get a Trump administration that’s committed to a more populist, pro-enforcement agenda? That’s certainly what they promised when they entered office, and their appointments certainly signaled that they would be pursuing a more aggressive approach.
That has to be juxtaposed against the Trump administration, that seems to want to cut deals and settle cases or potentially go around its expert antitrust officials.
What did you make of the recent firings of two DOJ officials around the HPE deal?
They had very skilled professionals who are well respected on both sides of the aisle at the Antitrust Division, and two of those officials were removed. It’s extraordinarily concerning and would be highly out of order, and suggests that the administration is not focused on doing the right thing for the right reasons, but instead trying to settle cases or cut deals based on pretextual arguments or political favors. I hope that’s not the case.
Critics say that antitrust enforcement was politicized under Biden, too, for example, by making organized labor a focus in some merger reviews.
I think it’s a false equivalency to suggest that protecting labor and protecting the ability of people to work and bask in the benefit of competition in terms of wages is somehow political. John Sherman — the namesake of the Sherman Act — talked at the time about protecting the ability of farmers to earn a living as one of the motivating factors for enacting antitrust laws.
Antitrust is a matter of law enforcement, and to the extent a defendant feels like it’s being targeted or there’s overreach, they have the opportunity to go to court and challenge it. Sometimes you win, sometimes you lose, but that’s why we have a process, and that’s why we have an independent judiciary.
Our track record is something I’m quite proud of. We beat Google twice in court. Our cases have survived legal scrutiny by courts, including our cases against Apple and Ticketmaster. We brought important cases in real estate. We beat a case against American Airlines to help lower ticket prices. The Figma IPO just last week is another great example of our success at DOJ. We had a similar result with the Nvidia-Arm deal. Both were abandoned in the face of a challenge, and both resulted in companies staying independent and having success.
How should antitrust regulators be thinking about the growth of AI?
Antitrust is most important at times of great change — when industries are experiencing an inflection point. That’s when, particularly in the tech space, incumbents have the greatest incentive to stifle new technologies.
The AT&T case helped give rise to integrated circuits and chips, which helped give rise to personal computers, and the IBM case preceded the growth and development of Microsoft. US v. Microsoft was brought at the dawn of the internet at the urging of companies like Netscape and helped give rise to the Googles and Facebooks and Amazons. Now we’re facing a similar inflection point, and companies like Google and others have every incentive to try to keep those new startups from reaching their full competitive potential and transforming the industry.
A lot of the deals in AI are acqui-hires and licensing partnerships, rather than mergers. Is the antitrust toolkit equipped to respond?
They absolutely have the tools to go after those deals. You have to elevate substance over form. If it looks like a duck and quacks like a duck, then it’s a duck. There’s a longstanding tradition for corporations to try to outsmart the law, but it’s the job of law enforcers to stay one step ahead.
You won a case declaring Google a search monopoly, right at the time that AI is threatening to upend everything. If, five years from now, search has been totally eaten by AI, and Google looks back and says, “See, we were right, and the DOJ was wrong,” is that still a win for you?
During the Microsoft case [in the late 1990s], Microsoft made the argument that the internet and mobile was going to kill the operating system and therefore, there was no need for antitrust enforcement.
The government won the case. In the process, they established a really important precedent, which helped us win the most recent case against Google. It also allowed the internet and mobile devices and ecosystems to thrive without being stifled by an operating system monopoly of Microsoft.
The purpose of antitrust isn’t to pick winners or losers. It’s to preserve the competitive process so that companies can figure out in the marketplace what wins and what loses. The goal of bringing a case against a company like Google is to stop the anti-competitive behavior, deprive it of the fruits of its violations, and make sure markets are competitive going forward. What happens from there is up to industry.
There was a sense, perhaps a little unfair, that during the Biden administration there was a shift away or broadening beyond the consumer welfare standard. Do you agree that such an antitrust approach should have a broader theory of the case?
Consumer welfare is a bit of a red herring, but it’s often used as a euphemism for less enforcement rather than more enforcement.
It was never the case that antitrust laws were only supposed to benefit consumers. It was always about the competitive process, because competition generates all sorts of benefits for society — greater innovation, lower prices, better working conditions, better wages, and frankly, a de-concentrated economy, which is not only relevant to corporate power, but political power.
When you have highly concentrated markets, it could lead to companies that have not just an amazing amount of influence over consumers’ daily lives, but extraordinary influence over the political sphere, in terms of lobbying.
M&A seems to be coming back. We’ve seen particularly consumer goods companies that are making promises about synergies and price cuts that often never materialize. How should antitrust regulators be looking at those promises?
Those promises are made out of convenience and in order to encourage enforcers to approve a deal. One of the concerns that I had expressed during my tenure was relating to consent decrees and settlements. The government would approve the deal, require some sort of divestiture, and a year later, the divested assets were no longer competing effectively in the market. We have to be very careful about “improving deals,” and then signing off on transactions with consent decrees that don’t adequately fix the problem and provide no recourse in the event that the merger results in anti-competitive effects down the line.
Notable
- “Figma’s IPO will begin to crystallise a massive windfall for the VC industry, which is just beginning to return cash to investors for the first time in three years,” the FT’s Due Diligence noted.
- Some analysts recognize the success of Figma’s IPO as positive, but don’t credit antitrust regulation for it, Business Insider reported.