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Antitrust, Free Speech, and Amazon: Not all Monopolies Are Alike

Episode #42  |  June 30th, 2021
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In This Episode:

Big Tech has long since outgrown itself, America. And we have a push-pull relationship with the likes of Apple, Google, and Facebook. As much as we decry their monopolistic, First Amendment-crushing ways of shadow-banning and demonetization, we’re also helplessly tied to these giants to participate in the digital world.

The silicon quandary is two-fold, as the questions of Big Tech’s unchecked power invite antitrust monopoly-busting concerns along with the free speech argument. Enter the oft-maligned Section 230, an antiquated act that allows these platforms to skirt any responsibility for content moderation, as they’re just hosting the posts, not publishing them.

And there’s a further wrinkle in all this: Amazon. Bezos’ creation somehow skirts the definition of a classic monopoly, as the e-retail Everything Store does lower consumer prices and improve services, albeit at the cost of excluding competitors. 

But there could be a shake-up soon in Silicon Valley. Biden’s appointed the promising Lina Khan as the new FTC Commissioner – think of her like Elliot Ness, but instead of going after Al Capone, she has her sights set on Mark Zuckerberg.

Columbia Professor John Coffee, an expert in securities law, joins Trish to stress the urgency of dismantling Big Tech while noting the legislative and legal willpower required to hold companies like Facebook and Apple accountable.

The two also discuss the EU’s suit against Google, the predatory practices of app stores, and why corporate crime so often goes unpunished.


John C. Coffee, Jr.

Adolf A. Berle Professor of Law, Columbia Law School
John C. Coffee Jr. is the Adolf A. Berle Professor of Law and director of the Center on Corporate Governance at Columbia Law School. He is a fellow at the American Academy of Arts & Sciences and has been repeatedly listed by the National Law Journal as among its “100 Most Influential Lawyers in America.” Coffee has served as a reporter to The American Law Institute for its Corporate Governance Project; has served on the Legal Advisory Board to the New York Stock Exchange; and as a member of the SEC’s advisory committee on the capital formation and regulatory processes. Coffee is the author or editor of several widely used casebooks on corporations and securities regulation, including Securities Regulation: Cases and Materials, (with Hillary Sale), 2015, (13th edition); Cases and Materials on Corporations (with Jesse H. Choper and Ronald J. Gilson), 2013, (8th edition); and Business Organizations and Finance, (with William Klein and Frank Partnoy), 2010, (11th edition).

Episode Extras:

  • Big Tech offers users a Catch-22 Hobson’s choice: take what we give you, or you get nothing.
  • The Apple App Store charges an ample 30% “tax” for developers wanting their wares showcased – but Epic Games (producer of the too-popular Fortnite) took Tim Cook and company to court over this, with swaths of antitrust activists (and gamers) awaiting the decision. 
  • Google dominates the search and advertising market – they’ll claim they only have 9% of all American retail, but they own 49% of the online market. Meanwhile, Facebook’s an acquisition cannibal, swallowing up competitors whole. Just ask Instagram.  
  • Section 230 perhaps made sense when it came out in 1996, with a quaint Internet consisting of clunky travel blogs and the spare chat room. But now, with nearly everyone living online, it’s due for an upgrade. 
  • We need more creativity with corporate penalties – when the corporation commits X amount of crimes, we’ll suspend incentive compensation – no more stock options, everyone!


Trish Regan:               Big Tech is really frankly just too big. I’m feeling it every day. I’m sure you’re feeling it every day. Hello, everyone. Welcome to American Consequences. I am Trish Regan. It’s good to have you here this week. I wanted to dig in with someone who’s just a tremendous scholar in this field that I’ve known for a long time, none other than Professor John Coffee from Columbia University. He’s actually a colleague of the new head of the FTC, Lina Khan, who’s also at Columbia, a young professor there.

She’s going in in the Biden administration to try and make some noise over this Big Tech stuff. She wrote a very interesting paper years ago at Yale, at the Yale law review, in which she argued we need to rethink how we think about monopolies because typically, when you talk about monopoly, you say, “Oh, you know what? The consumer is going to get hurt. The consumer is going to be at a disadvantage.” But Lina Khan turned it on its head, and she said, “You know, that’s not necessarily the case.” When you look at Amazon, the consumer’s doing just fine, right? The consumer’s actually getting the benefit of these lower prices. But Amazon… in that it is so darn big – it really is the everything store, right? Actually, it’s a monopoly with different kinds of effects on society that may not be evident in just the pricing structure on products.

And I think that’s an important distinction, and I give the Biden administration credit for putting her in place. The challenge now, though, is where does she begin, right? Because it’s not just Amazon. We’ve got Apple. We’ve got Google. We’ve got Facebook. We’ve got Twitter. We’ve got LinkedIn. All of them have a hold on society, and in different ways. I mean, I say they’re a monopoly in that they’re hurting the consumers. I think the Section 230 is a massive issue. In other words, they’ve gotten away with being able to say, “Oh, it’s not our fault.” You know, somebody just posted that. “We’re just the town square,” and somebody’s just posting that story, and “We don’t have any responsibility for it.”

And yet the publisher of the story is held accountable. The reason they put that in place originally was because these were the little guys, right? The little guys were supposed to get some exemptions to try and help them grow. Well, they grew, and they grew, and they’ve grown. I mean, when you’re talking over a billion users on Facebook, when you’re talking about Google controlling roughly half of all advertising, these companies are so big. They hold all the sway. And increasingly, at least from the First Amendment standpoint, I see them as being a real problem. A real problem, because if you don’t gel effectively with their side of things, their viewpoint, then it makes it much harder for your information, for your viewpoint, to get out there.

I see it all the time. I mean, I have literally been shadow banned by LinkedIn. At one point, I was just nothing but a silhouette. There wasn’t even a picture of me. I was in black and white, and it was just a graphic. And they somehow took away all my previous stories with all the art that was there. It was just gone. We filed a ticket. Eventually, it got resolved.

I’ve seen it on YouTube. I’ve seen it on YouTube where I’m just talking about the Fed and interest rates, and I’m talking about how I really don’t want socialism in this country. So what happens? Oh, you’re demonetized. You’re demonetized and you’re shadow banned.

How are we as individuals supposed to be able to soak up all the information if there’s only one agenda that’s being promoted? Meanwhile, you’ve got the App Store going on, right? Apple, if you want to download any of those apps – you’re welcome to on your Apple iPhone – but they’re going to charge the manufacturer of those apps 30% as a kind of tax, right?

Now I’m all for everybody being able to make a living, and I’m all for Apple getting its share since you’re using the App Store, but 30%? Right? And you – there’s no workaround. You have no other way to access your customers. And Epic Games is great proof of this, and this is going in front of judges right now.

So the reality is the world has changed so fast. I don’t think anybody quite anticipated how much Big Tech would grow and grow and grow, and how it would affect our ability to transact online, how it would affect our ability to think about ideas, and how it would affect our political arena. And so it’s a little bit scary.

I am really excited to have Professor John Coffee, again, a colleague of Lina Khan’s. I’ve known him for many, many, many years, and he’s always been a great source and a go-to guy on all things security law-related. I want to welcome him to the program. John Coffee, Professor Coffee, author of the brand-new book Corporate Crime and Punishment. Welcome. It’s good to have you here.


John Coffee:               Well, it’s a pleasure. It’s always a pleasure to talk to you.


Trish Regan:               You know, you’re at Columbia. You’ve made a career specializing in securities law. Tell me – and we can get into the new head of the FTC in a moment – but tell me your sort of overall gut reaction when people say these Big Tech companies, whether it be Amazon, whether it be Facebook, whether it be Twitter, they need to be broken up, because Google – they have simply become too big, and they’re running the world. What is your response?


John Coffee:               Well, of course, first of all, note that that’s a day-and-night reversal. You can go back two or three years and if a Big Tech company came into Congress to testify, they were treated as a hero. They’re now treated as a presumptive villain. And they do face a looming war on several different fronts. There’s a lot of important litigation in court, and we’re waiting for decisions in important cases. Congress has bills pending, but Congress is pretty paralyzed. Nonetheless, the regulatory agencies can act, and the Federal Trade Commission has a new chairman, Lina Khan, from Columbia Law School, whose career was basically made by arguing that Amazon had to be severely restricted because it was dominating the market and endangering the possibility of true competition.

So we’ve got those possibilities. Then we have Europe. Europe is not only mad about antitrust… They think the U.S. Big Tech companies, by which I basically mean Apple, Google, Amazon, and Facebook, are invading the rights of privacy of Europeans and not keeping data confidential that was not given for a broader purpose. So all of those things are coming together, and each of these companies has a slightly different position. We can take any one of them, you know, whether you want to talk about Apple or Google or Facebook or anyone. They each have a somewhat different vulnerability.


Trish Regan:               I look at them as somebody who’s in the industry with a message I’m trying to get out, and I’m occasionally pretty surprised by – and I never used to see it, because previously, I never really worked with the back end of my own say Facebook page, or really saw the shadow banning that people talked about. And I was like, “I don’t know, shadow banning, what is that?”

Now I actually see it pretty close-up, front and center, because there will be, say, just a story that even if I have hundreds of thousands of followers, for some reason that particular story may only go out and have had so many as 200 people actually see it. And so I say to myself, now why is Facebook – now they’re a private company, right? They may just decide they don’t like Trish Regan, or they don’t like somebody who’s pro-capitalism, anti-socialism, and they may say, you know, we want to hide you or shadow ban you, in which case I’m respectful of them being a company. However, however, if there aren’t other places to go, and if they’re all sort of doing the same thing, I question whether or not an individual can get out a message, right?

And I’m actually – this is like a huge can of worms, and you are exactly the guy I want to talk to. I could go in 50 different directions and you’re right, each one of these companies has its own vulnerabilities. But think about the individual right now for a second, if you would, with freedom of speech. And I realize that’s different than monopoly per se, but aren’t they kind of treading on our freedom of speech if they’re so big and there’s no other town square to go and blast your message in?


John Coffee:               Each of these four has dominance in their own field. They have their own space in which they have no rival. Take Google, for example. It totally dominates the search and advertising market. They will say they only have 9% of all American retail, yet 49% of the online market – and that’s a huge market share – and it allows them to do things that just didn’t happen in the more competitive world. You know, the auto industry was never that large that you could have a 49% share.

Facebook… you’re probably most concerned about Facebook and notice, Facebook has made some acquisitions. Facebook’s rival used to be Instagram until Facebook acquired Instagram. And Google acquired YouTube. This is this recurring pattern. If there is a new entrant who might create real competition, well, you acquire it, and that does mean that the ordinary consumer has less choice where they can go.

I think probably of all these firms, Apple right now is the most vulnerable. But we can talk about whichever firm you want to discuss.


Trish Regan:               I’m curious to hear your thoughts on all of them. You say Apple is most vulnerable –


John Coffee:               Apple has the problem with its App Store. Apple has an App Store where they say, if you want to sell an app to any user of our iPhone or our iPad, you can only sell it to them through our App Store, and that’s a very exclusive dealing relationship that causes problems from an antitrust perspective.

And then Apple charges a very fat fee. The typical fee for selling your app on the App Store of Apple is that you have to pay 30% of your revenues received. Now 30% is a large amount when you recognize that Apple is really doing nothing. They’re just letting you put your app for sale on their App Store, and they’re taking this huge tax. When they take that 30%, that both injures new producers of apps who are disadvantaged, and it costs more to the consumer because that 30% tax that you pay to Apple raises the cost to the consumer… because obviously, the producer of the app has got to charge more when he has to pay this huge tax to Apple.

So both consumers and rival app producers have a grievance, and they’re suing. Now right now, in terms of current events, the biggest case in this field is the lawsuit brought by a company called Epic Games, which produces a game called Fortnite, and Fortnite is apparently used by 100 million or more Americans – I’m too old-fashioned to know about what Fortnite is or what it does, but it’s about the biggest-selling game.

And when they tried to sell directly to iPhone or iPad users, Apple cut them off of their App Store, which basically ended their ability to reach the vast majority of iPhone and iPad users, and they sued. That suit went to a trial this winter. The court has finished the trial, heard everything, and will probably come out with a decision within two months, let’s say, maybe less. That decision is going to have significance not only for Apple but also for Google because Google uses the same exclusive App Store. You can only sell to our people on our website, and we charge you a very large tax in the same neighborhood of 30%.

That kind of practice is the sort of thing that I think courts are going to look at with some skepticism, and we’ll know more in probably two or three months. Now that doesn’t deal with the issue you have when Tweet cuts you off. Tweet says, “Well, we have to correct misinformation.”


Trish Regan:               Right. Right. No, and I hear you, and I’m talking apples and oranges, because I think they’re different issues. One is the antitrust issue, right?


John Coffee:               If you were just one of a hundred competitors and you cut someone off, they could go to the other 99. But if you’re the only force in the field, then that gives you a monopolist status.


Trish Regan:               Sure. So is there – what’s the correlation, then, between just sort of the issue of free speech, then? Look, I’ll use Wuhan as an example, in that up until a couple of weeks ago, as a journalist, you were not allowed – I mean, seriously, Professor Coffee, you were not allowed to question the fact that there was a Wuhan Institute of Virology in Wuhan, and that was definitely, you know, just, period, not allowed. It would get you shut down. It would get demonetized. It would get you shadow banned, all of those things, possibly even kicked off the platform altogether, any one of the various social platforms.

And as a journalist, I look at it and say, “Look, you know what?” You ought to be able to at least ask the question because it should be within our rights to say, “Hmm, you know, this Institute of Virology is located in the very place where this coronavirus was first found.” And yet if you can’t even ask the question, right? Like if we can’t have an honest dialogue, and I’m not saying that you’re even providing the answer, but you’re asking the question, and that’s not allowed, what is that doing to one’s freedom of expression here in this country that, you know, look, let’s face it, we pride ourselves on this freedom of expression, and our First Amendment.

And so is there – is there an issue as well when it comes to some of these companies having almost a monopoly-like status on speech?


John Coffee:               That leads you to what is the best remedy. For example, it is one conceivable approach that you could unwind some of these earlier mergers. If Google acquired YouTube and Facebook acquired Instagram, thereby eliminating an alternative other source where you could have broadcast your message to the world, maybe what you want to do, given their near-monopoly power, is to unwind some of those mergers so there were more competitors.

I mean, one answer for problems of free speech is to make possible more speech by having more competitors.


Trish Regan:               Well, that’s sort of always been my belief and approach, because I’m of the view that more speech is the solution, and that more speech will hopefully drown out the crazy and the insane stuff, and people are able to conclude the sort of best answers on things. But it’s tough.

And this view of – or this modern day and age, right? Where you have algorithms in place that are put in place by individuals, right? Individuals make up these, and so individual biases, they are reflected, and that comes into play.

But back to your point on competition, I would think that the answer is in part to have more of these companies. And so maybe it is sort of a rolling-back, if you would, of some of the mergers that happened.

But you know, I don’t know if – do you remember Myspace, right? Which was around before Facebook.


John Coffee:               I mean, I think that when you look at a company like Google having 49% of the online market, I think that does require that we recognize them as a quasi-monopolist, and they can’t engage in any practice that looks anti-competitive. And in the Facebook, maybe if you had Instagram owned by a different company, forcing it to be spun off, then there would be someplace else to go. Or YouTube could do some of this as well, or there could be new entrants.

But new entrants are very much disadvantaged by practices such as the App Store. You can’t really make a lot of money as a new producer of apps or other kinds of services if you’ve got to pay either Google or Apple a 30% commission on the sale price when you sell this to a customer. That tends to perpetuate the monopoly.


Trish Regan:               Very interesting. So let’s turn to Amazon. Let’s turn to Professor Khan for a second. She’s taking over there for Ajit Pai at the FTC, and I’ve got to tell you, I’ve read her paper, and I really agreed with it. Look, I’ve said for a long time that I look at monopoly as we currently know it, and we assume that somehow the consumer has to be getting gouged in some way, shape, or form in order for it to fit sort of the classic definition of monopoly. And when you look at Amazon, really and truly the everything store, they’ve actually afforded us in some ways a better standard of living, right? Because they’ve afforded competition within the pricing space.

Yet simultaneously, because they’re so big, I question whether – in this case, it’s these small mom-and-pop businesses that are trying to be on their platform, that lose out. How do you think about monopoly as we’ve known it sort of previously, and then monopoly in this new day and age, when, yes, Amazon affords better prices for consumers, yet simultaneously is kind of running the whole big show?


John Coffee:               Well, now you’ve asked the most important question because the traditional goal of antitrust law was to keep prices lower or to get services better, and frankly, a company like Amazon has prospered by getting prices lower, by getting services almost instantaneous, and doing things that the mom-and-pop store lack the scale to be able to do.

But by the same token, they are excluding or they’re at least discouraging new competitors, and there’s got to be some kind of balance struck if we think there’s an advantage to having diverse competitors all able to get their message out, or at least for social media, I think we have particularly strong reasons to worry that there might only be one or two nationwide social media companies that could spread a message.


Trish Regan:               You know, that brings me to Parler, and one of the things I – you know, look, I – let me be very clear. I don’t think that there’s any room in this world for hate speech and for militias being organized, and that is horrific, that is horrible, it should not be. I was hard on Facebook when it seemed that they were having – and Twitter as well – some kind of hand in enabling ISIS terrorists to communicate online. And look, there should be – whether it’s domestic terrorism or ISIS-style terrorism, whatever it is, right? We don’t ever want to have conduits for that kind of criminal, horrible, murderous activity, right? So let’s just – we should just get that out there. I think you would be in agreement with me on that, of course.

But then I look at Parler. Wow. I mean, that was a company that really got its legs cut out from under it seemingly overnight, right? Because they were using Amazon Web Services. Somehow, Amazon, Google, Apple all came together, kind of instantaneously, right? It was right around January 6th, and they determined that because Parler had some people on there that may have been organizing, they were taking out all of Parler until Parler could come up with some better security procedures.

It was just interesting to me because I remember when Facebook was under fire, and Twitter was under fire for similar accusations, when you had terror activities throughout the world. So it’s just, you know, Parler tried to present an alternative, Professor Coffee. It’s running into challenges. It’s also running into the big guys who are like, wait a second? Who’s this little upstart? And I think in some ways might have welcomed the opportunity to try and take out a competitor before that competitor got too, too, too big.

Rumble right now is out there, and it’s acting as a possible competitor to YouTube. It’s got backing from the likes of J.D. Vance and Peter Thiel but hopefully will not suffer some of the same fates as Parler did in terms of getting its server taken away from it. What’s your view on all of that right now?


John Coffee:               Well, there are several values here that we have to have in our system. One is due process. It can’t be an arbitrary determination that you are engaged in hate speech. Now most of us know it when we see it. We can recognize this as hate speech, whether it’s directed at gays, at the political Left or the political Right, or some other issue. But you do need a mechanism to make sure that the claim that this was impermissible speech, that was hate speech, is reviewed by an objective, neutral person.

Facebook has a panel, and that’s better than nothing, but I think this is the kind of area where either courts or legislatures could come up with a superior system. And of course, the fewer competitors we have in this space – we now have pretty much a limited number, Twitter, Facebook, and some others, that can get nationwide audiences. It’s hard to start up with a new service and compete with these multibillion-dollar companies.

Therefore, the claim that there should be some spinoff of some of these companies, if Facebook had to spin off Instagram, well, you’d have another source. And if you could encourage two or three more like that, by making sure that there weren’t anti-competitive practices that chilled those new competitors, then we might get back to a world in which there is a little bit more diversity in the views that can be expressed.


Trish Regan:               What’s your sense of Professor Khan? I know that you – she’s your colleague, or was your colleague until going into government there at Columbia University. Do you think that she’s going to go in and try and make some of these changes to Big Tech? It’s a tall order.


John Coffee:               Like yours, in that she’s saying it’s not just about getting consumer prices lower. It’s about making sure we have competitors who can carry on and can compete. We want diversity, and we don’t want there to be only one near monopolist dominating the field.

Now her views are controversial. I don’t think right now that I can expect that she could adopt major rules at the FTC that would change the behavior of Facebook or Google or force them to spin off without there being litigation that would last years, and the courts are not necessarily sympathetic to an attempt without legislation to change the goals and the purposes of antitrust law.


Trish Regan:               So what do you think her first step will be in that office? What do you think her first step should be?


John Coffee:               Her No. 1 concern in her prior writing has been Amazon, and I would think that she would have some interest in what Amazon does. There are a lot of claims that firms like Amazon collect data from their competitors, because the competitors have to list their products on Amazon’s websites, and they get that data from the people using their website, and they use it to find out which products the company is selling are really attractive, and they design their own competitive equivalent. They come up with a private-label product that exactly matches or closely matches the product that the new competitor was selling on Amazon, and that’s using data you get because they’re selling on your platform to design a contrary product. Whether or not that’s permissible for a company with real market power is I think a very open and debatable question.


Trish Regan:               It’s a very fascinating question. And again, forgive me because this isn’t as streamlined as I would like, because I have so many questions, and we can go back to Amazon, but just your thoughts quickly on this Section 230, right? Because it seems as though a lot of these publishers – or they’re not publishers. That’s part of the problem, right? They’re social media platforms where publishers are putting their content. They’ve been able to get away with a very different standard. Facebook can say, oh, you know, that’s not our problem, because somebody else published it there. But publishers themselves can be held liable for bad information. Does that need to change? Will that make things worse in that you will really have Facebook and Google and Apple and everybody else sort of policing things? Or does that need to happen because they’re sort of getting away with being able to have their cake and eat it, too?


John Coffee:               Well, of course, people are going to disagree. This is one of the biggest political issues, and I think Congress could conceivably come up with a new provision that replaces what was called the Communications Decency Act provision that gave the platform complete immunity. Facebook tried to fill the gap a bit by putting together this special panel, but that hasn’t totally satisfied everyone. And the panel itself has some problems with how Facebook is using it. So I think we’re still looking for the ideal solution, and I think that it’s probably going to require ultimately some legislative action because I don’t think courts can design a complete system. They can just say some things are abusive.


Trish Regan:               You know, we’re talking with John Coffee, professor of law at Columbia University, author of the new book Corporate Crime and Punishment. And he has made the securities industry his specialty over the last several decades. And I look at the social media space and Big Tech, in some ways, Professor Coffee, it’s like, wow, it’s changed so fast. It’s all changing so rapidly. It’s all happening so fast. And it’s having a profound effect on society. And it feels like, you know, courts and government and governance sometimes is a little bit late to catch up. How do we catch up at this point in time?


John Coffee:               Well, you know, what we’re always finding is that there are unintended consequences. No one set out to totally dominate, be the only voice, but it becomes very – a very traditional move if you see a new entrant who’s got a – maybe a better model or a better product or some technical advantage on you to say, they’re still small. We can buy them up now at a large premium, and that will save our bacon. We won’t have to face their competition.

I think once companies get to a certain market power, it’s really necessary to prevent them from making further acquisitions. I don’t think we want Instagrams and YouTubes to be acquired by the dominant firm in the industry. We want to have many voices.


Trish Regan:               Sure. What’s your thought on the Europeans right now and their lawsuit against Google?


John Coffee:               The U.S. government and 11 states have brought a suit against Google, but the schedule for that suit is it won’t go to trial for at least another two years, so that’s going to be at a slow pace, and we don’t know whether the current administration – that suit was originally brought by the Trump administration. It’s now being maintained by the Biden administration. They may have different goals, and they may see different settlements as being desirable.


Trish Regan:               No, yeah, I hear you. And I’m also talking about the European Union and their concerns about the information that’s being gathered by Google and being used, in their view, abusive ways. Your thoughts?


John Coffee:               Aggregating information that it gets from consumers using their website and using it and packaging it either to better market products to that consumer, finding out what you really want and having the advantage in knowing what you want so you can market on Google to that person, or the possibility that they will reveal information that you may want to keep private. You may have a medical condition, a sexual orientation, something like that, that you don’t want to share with the world, but you can find it out if you get all of the information that’s coming in through emails and others.


Trish Regan:               That’s pretty spooky. I mean, that’s pretty weird.


John Coffee:               Well, Europe is much more focused on that than the U.S. is. The U.S. is focusing on – right now on antitrust concerns, but Europe is probably even more concerned about privacy and confidentiality. They have begun to restrict any movement of this confidential information outside of Europe. Google can’t – if they have their way, Google and others won’t be able to take that information back to the U.S. and combine it with other information.


Trish Regan:               So how hurtful would that be to Google itself? I mean, its entire business model is built upon being able to gather all that data and get all that information and be able to market so specifically to you, an individual.


John Coffee:               Well, I think there needs to be maybe some definition of what’s confidential, but I do see the European view that we don’t want you taking information that shows that you know more about that person than anyone else and selling that to those who want to market to that particular kind of interest. That’s going to be partly a cultural view, and Europe has a greater cultural sense of the need to protect privacy than the U.S. does.


Trish Regan:               That’s interesting. Why do you think that is? I mean, is that just more within their sort of legal framework, it’s important to them?


John Coffee:               Well, maybe the U.S. is more interested – more used to the idea of openness and transparency being good. In Europe, you keep everything confidential.


Trish Regan:               I find all of this so interesting, so fascinating. There’s part of me that just wishes we could go back to a life without computers, as much as I love it, right? Being able to access information. But it’s an eerie thing when there’s that much that’s accessible to Big Tech on individuals themselves, and it’s quite concerning when you can’t have the same kind of, I guess voice that maybe you might have had in other ways.

But look, part of it’s like progress, right? We’re changing and we’re growing as a country, and our technology is growing and improving. And the genie is out of the bottle, so what do you do about it now? I think this is where you probably need some really smart lawyers to kind of think through the implications of all this stuff going forward?


John Coffee:               Well, I think yes, but you’re going to get disagreement. I mean, there’s not one solution that will satisfy everyone. One size doesn’t fit all. But I do think the idea of allowing large companies that dominate a space, whether that space is Google’s space or Apple’s space or Facebook’s space, they should not be allowed to make further acquisitions because that reduces the prospect that there will be a viable competitor.


Trish Regan:               But would you take that further and say not only should they not be able to make additional acquisitions, but that they should have to break up whatever they’ve gathered thus far?


John Coffee:               Well, you’d have to – to do that under existing law, you’d have to show there really was an attempt to monopolize. That’s a conceivable outcome, but I wouldn’t say it’s likely to come soon. Now the Google suit that the U.S. has brought is at least two years from getting to trial, and by then, I don’t know whether the goals of that suit will change or be the same. But breaking up companies, you know, the last – we’ve done it to Standard Oil of New Jersey and a few others a century ago. It’s not something we do every day.


Trish Regan:               Yeah, we did it with Ma Bell, right?


John Coffee:               Well, actually, they settled all that. They brought a suit against Ma Bell, and eventually, the government dropped it. Under Reagan, they settled that with only modest changes. Ma Bell itself thought it wasn’t efficient to be both a long-distance carrier and a retail carrier. They also wanted to redefine their role.


Trish Regan:               So I guess you don’t think it would necessarily happen any time soon. I mean, even though it may be Professor Khan’s objective to get in there and really have some influence on behalf of the consumer that she thinks may be in some different way, right? Being taken advantage of by the sort of big, giant Amazon, it doesn’t necessarily sound like this is going to be able to happen overnight.


John Coffee:               You could say you cannot aggregate this kind of data and use it simply to sell your services because you didn’t have the right – you never got the right to use that data. This is the same kind of problem that exists when we were subject to thousands of cookies. Everywhere we go, we’re waiving and accepting cookies, but that is allowing information aggregation.


Trish Regan:               But if you don’t accept the cookies, then you can’t usually read the website, right? So it’s like –


John Coffee:               That’s why it’s Hobson’s choice. Hobson’s choice is no choice. Take what we give you and call it a choice. So you really can’t opt out in the modern world of Google or Apple. Maybe you can leave Facebook. I don’t know.


Trish Regan:               Roger McNamee wrote a really good book on this called Zucked, and he – he’s certainly Left of center, but he regrets, he said, giving the initial investment to Facebook, because he thinks it’s just really poisoned the world and poisoned our youth. And I think you can look at this from either side of the political aisle, right? It’s not a political issue at this point. It’s just that these companies have become so big and so instrumental in our thinking and in our everyday lives, and you have to understand what are the repercussions of that.

And so that’s where I think Lina’s job will be very important, to where we need to continue seeking the expertise of people like you. And it does sound like there are paths forward. What do you say to those, and I have friends who have said to me they really don’t believe that she will be successful in that position, only because there’s so much big money, corporate money, lobbyists, that are against her in this field, and Big Tech has a lot of sway. So it’s in some respects – some people believe kind of like, oh, you know, big shiny object, look over here, we’ve got Lina Khan, and she’s really tough on Amazon, and she’s going to break up monopolies, but it’s a little bit lip service, because they don’t actually see it coming to fruition. Your thoughts?


John Coffee:               Let me put it this way. She has to choose her targets carefully. Powerful as the FTC is, it doesn’t have the resources, the manpower, the budget, or the congressional support to take on all of the big players. She’s got to take on one case and use that as an illustration that may cause other companies to back off and curb some of their own practices.

But whatever the case she chooses is, she’s going to have really just one or two big cases. They can’t do much more than that with the manpower they have.


Trish Regan:               Quickly before I let you go, just tell me a little bit about the new book, Corporate Crime and Punishment.


John Coffee:               We have seen corporations find a way to escape any real threat from the criminal law. They use practices such as the deferred prosecution agreement, under which they negotiate a settlement. There may be a big fine, but that big fine doesn’t at all deter the corporate officers. It falls on the corporate shareholders. And corporate shareholders, who are basically large institutions, can absorb these penalties. It doesn’t much change their practices. Nor are institutions very eager to come in and try to run these companies. They don’t have the ability.

So I think that the large corporation has escaped the threat of the criminal law, and part of this deferred prosecution process is that corporate officers get a de facto immunity. The company pays a settlement, but the person who made the decision was some officer someplace. And the person who pays the penalty are the huge group of pension funds and mutual funds who have millions of shareholders or millions of pensioners, and the penalty doesn’t achieve its purpose.


Trish Regan:               You know, that’s a very good point. Do you think that that’s also just a function of these companies getting too big? That at some point you just reach such size, such magnitude, that, to your point, you’re kind of able to skirt the law in some ways and make bad decisions and not be held as accountable?


John Coffee:               Well, I think we’ve got to focus the criminal law on the individual decision-maker or the group that makes the decision. Placing penalties on a corporation is just kind of a way of ensuring the penalty and absorbing it as a cost of doing business.


Trish Regan:               I was talking recently with a cybersecurity expert because we were talking about Colonial Pipeline, we were talking about JBS, we were talking about the need for these big corporations and the individuals within them to take more ownership. And look, I think the government should be there as well, but the reality is the world has changed, and we’re going to have to continue dealing with these hacking attacks, and corporations need to recognize that, right? CEOs need to recognize that.

Anyway, the individual was saying – and this was on last week’s podcast – that what really needs to happen is a kind of Sarbanes-Oxley that holds CEOs accountable, right? So that you know that before you sign on the dotted line, you’ve tried as much as you can to at least put some kind of system in place to protect your customers’ data and to protect your infrastructure, etc. Do we need more accountability in that sense, whether it’s cybercrime or another kinds of things, right? That CEOs and individuals within companies can be more proactive on? There needs to be, in your view, maybe more penalties if they’re not?


John Coffee:               I think we have to be a little bit more creative in how we use penalties. For example, if a corporation commits a crime, I don’t say the CEO should go to jail, because he may not know anything about what’s going on. It happened 15 levels below him. But we could say when the corporation commits a certain number of crimes, we’re going to suspend incentive compensation. We’re not going to let them have stock options or other kind of special executive compensation. That’s kind of a group penalty, and that will make everyone fearing the danger of the corporation getting in trouble because there will be a group sanction in the suspension of incentive compensation.

That’s much better than saying there’s an automatic jail sentence for the CEO, who really can’t be an insurer of what’s happening among 500,000 employees.


Trish Regan:               Very interesting stuff. Well, look, times are changing, but they always do, right? I mean, historically, if you go back and you had the robber barons of the 1920s and big corporations then, and we have big corporations now. I guess every generation has a version of this, Professor Coffee?


John Coffee:               I’m seeing a new activism among the large institutional shareholders. Just two weeks ago, a tiny little hedge fund called Engine No. 1 won three seats on the board of Exxon, our largest oil company. No one thought that could have happened two years ago, and it happened now, not because Engine Co. had great power. They only owned 0.02% of the stock. But because their view that Exxon had to change its policy on climate change and non-carbon fuels did resonate with all of the major institutional investors, like BlackRock, and they voted on these new directors, demanding that there be a new decision-making process.

So I think on issues that are recognized, and climate change is probably the biggest example of that, we are seeing institutional activism at a new high level.


Trish Regan:               These are crazy times, but we’ve had a lot of crazy times, and we seem to make it through okay on the other end, so I think that’s the one good takeaway. But there could be a lot of change I imagine coming, not necessarily overnight, but your sense is just in the next few years. Should investors be preparing accordingly?


John Coffee:               We have to focus on an important topic. People like the FTC have to focus on more than getting the lowest prices for consumers. They have to also focus on making sure there’s not a power structure dominated by just one firm in some very important space.


Trish Regan:               Very well said. Well, Professor John Coffee, thank you so much. It’s good to talk to you again.


John Coffee:               Well, it’s my pleasure. Hope to talk again.




Trish Regan:               Listeners to my show, I want you to know my friend and AMC contributor, former U.S. presidential candidate, and 22-year congressional veteran, Dr. Ron Paul. Like me, he gets a little worried about the financial state of our economy. All his concerns about inflation I certainly share. The concerns he has about the enormous effects bad policy would have on our citizens, he and I are right in sync on this.

Well, the Fed is continuing its printing press ways and inflation is increasingly climbing at alarming levels. Every American needs to be able to protect themselves financially. And Dr. Paul, he has some answers for you on how exactly you can do it.


Ron Paul:                    Most Americans will be completely blindsided by what’s going to happen. So please, make sure you, your family, and anyone you care about are prepared.


Trish Regan:               I want you to go to,, remember that, to see how you can protect yourself financially. Again, that is I’m sharing with you thoughts from my friend, former presidential candidate, 22-year congressional veteran, Dr. Ron Paul. Go to




Trish Regan:               Really fascinating, right? I mean, we have so much at stake right now. There’s so much on the line. The world is changing really, really fast. You need to think about how to invest in all this. One of the things I would just suggest, you know, look, if they do break them up, it’s probably pretty good, right? Because it means your shares are going to split and you’re going to get a little of this and a little of that, and maybe you’ll get some options. But I think you’ll probably do just fine. These companies have really built, for better or for worse, tremendous, tremendous businesses. So I would not be afraid as a shareholder of any of them being broken up.

But as an individual, or as a company trying to put one’s app on the Apple App Store, yeah, I would be very much looking forward to a breakup of Big Tech. I think it’s badly needed right now. It’s the right thing to do for business. It’s the right thing to do for consumers. It’s the right thing to do for free speech. It is the right thing to do for Americans, the right thing to do for the world.

So we wish Lina Khan lots and lots of luck. I want to encourage you to go to You can read more all about this. I’m tackling the issue in this week’s magazine. So, And I’ll see you right back here next week.


Announcer:                 Thank you for listening to this episode of American Consequences. Want more Trish? Read her weekly articles Thursdays in our magazine at, and subscribe for free to get all of our daily articles and the monthly magazine. We’d love to hear from you, too. Send Trish a note: [email protected]

This broadcast is for entertainment purposes only and should not be considered personalized investment advice. Trading stocks and all other financial instruments involves risk. You should not make any investment decision based solely on what you hear. Trish Regan’s American Consequences is produced by Stansberry Research and American Consequences and is copyrighted by the Stansberry Radio Network.



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