Capitalisn’t: Regulating Facebook and Google—the Market-Structure Perspective

Luigi: Next week, the Stigler Center of the University of Chicago is organizing a major conference about the so-called digital platforms. The European Union has released a report about digital platforms. So have the United Kingdom and Australia. Even India is proposing legislation in this arena. The United States government has been completely silent on this front. So, the Stigler Center is substituting for the US government by presenting not one but four reports on this topic. And the conference will be streamed, so you can all follow it on the internet.

Kate: Luigi, if you want people to follow, you should probably explain what a digital platform is.

Luigi: You’re right, especially because the conference is all about two very special digital platforms, Google and Facebook. In general, a digital platform is simply software designed to facilitate transactions and connect users to data resources. So, Uber is a digital platform, and so is Amazon, yet the main focus of the conference is on platforms that have a big media component to them, such as Google and Facebook.

Kate: Wait, but Mark Zuckerberg has insisted many times that Facebook isn’t a media company.

Mark Zuckerberg: We’re a technology company. We’re not a media company.

Kate: So, are you saying that he’s lying or that he’s wrong?

Luigi: I think you’re hitting the real heart of the conference. Why is Zuckerberg pretending that social media like Facebook is not media? After all, he doesn’t call it a social technology or a social platform. He calls it social media. More seriously, the problem of what these companies are and how they should be treated from a regulatory perspective is at the center of this conference. These are new animals which we find difficult to box in the traditional definitions. For this reason, the conference is organized with four different subcommittees that analyze the companies from four different perspectives.

The first is a traditional market structure perspective. Then, a media perspective. Third, from a privacy perspective, and, last but not least, from a political economy perspective. In anticipation of this conference, we’ll talk to the head of the market structure subcommittee.

Kate: From Georgetown University, I’m Kate Waldock.

Luigi: And from the University of Chicago, this is Luigi Zingales.

Kate: You’re listening to Capitalisn’t, a podcast about what’s working in capitalism today.

Luigi: And, most importantly, what isn’t.

Kate: On today’s episode, we have the honor of having as a guest Fiona Scott Morton, Theodore Nierenberg Professor at the Yale School of Management, and the former deputy assistant attorney general for economics at the antitrust division of the US Department of Justice, where she helped enforce the nation’s antitrust laws.

I’m going to start off by asking you, what’s so special about these digital platforms that generate all this international attention and spurred you to actively participate in this conference?

Fiona Scott Morton: Well, I’m actively participating in this conference because Luigi twisted my arm, and he’s very charming. So, that worked.

Kate: I know the feeling.

Fiona Scott Morton: It’s also, of course, just a tremendously interesting problem. It’s the problem of our age.

Kate: Could you give us a high-level summary of the report that you wrote for this conference?

Fiona Scott Morton: The report is about the way in which we should think about digital platforms, in the way that they tend to exhibit a concentrated market structure, the problems that flow from that, and the solutions that we might think about using as a society to address those problems. The start of the report talks about the really large economies of scale and network effects which come from everyone wanting to be on the same platform, and global reach, and economies of scope, and use of data that make it very, very efficient for a firm to grow big. When you have a firm growing big, you tend to, instead of having 10 firms, you have one firm or two firms. So, these markets exhibit more concentration because of these characteristics.

That concentration makes it difficult for entrants to get in. There are entry barriers that come along with these forces of economies of scale and network effects, and when entrants can’t come in or find it hard to grow, then you end up with less competitive pressure on those one or two large firms in an industry. That leads to problems like high prices, low quality, less innovation. Then, after identifying those problems, we move on to some solutions.

One of the solutions that’s often proposed is self-correction. Let’s just wait and see if it works its way out. The committee decided that that was not likely and that public policy should really depend on either increased antitrust or some regulation.

Luigi: Fiona, this is all wonderful, but most of our listeners think that there is no real problem with the digital platforms. Most of them, and I’m one of them, actually, benefit tremendously from Facebook and Google. We live doing Google searches, we travel with Google Maps, and we keep contact with our friends through Facebook or WhatsApp. We don’t pay a penny for all these services. So, why do you see a problem here?

Fiona Scott Morton: Well, you’re quite right, and I agree with you about the tremendous benefits of all this technology. The report actually starts out by saying it’s just incredible what we have now and the quality and nature of the innovation. The idea of the report is to say, “Well, many fantastic things come with some downsides, and we use public policy and regulation and laws to limit those downsides.” So, we invent the car, and we also invent a crosswalk and a traffic light, because cars are really fantastic, but they’re better if there are crosswalks. We totally acknowledge the upsides, and we’re just trying to make some points about downsides, and the downsides are not trivial.

These are downsides that can affect elections, though that’s not the subject of my report, and affect the pace of innovation and the quality that we all experience. It’s hard to know, of course, the quality of services you’d get if there was more competition. We only see the quality of services we actually do get.

Luigi: OK, but most people associate concentration problems, monopoly problems, with higher prices. But when it comes to Facebook and Google, we get all our services for free. We don’t pay a dime for it. So, how can you talk about harm to consumers?

Fiona Scott Morton: That’s a great question, and I think that the first thing your listeners have to think about is that free is not some special zone. Free just means the money price is equal to zero. The money price is often positive when we go to the store and buy a loaf of bread, but it’s also possible for prices to be negative. We could be paid to use Gmail or Facebook. Now, why would Gmail or Facebook pay us? Because what we’re giving them in return is not money but data. We’re giving them lots of data about where we go, what we eat, what we buy. We let them read the contents of our email and determine that we’re about to go on vacation or we’ve just had a baby or we’re upset with our friend or it’s a difficult time at work. All of these things are in our email that can be read by the platform, and then the platform’s going to use that to sell us stuff.

So, this is very valuable data. We’re paying for these services that we get. We’re just paying in a bartered kind of way. We’re not paying with money, we’re paying with data.

Kate: If my data is so valuable, more valuable than the services that they’re providing me, these digital platforms, why isn’t it the case that I haven’t been paid, say, a dollar a month by Google to have a Gmail account?

Fiona Scott Morton: I think this is a really good question, and we don’t quite know the answer to it. I mean, one part of the answer is micropayments actually are hard to do. There are transaction costs with paying somebody a tenth of a cent. There’s another issue that if a website just paid a tenth of a cent to anybody who came, there would be bots immediately created that would just click on websites in order to make money, and they wouldn’t be real people. But I think these problems are surmountable. Open standards, identity verification and aggregation. I could imagine my cell phone provider collecting payments from all the places I went on my mobile phone, knowing that it was me because it was my mobile phone, and lowering my monthly bill.

I think we need to explore some of these options, because it would be really great for consumers to be able to be paid in money rather than having a zero price. Negative price is even better.

Luigi: Actually, for our listeners who follow us, when we analyzed the initial coin offerings, we had a discussion about how maybe cryptocurrencies could be such a form of payment. So, in the future, they might help resolve this problem. But for the time being, this problem does exist, and one of the things you say in the report is that one indication that there is something wrong, to some extent, is that these companies are making a lot of profits. But people enter into this exchange freely. If they’re willing to give up their data for the service, whether this data is worth the service they receive or not is a bit in the eye of the beholder. They are voluntarily entering this transaction, and that suggests that they are better off in this transaction. Why should we interfere with that free exchange?

Fiona Scott Morton: That’s a nicely presented question, and the reason that we interfere is when we think there’s insufficient competition. A monopolist, for example . . . Let’s imagine there is a monopolist of all cars in the United States. There would still be people buying cars. The monopolist would choose a price at which it would sell cars. There would be many millions of people buying cars. They would freely be buying cars, and why would we want to intervene? Because if there were competition, if there were nine or 10 makers of cars like we see in the United States today, the price of the car would be lower, the quality would be higher, the service would be higher, and the consumer would have thousands of dollars that she could spend on something else besides a car.

Competitive markets are extremely valuable for consumers because it gives them more choice, lower prices, better quality, and then money to spend on other things that they value.

Kate: OK. Most economists or many economists think of people as rational. By rational, I mean they take in as much information as they possibly can. They make decisions that are best for themselves given that information, and they have a sense of what the future will look like, and so they’re making those decisions to make themselves best off not only now but also in future states of the world. But your report really highlights that people have a lot of behavioral biases, and digital platforms can take advantage of these. Can you tell us a little bit about those behavioral biases?

Fiona Scott Morton: Absolutely. The economics profession has been really interested in the intersection of economics and psychology for the last several decades. The old model was a neoclassical model of the consumer that did exactly what you’re describing, Kate. But in real life, consumers are not that good. They turn out to have behavioral biases of several well-known types. For example, consumers really respond to defaults. If something is presented as the default option, it takes energy to switch away from that. When certain boxes are checked on a website, when certain options are presented first, the framing of those options and the default nature of those options really lead people to use those services.

So, defaults really matter . . . Consumers are also really impatient. They don’t like to wait until tomorrow to get something. That’s called present bias, and what it means is that consumers will watch addictive video, or they will gamble, or they will buy the candy bar in the supermarket checkout aisle because they’re hungry. They know they are going to get dinner when they get home, but they’re hungry right now, and they can’t impose self-control enough to wait.

Kate: Or they’ll sign away all their rights to data by clicking through an agreement or a warranty very quickly without reading it, right?

Fiona Scott Morton: Yes. I mean, one of the things is we’re all not lawyers, so it’s not clear that we would learn anything from reading that text. Secondly, if you click “no,” you can’t open your phone or get onto the web or use the service, so clicking “no” is not really a very viable option, and then secondly everybody’s in a hurry.

Luigi: Some people actually experimented by putting terms where you say you’re giving up your firstborn child or whatever, and people sign because they didn’t read it. So, this is the standard these days.

Fiona Scott Morton: Yes, exactly, and actually the German cartel office has said, “We don’t really think this constitutes an agreement, because there isn’t any other option for the consumer, and so the click is a little bit meaningless.” Let’s go back to that candy bar in the supermarket checkout aisle. That checkout aisle is designed for everybody. Everybody goes through there. Old, young, every demographic. People who are hungry, people who are not, and it’s set up, yes, to take advantage of that behavioral bias of impatience, but it’s also set up for everybody.

That means that it’s not always effective for everybody. When you go on a digital platform, that platform knows what you bought yesterday. It knows what you’re talking about in your email today. It sees your hand movements. Maybe it sees your eye movements. Maybe it knows geographically where you are. So, it’s able to target your weaknesses and your behavioral biases very precisely. It knows what they are. It knows when you’re likely to be susceptible, and it’s able to pick a product or an ad or a suggestion that’s just for you, and that really is new. That’s quite different than the mass-produced kind of, “Let’s get people to subscribe to the gym in January, because we know they’ll do that and then they won’t come.”

Luigi: And God forbid that you are connected to a Fitbit, because then they also know your heartbeat and probably pretty soon your sugar level, so they’re going to come and make you an offer when they know you’re low on sugar and not able to fully connect.

Fiona Scott Morton: Yes, if the supermarket knew who was low on sugar and could offer them a candy bar, that would be a little closer to what we see on the digital platforms.

Kate: Another feature of these digital platforms is that they’re pretty good at keeping out the competition. Can you tell us about how these companies erect barriers to entry?

Fiona Scott Morton: Yeah, barriers to entry are very important in this world. Firms use barriers to entry all the time to try to preserve their profits, and this is one of the things that antitrust enforcement does, is to prevent the creation of market power, the maintenance of market power, in a way that’s not competition that helps consumers, but just exclusionary, just designed to stop an entrant or designed to shut down competition. Digital platforms are quite amenable to these entry barriers. I mean, they come naturally because of network effects, which are when everybody wants to be on the same platform.

A social media site, for example, is more valuable the more of my friends are already on it. Nobody wants to be on a social media site by themselves. Who would they talk to? The more other people are on the social media site, the more attractive that social media site gets. Many platforms have this characteristic. The more people use Uber, the more Uber drivers there will be, and that makes Uber more attractive and so on.

A barrier to entry then becomes a really important way to keep out an entrant, because let’s suppose I’m a new car-hailing platform. How do I get started? It’s a bit of a chicken and an egg. I don’t have drivers, so I don’t have customers, but if I don’t have customers, I don’t have drivers, and it’s going to be challenging to get going. The platform that’s in power, the incumbent platform with market power, is going to use all the tactics it can to try to keep those entrants out, because those entrants threaten its profits by creating competition. This is where antitrust comes in. Antitrust laws are designed to stop that behavior when it’s harmful to consumers.

Luigi: But this is a very important point, Fiona, because very often, consumers don’t perceive that behavior as necessarily hurtful to them. So, one way which you assert your incumbent’s power is to prevent people from using other platforms at the same time. Let’s say, in jargon it’s called multi-homing. Suppose you look both at Uber and Lyft. In principle, you can choose anytime which one to use. Even the riders, they can choose any minute which one they’re going to use. So, this is allowing for multi-homing, and this is allowing for competition.

Now, imagine that Uber offers me . . . In fact, that’s what happened to me the other day. Uber offered me a possibility of paying $20 for adding a 20 percent discount on all the rides next month. On the one hand, this seems like a great deal, because I travel by Uber a lot, and so I’m going to save money by doing that. On the other hand, what they are doing is making me not multi-home, not look at my Lyft application all the time. As a result, they are making it more difficult for Lyft to survive. And so, eventually, they’re going to have the entire market, and they’re going to do whatever they want to me and all the other customers. So, how do you deal with this exclusionary practice or loyalty practice that appears to be in favor of consumers but eventually ends up actually being hurtful to consumers?

Fiona Scott Morton: The answer to that is probably longer than will fit in one podcast, but you’re exactly right about the impact of that scheme. The idea is to get people to single-home, and when a user is single-homing, their eyeballs are only going to that platform, and that platform then has market power over that user, because they’re not even considering any of the competition. What do we do about these kinds of tactics? Well, the report talks about this at some length. We haven’t been enforcing the antitrust laws in the United States to the extent that we could have been, and the result of that is that we’re quite behind in enforcement in general, and we’re certainly behind in enforcement of digital platforms, because digital platforms present a number of new issues.

One of those issues is the complexity of offering a pricing scheme that might look like it’s a reduction in price to the consumer but makes the consumer single-home, then possibly leads to a higher price to the consumer or the exit of a competitor that down the road leads to a higher price for the consumer. If the set of facts brought to a court convinces the court that this is exclusionary conduct, it’s not actually helping the consumer in the long run, then that could be found to violate the antitrust laws, and then that would be prohibited.

But antitrust is kind of slow. It’s going to take years. First of all, you’d have to have a government that wanted to enforce in this way. Then you would have to convince courts that it’s important to enforce in this way, and then it would take years to do it. So, the report is pretty clear about all the changes that we would have to have in order for antitrust laws to work to protect us from this type of thing that you’re describing.

Kate: Just out of curiosity, Luigi, after the discount period was over, did you go back to checking both Lyft and Uber?

Luigi: Yes, I did, but they offered me another discount.

Kate: OK. So at least you go back to multi-homing when the discount period’s over.

Fiona Scott Morton: Yeah, and Luigi did also mention that the drivers could be offered incentives to single-home also, and so you might get an effect on both sides of the platform encouraging single-homing, which is again quite interesting.

Kate: I’d like to take a step back and think about what market power looks like from the context of, or in the context of, a digital platform. Let’s say, for example, Google has 100 percent of the market share in search engines. In traditional economics, we think of a monopolist as, OK, when you have monopoly power, you jack up prices. Maybe you limit quantities and maybe the quality of a product is degraded. But in the context of a search engine, if we’re not paying anything, then how is Google going to jack up the prices? How is it actually going to limit quantities? It’s hard to grasp what the digital platform could do as a monopolist or oligopolist. So, what are the harms if they have a lot of market power?

Fiona Scott Morton: Well, the first really obvious harm is higher prices for advertisers. We say they’re free, but let’s remember, they’re making billions and billions of dollars every year, so there’s something not free happening there if we’re generating billions of dollars, and the something that’s not free is the advertising. These are platforms that are selling our attention. They’re selling ads. They’re an ad-supported platform, and the higher prices are coming about as higher prices for advertising than there might be if there was more competition. That’s the first place to look. But then the second place—

Kate: Wait, so can I butt in there for a second?

Fiona Scott Morton: Mm-hmm.

Kate: So, I know that Google and Facebook address this potential criticism by saying, “Oh, we have a competitive bidding process for our advertisements, therefore we’re charging the lowest price possible.” How does that square with what you just said?

Fiona Scott Morton: Well, what we see is sustained, high economic profits from this business model with anecdotal evidence of entrants attempting to get in and, for example, being bought. So, WhatsApp, Instagram. We see the European Commission’s cases against Google in exclusive dealing, in bundling. The reason that I can’t answer your question more specifically than that is because we don’t have antitrust cases against these platforms in the United States. That’s what you need to do to find out, how is the market power existing? Is it there, or isn’t it? How is it being exercised? In what way? Price, quality, innovation? Who is it harming? What’s the magnitude of those harms? And that’s what you learn when you open an investigation.

Luigi: And also, I think another damage, and correct me if I’m wrong here, is the lack of protection for our privacy, because when Facebook was competing with Myspace in the early phase, it was very protective of individual privacy. It’s only when Myspace was completely defeated that Facebook started to insert the more aggressive cookies that will follow exactly what we’re doing and the level of surveillance that was not present before. So, I think that the lack of competition leads to lack of privacy.

Fiona Scott Morton: Certainly, privacy is a dimension of quality, and if consumers care about it, there could be a platform that says, “Look, I have a different business model. I have a subscription model. Pay $2 a month and I will not sell your personal data. I will not collect your personal data. I’ll just collect that $2 and offer you whatever the service is.” That would be a useful business model to have competing with the ad-supported business model. Some people might choose one, some people might choose the other. There’s also the issue that sometimes these privacy violations have externalities on other people or what the behavioral economists call internalities. They hurt me. I do it, but it’s like not going to the gym. I’m hurting myself in the future.

In those cases, we might actually need regulation or rules that prevent some types of contracts or some types of content that we think as a society are harmful.

Luigi: When you mention more privacy or an alternative, in some cases these alternatives do exist. There is a search engine called Duck Duck Go that does exactly that. They protect your privacy. They don’t collect information about you. If I were Google, I would say the alternative is a click away.

Fiona Scott Morton: Yes. So, I use Duck Duck Go. It’s on my phone, exactly, because I was writing this report and felt like I should try out all these technologies. The reason that the click away is such a deceptive phrase is what we were talking about before, consumers’ susceptibility to defaults and the status quo. So, yes, you can scroll down and look at page three of the search results, but consumers don’t do that. Many things are easy, and yet we don’t do them.

Luigi: Yeah, but it’s not just our laziness, because you are not lazy. You sometimes use Duck Duck Go, but you don’t use it all the time. Why don’t you use it all the time?

Fiona Scott Morton: Because there are default installed browsers on my machine in my office. It’s as simple as that.

Luigi: I guess that’s one reason, but I think the second reason is that Google is better in searching for complicated stuff. Why? Because they had the time to accumulate all those searches. This is the economies of scale we were discussing before that does represent an important barrier to entry.

Fiona Scott Morton: Yes, that’s exactly right. When there’s more users of a search engine, then it can learn more quickly, get better at answering rare queries, and provide a higher-quality experience to users. I don’t tend to use the search engine for things that are difficult. I’m trying to find a train time or opening hours of a store or something, so pretty well any browser can do that, but the more sophisticated your question, the better a browser you want to have, and that responds very strongly to economies of scale. This is why the European Commission found that it was a problem that Google was, for example, paying Apple to be the exclusive installed browser on the iPhone, because that was going to generate a lot of scale for Google and continue to keep it ahead of competing browsers, because there would be all those users due to the iPhone contract.

Luigi: How much are they willing to pay for that?

Fiona Scott Morton: In the last year, it was $12 billion. So, that really tells you that defaults, the default search engine that you get on your phone, is going to be the one you use. Otherwise, why would anyone pay $12 billion for that privilege?

Luigi: And it’s funny, because very often in discussion and litigation, the economists of Google are trying to make the case that this is irrelevant, while at the same time, their business people pay $12 billion, so there is a contradiction in terms here.

Fiona Scott Morton: It’s a lot of money.

Kate: Luigi, when Fiona was talking about Google search results, I saw you smiling. Why were you smiling?

Luigi: Yeah, I was smiling because I remembered this joke that I saw online that said that the body was buried in the second page of a Google search where nobody would find it.

Kate: OK. Let’s say that we can’t convince everybody to voluntarily use Duck Duck Go or to get back on Myspace and Facebook at the same time. In order to combat the harms that we’ve discussed so far, what sort of changes would you propose?

Fiona Scott Morton: Well, let me preface my answer by saying these changes would have to be put in place in a responsible way. That is to say, as remedies for violations of the law or as regulations that as a society we decided we wanted. But I think we can do a number of things that are more productive than fining the companies, which seems to be what the European Commission does and the FTC is thinking about doing with Facebook, and fines don’t restore competition. They don’t change the competitive landscape at all. But you can do things like require firms to give to consumers their own data in a usable format. Suppose that I could go to Amazon and say, “I would like a file that tells me what I bought for the last three years, and I’m going to take that file and I’m going to give it to Jet.com. Then Jet will know what it is that I bought for the last three years, and they can make suggestions and serve me in a better way, because I’ll have addresses, names, all the things I purchased. All the data that I put into the Amazon platform.”

That would really lower switching costs between Amazon and entrants. That might make entrants think, “Wow, if I enter, I could get a bunch of people quickly and I could serve them pretty well. I could start training my own search engine on that data that they give me.” But why would it be in the interest of Amazon to give me my data, and what format would they use? So, you need a regulator, a regulator to say, “Here’s the format and, yes, this is going to be a rule, and we’re going to enforce it to make sure that established platforms give their data when they’re asked.”

That’s one kind of remedy. A second kind of remedy you could think about is interconnection. Suppose that an entering, small social media platform didn’t have network effects. It had some users, but those users had friends on Facebook. Well, suppose that a regulator said, “Facebook, you must interconnect with small platforms that would like to interconnect,” and the small platform could then go into Facebook, retrieve the information of the friends, with their permission and the user’s permission, and then be able to display that on the new . . . the entrant’s social media site.

So, even though the entrant has very few users, it doesn’t suffer from bad network effects because it can take the data. It can connect to Facebook and bring the data across.

Luigi: And let’s remind our listeners that, to some extent, this is what the US government did at the beginning of the telephone era. There were a lot of different networks that were not interconnected with each other, and they forced openness in the network, so they destroyed the natural externalities, and I think that that is, to some extent, a potential remedy for the social networks.

Kate: Yeah, we just need to turn social networks into regulated utilities.

Fiona Scott Morton: Well, interconnection is not regulation of the price, right? Interconnection is saying, “I want everybody to be able to talk to each other.” Certainly, my children would agree that the telephone is a fairly useless thing, and social media is much, much more important and the place where they do all their business and socializing. But the point about the regulated utilities, this is something that Senator Warren has put forward as a proposal and that is actually a little bit different, that regulated utilities like electricity and so on are places where we as the government actually control the price and say, “Here’s how much a utility may charge for electricity.” So, that’s a little different.

Kate: Fiona, can you tell us more about what sort of authorities would be enforcing some of your proposals?

Fiona Scott Morton: We don’t have in the United States an authority that’s dedicated to digital issues. The issues that we discuss in the report about competition and how to set up baseline conditions in data so that you get more competition and more choice and more entry, like data portability, like open standards for micropayments. These are kind of baseline activities that I think it would be really helpful to have put together into a specialist agency that would be good at handling all kinds of data issues.

Kate: And what about antitrust?

Fiona Scott Morton: The antitrust for digital platforms could be also placed inside this agency if we wanted to. Some advantage of that would be, let’s say, the exclusionary tactic that violated the antitrust laws was something technical that was a little bit hard to see, and so, a regular agency like the Department of Justice wouldn’t see it as quickly as a digital authority might see it, because they’re working with that data and those situations and markets every day. So, you could certainly empower a digital authority to enforce the antitrust laws or actually go a little bit beyond them.

In the report we suggest that if you’re one of these very large digital platforms, the Googles and the Facebooks, that transactions, purchasing small rivals that represent possibly nascent competition that might one day overthrow the platform, that these transactions need to be scrutinized especially carefully, and not by the standards of ordinary antitrust law but by a higher standard, because the benefit to consumers of having even a tiny fragment of competition would be so high that we really want to protect and preserve those small entrants.

Luigi: But you are also recommending some legislation as far as antitrust is concerned. Can you explain why you resort to this idea that we need to fix antitrust laws in the United States?

Fiona Scott Morton: It goes back to the influence of the Chicago School from the ’70s, which was about using economics in antitrust, and that was a good idea at the time, but it was interpreted to mean less enforcement is good, and that was a drumbeat that was repeated for three or four decades. So, we’ve been enforcing the antitrust laws less every year for three or four decades, and I think there’s quite a bit of evidence now demonstrating that we have overshot the mark. We’re under-enforcing at this point.

How do you get courts to appreciate that we’re under-enforcing, to sort of absorb all of that evidence and change what they’re doing? Well, that would take a long time. It would probably take decades to reverse that. So, do we want to wait decades? I don’t, really. It seems to me that a more sensible approach would be to pass a new law that would essentially be the same thing we’ve got, the Sherman Act, but it would say Congress would like to re-pass the Sherman Act, and we really mean it this time, and here’s all the things that we would like you, the courts, to be doing to enforce the antitrust laws.

Kate: These remedies that you’ve proposed, do you think there’s any chance that they may be implemented any time soon?

Fiona Scott Morton: I have no idea about that. I think the role of this report and having a bunch of academics get together and think about these problems and put forward solutions is really to try to be rigorous and careful and thoughtful about those solutions and to start the conversation about what we might do and where we might go. I’m not the elected official. Politics is messy. It’s sausage-making, and legislation is sausage-making, and I am not going to be very good at that, so really, what we are attempting to do here is not engage with that problem at all but just to say, “Look, here are some good ideas. Here’s some analysis that’s clear. Here’s some evidence that we have. Here’s a lot of literature on this topic. Here’s some proposals that actually make sense in light of the problems that we’ve brought forward, and go out and do the best you can with them.”

Luigi: Thank you, Fiona, for all the effort you put into the report and for sharing it with us.

Kate: Thank you, Fiona.

Fiona Scott Morton: You’re welcome.