WHEN: Today, Tuesday, August 6, 2024
WHERE: CNBC’s “Squawk on the Street”
Following is the unofficial transcript of a CNBC interview with U.S. Department of Justice Antitrust Division Assistant Attorney General Jonathan Kanter on CNBC’s “Squawk on the Street” (M-F, 9AM-11AM ET) today, Tuesday, August 6. Following are links to video on CNBC.com: https://www.cnbc.com/video/2024/08/06/dojs-kanter-on-google-antitrust-ruling-were-interested-in-ensuring-the-competitive-market-works.html.
All references must be sourced to CNBC.
JIM CRAMER: Jonathan Kanter, Assistant Attorney General for the Justice Department’s Antitrust Division joins us first on CNBC. And first, Mr. Kanter, congratulations on what I think is a very, very big win.
JONATHAN KANTER: Thank you, Jim. It’s great to be with you again.
CRAMER: Well, let me ask you, when a judge rules that someone is a monopolist which means exclusive agreements have reduced incentive and innovation. What could possibly be the remedy because how do you break the exclusive agreement? How do you get incentives and innovation started again?
KANTER: Sure. This is a familiar problem. So this — these kinds of exclusive agreements were at the center of the USB Microsoft case and the court observed there as I would observe here that there are remedies for all things but death. And at the end of the day, what’s most important is that we meet the market where it is. We reflect market realities as they exist today. And we look ahead with the next inflection points coming down the pipe are in terms of competition and protect them from anti-competitive conduct.
CRAMER: Well, Mr. Kanter while Google won, it would seem that there’s an unintended consequence here. Apple which is who’s involved in getting the payments, they lose the payments. It’s most likely as the judge says over and over again that Google’s predominance won’t change because it has a superior product. So isn’t the loser Apple not Google?
KANTER: Well, the losers were competition during the conduct, the anti-competitive scheme that Google perpetrated. But the loser — the decision is Google, right? Google is a monopolist that illegally obtained its monopoly power. Now we need a remedy to make sure that we sufficiently address the anti-competitive conduct and provide opportunities for new innovators to reach market. There’ll be a process, an orderly process the court will put in place. I want to respect that process that’s going to happen. The court has ordered a conference in September and we’ll talk about remedies. But like I said before in a market that involves technology and dynamic products, it’s important that remedies actually meet the moment in all of our cases and that they meet the market where it is right now.
CRAMER: Well, Assistant Attorney General Kanter, you just said it, you said that you have to take care of watching what the changes are, the dynamic. I have here in my hand a July 25th search GPT prototype that Microsoft using copilot and search GPT wants to put together and will do a search engine. Now I’ll pay — there’s 200 pages devoted to the fact that there’s no competitor to search. So therefore you have to do this. Could you not be overridden by the events of July 25, 2024 search GPT prototype?
KANTER: These are factual questions, the court addressed the number of these questions in its lengthy opinion that was extremely rigorous detail-oriented relied on expert testimony as well as documents and data. The fact of the matter is competition often matters most when they’re new inflection points that emerge in the market and monopolies have the greatest incentive during those inflection points to stifle competition before it has the opportunity to take hold. So at right now is perhaps the most critical inflection point we’ve seen in the search market in 15 years and making sure that it has the opportunity, that competitors have the opportunity to compete on the merits, benefit of their own innovations and — and win or lose based on the merits of their products is the most important thing right now.
DAVID FABER: Mr. Kanter, just a couple of questions on process so investors can get an understanding. What happens, you know, you mentioned you’re going to be in September, you’re going to be, what, talking about remedies with the judge, Google I would assume has an opportunity to be a part of that as well. Can you just give our viewers a sense as to what happens from here both that, the remedies and then what’s going to be an obvious appeal and how that all plays out, and whether remedies take place in the interim or wait for the appeal to actually take place as well?
KANTER: Yeah, so that’ll have to play out in the court process and I want to respect that. So I can’t really comment other than to say that the court will order a path forward. In the past, there are cases where courts have effectively conducted a remedies trial. There are other cases where different outcomes and different processes were put in place. That will be up to the court. We look forward to being there. And we look forward to making the arguments we need to make in order to protect competition.
FABER: Well, you — are you going to — you won’t share in any way what you would like to see in terms of a remedy or are you willing to do that?
KANTER: I think it’s premature for us to talk about that right now. We look forward to engaging with the court throughout that process. But for today, we’re really thrilled with the outcome. I’m really proud of our team, which fought day in and day out against a formidable adversary to bring the facts forward and we have a decisive victory in hand.
CRAMER: Mr. Assistant Attorney General, what is wrong with Google paying Apple?
KANTER: So we covered this in our case when it’s one thing to companies to engage in legitimate commercial interactions. It’s another thing to pay somebody in exchange for exclusivity. It’s another thing to change — to pay somebody with a requirement that they don’t work with a rival. Those are the kinds of issues that when you have massive amounts of monopoly power can violate the law. The law is pretty clear here and we brought those facts, we — we explained why it was a problem. We explained why it harmed competition. And ultimately we succeeded in convincing a court. We have a very lengthy detailed opinion that explains all of this.
CRAMER: No, I read the opinion, I’m just concerned about the possibility that a company with the superior product paying Apple to someone — someone, this is valuable real estate. You can’t just ask Apple to give the real estate to whoever wants it.
KANTER: Right. Again, the — the case focus is not on the fact that there were payments that companies are engaging in commercial contracts, the case focuses on the conditions that accompany those payments. And I think that’s a really important aspect of the opinion. And again, these kinds of exclusive arrangements are not new to antitrust law. They’ve been discussed for generations. And so, the concepts that we brought forward here are well within the mainstream of antitrust enforcement.
CRAMER: OK, I’m watching a piece that the “New York Times” wrote not that long ago about regulators close in, NVIDIA scrambles for a response. And I read this, and I say to myself, is it possible, not unlike when Bobby Kennedy was this was the Attorney General that there was a get half a squad there. I wonder honestly whether there is a get big tech squad within the Justice Department?
KANTER: I can assure you that no such thing exists. We follow the facts in the law. We’re about rule of law. But I — but I think it’s important to kind of dispel this notion. We want companies to compete. We want companies to succeed. We don’t bring very many antitrust actions every year. It’s a small handful. And we only do so when the facts in the law support it. I spent — about two weeks ago, I was out in the Bay Area and I spent time with VCs founders from across the technology industry. And what I heard was that they overwhelmingly support our tech cases. Why? Because they want to build and invest in businesses that have the opportunity to succeed and become durable and thrive on the on the competitive stage. That’s exactly what we want to promote and that’s exactly why antitrust enforcement exists in the first place. We’re not interested in necessarily regulating companies. We are interested in making sure that the competitive market works so that the market can pick winners and losers, not the government or anyone else or a monopolist for that matter.
CRAMER: Well, the government picked intel as a winner, in a different branch and commerce. That’s not working out very well. I mean, maybe the government shouldn’t be picking anybody.
KANTER: I’m talking about our antitrust laws and I’m talking about marketplaces —
CRAMER: I understood. I understand. Now, in terms of going back to NVIDIA — NVIDIA has a very large market share, done — grown over 20 years of a superior product. Can you just say, you know what, with that level market share, we have to look into it because that’s not right?
KANTER: So market share alone does not necessitate or require us to look into a company or do an antitrust investigation. What we care about is whether a company that has a degree of market power is using that market power to squash out rivals. So one of the common themes in a lot of our cases is not the monopolist making changes to its own product. It’s the monopolist telling others what they can and can’t do in the market. The monopolist essentially functioning as a regulator for how other companies behave. That’s the kind of stuff we care about. And a lot of our investigations and a lot of our cases whether it’s technology or concert tickets deal with monopolist imposing requirements and restrictions on how others conduct business.
FABER: Mr. Kanter, the case you won yesterday was actually begun under the Trump administration. But you have a number of other important cases, the ad tech one against Google, the FTC as well, that are ongoing. I wonder, if there is a change in administration, what are your expectations in terms of the fate of those ongoing cases?
KANTER: I’m focused on today. I’m a sitting government official. I can’t talk about elections or prognosticate about outcomes. What I can say is that there’s broad support for the work we do. And that broad support is because we are delivering results not just for consumers and for workers but for other businesses. We hear all the time whether it’s in health care and health — small health care providers who are concerned about the role of big insurance companies or in agriculture farmers, small business owners. We’re concerned about the role of meat packers or seed producers whether it’s in airlines and smaller airlines or consumers are worried about the skyrocketing cost of aviation. Media companies are worried about the ability to have return on investment from advertising or subscription services. Across industry we’re hearing that businesses care about antitrust enforcement because they want to compete on the merits.
CRAMER: OK, Mr. Assistant Attorney General, does it play any role in the Justice Department that these are our finest companies, the companies that have competed on a world stage? The companies that can rival China if not beat China or is that never considered, is the — is the worldwide need for strength with our companies ever considered as a factor with the Justice Department?
KANTER: Let’s be very clear here. Our system in the United States is based on free and open markets. Open markets require opportunities to compete. Our great companies become great because they have to compete, because they have to win business from consumers day in and day out. We want those competitive forces, those juices to make our companies better and that’s the basis of our system. That’s why it’s so amazing. But if we have a small number of national champions that are the only representatives of the United States on the world stage then that is antithetical to our free open market system. We want the new innovators whether they’re in California, Iowa, Ohio, Pennsylvania or New York bringing new or anywhere else in between, bringing new products and services to market day in and day out.
CRAMER: Once again, Mr. Assistant Attorney General Kanter, congratulations on a very big win for you in the Justice Department. Thank you for coming on “Squawk on the Street.”
KANTER: Thank you for having me. Great to be with you.
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