Meta Shakes Off the FTC, and AAG Jonathan Kanter takes on Google

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Kara Swisher: Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher. Daddy's a little hungover. Did you stay?

Scott Galloway: I left my... We were in Florida together, weren't we? We were in Florida together. We were. I left. I just left and came back to freezing cold weather. And you just hung out in the Miami area.

Kara Swisher: I hung out with, hola, Zacapo, me llamo dog. You love that Florida. Daddy went deep in the paint last night.

Scott Galloway: Oh, Florida. I'm not a fan, I got to say.

Kara Swisher: It's the best. Are you kidding? The weather was beautiful.

Scott Galloway: There's Florida, and then there's the largest city in Latin America, Miami. You got to discern between the two.

Kara Swisher: All right, whatever. Miami's incredible. Miami's awesome. I love Miami. That is true. It's really fun. I just have to say that. You've been to my place. You've been to my home. It's nice down here.

Scott Galloway: It is nice. It's nice, yes.

Kara Swisher: It's also very nice in California where they have better rules, again, for people like me. And one-third of welfare recipients.

Scott Galloway: Let me ask you this as a California resident.

Kara Swisher: Okay, great.

Scott Galloway: That's because you all throw them out. They're cruel. It's a cruel state. Everyone's on their own. And as someone who was thinking at one point of running for mayor of San Francisco, how did we take the most beautiful collision of sea, sky, and land, the most innovative culture in the world, the greatest concentration of wealth in the world, and fuck it up this bad?

Kara Swisher: It's not this bad.

Scott Galloway: Oh, it's pretty bad.

Kara Swisher: No, no. Have you been to LA recently?

Scott Galloway: Yes. LA has got a real problem.

Kara Swisher: Oh my gosh. I would have to agree. That mayor has a lot of... That said, it's a little more complex than that. But, you know, people in Florida would like to make it simple. They have all kinds of issues in Florida. And more crime, by the way. It's just ridiculous. The fighting between these two states is ridiculous. Although, I find Florida to be a less kind, more humid California, essentially.

Scott Galloway: Less kind, more humid. That's actually our Chamber of Commerce ad campaign. Less kind, more human. You know what I'm doing today? You know what I'm doing today after we leave? I'm getting my picture took by Vanity Fair.

Kara Swisher: Something tells me it's going to be a puff piece.

Scott Galloway: When they interviewed me, let me summarize the interview I did for you. Is she awesome or really awesome? I mean, I was like, oh, God. And you said no. I'm literally like, hold on, I need to go throw. I just threw up in my mouth. And then probably proceeded to reveal all kinds of information. She has information about my compensation. I feel like that was you and stuff like that. But that's okay. I don't care. I'm an open book now, Scott. I'm so old. I could care less.

Kara Swisher: That's the thing. We're going to be dead soon.

Scott Galloway: That's right. We could care less. You have adopted a similar life strategy that I have. I'm like, when you're embarrassed or you fuck up, it's like, you and they are going to be dead soon. It really doesn't matter. I don't care. I don't care. I spent the morning, they're doing some paving of sidewalks in my area, and they don't have a speed bump in my neighborhood. And all these kids are on the street, and these people come whipping around the curb. So what I spent my morning this morning doing is standing in front of cars saying, slow the fuck down. So that's how I prepared for my Vanity Fair photo shoot.

Kara Swisher: When I grew up, speed bumps were unsupervised children of single mothers.

Scott Galloway: I just made that up. That was pretty good.

Kara Swisher: Oh, my God. That was pretty good. What was that?

Scott Galloway: I think that was the kid. I think that was the kid whose mother's a secretary. Before we move on to the actual things, we've got a big packed show, including a big interview with Assistant Attorney General Jonathan Cantor, who's an antitrust total gangster. What is your advice for a photo shoot? Because I like soft pants and sweatshirts.

Kara Swisher: Don't show up. That would be my advice.

Scott Galloway: I know, but you take a lot of them. And, you know, Joe Kahn did the mistake of lying on the floor doing the sexy shot. Don't let them do stunts, right?

Kara Swisher: I've had more photo shoots than last year. You know what I do? If they tell you to do something and it doesn't feel comfortable, I'm just like, no. Put your hand on your head. And I like no. I would never do that. Just wear what you like to wear. Yeah, soft pants and sweatshirts that say "Lesbians Who Tech" on them. And just take their direction because they're great at what they do. But absolutely, when they ask you to pose in a thing that looks unnatural, you just don't do it. Just like, no. Anyways, that's my big advice. And flirt with the assistant. I just think that's good workplace practice.

Scott Galloway: I'm a good flirter.

Kara Swisher: I'm just a bad flirter. I didn't even know Amanda liked me on our first date. She had to tell me explicitly, yeah, because I'm not a flirter.

Scott Galloway: That wasn't that she didn't like you. That was just good judgment. Anyway, okay, I'm not going to do what they said. Can I wear soft pants, do you think, for Vanity Fair? What does soft pants even mean? Yeah, I hate all those photo shoots where they have all these props and shit. You should wear... I literally could dress you. You should wear your white jeans. You should wear a nice shirt and like a cool jacket. Basically, you should look like a 17-year-old boy whose mother dresses her.

Kara Swisher: Yes, fantastic. All right, excellent. Thank you so much for the... So no heels.

Scott Galloway: I want you to look like the ad from the JCPenney's Junior Brooklyn Boys section.

Kara Swisher: Hefty. Hefty, what do they call them? Husky. Uno, mas, a capa, por favor. All right. Today, the Fed eases up on the breaks. Is it reading the right signs? Also, Meta gives the market what it wants, money. It did very well when you did a very good prediction. As I said, a friend of Pivot today is Assistant Attorney General Jonathan Cantor, who I've known for quite a while, and I'm very excited to talk to him. But first, let's talk TikTok. The CEO will testify before Congress. Shou Chu will appear before the House Energy and Commerce Committee on March 23rd. Next month, the House Foreign Affairs Committee will vote on a bill that could ban TikTok in the U.S. It's never going anywhere. And Senator Michael Bennett of Colorado, someone you know very well, both of us do, has called for Apple and Google to remove TikTok app from their stores. It's all over. Michael Bennett doesn't do things like this. So what can the CEO do? This is not good. This is mounting pressure. And, you know, Facebook is thrilled. Between Elon and this, Facebook must be doing jigs all over the place. So what does he got to say? What do you think?

Scott Galloway: I think, quite frankly, I think he's just got to sit there and take it because this is just such a photo op for the senators. And not only that, when Senator Bennett is angry, it's like... I remember when I was a kid, there were mellow dads. The mellow dads occasionally... you know your friends and their dads are just really mellow, like barely hear anything that's going on. And they just kind of on the couch. "Hey kids." When mellow dad got angry, you just like, "Okay, shit got real. Run home." Senator Bennett is mellow dad. He does not... when he's upset or pursuing something, that means it's real. This guy does his homework.

Kara Swisher: Yeah, he doesn't need to be reelected. He just got reelected, right?

Scott Galloway: That's right. And then when you think about it, unfortunately, it's just going to be such a photo op for people on both sides because the Democrats will focus on its potential as a propaganda tool, and the Republicans just love to be anti-Chinese. So they're just going to go, they're going to ask questions that are impossible for him to answer. They're going to start with, "Can you guarantee us there are no members of the CCP who are engineers creating algorithms to determine what content 55% of Americans use?" And unless he wants to purge himself, he's going to have to say no, or he's going to come up with these ridiculous bullshit answers that Vanessa Pappas had when they asked, "Where's your headquarters?" She said, "Well, we're a multinational company with no real headquarters." He's actually quite good. I saw him at a DealBook, but he avoided all the questions. And when you get Josh Hawley or Senator Bennett asking him questions, he's not going to be able to avoid questions. They're going to go, "Sir, you didn't answer my question." He can say to Andrew Ross Sorkin, he can say bullshit answers like, "It's a key issue. We think about it a lot. We have a team devoted to figuring this out." That's not going to fly in front of these folks. It's going to be great theater.

Kara Swisher: Yeah, it should be interesting. I think the Congress has to be very careful in not looking like they're just pandering. They have to do it surgically. Some of these people are good at that. And if they do it just for show and do stupid stuff, I think that's a problem. And the question is whether they're going to actually do anything, if any of this stuff is going to pass. Banning TikTok in the U.S. seems very drastic to me. I don't... A lot of money, a lot of dough.

Scott Galloway: A hundred percent. And you and I agree that they'll probably figure something out or come to some sort of accommodation because there's just so much American money at stake here. It'll be fascinating to see. What's interesting is that universities are blocking it. Schools are deciding you cannot have it. There is a slow creeping ban of TikTok.

Kara Swisher: Most of those are around addiction and time spent. But yes, yeah. It's not the Chinese thing as much as it is the usage. We'll see. But it is a lot of money. So I always think money wins, but we'll see. Speaking of money, Elon Musk continues his search for more Twitter revenue. The company announced this week that it will begin charging developers for access to its API. That's the data stream that powers tons of third-party services and apps like Tweet Delete. Researchers also use API to track hate speech and misinformation. There's certainly value to API. It probably is a better way to make money than the blue check mess. The company may finally start to include payments. We've been talking about this. It's an area of expertise of Elon's. It's been applying for regulatory licenses and building relevant software. Again, somewhere he's super comfortable. He also wants a system to allow for crypto payments. So that's not really something that everyone's clamoring for right now. So is that going to help? I mean, payments, sure, if you trust him, and certainly not advertising. I went on yesterday. My night's usage has dropped from eight or nine hours a week to 44 minutes a week. It's crazy.

Scott Galloway: And what are you doing with that time? Other than Vanity Fair photo shoots?

Kara Swisher: Yes. I have another photo shoot on Monday in New York.

Scott Galloway: Of course you do. I'm staying at your place.

Kara Swisher: Of course you do. I'm doing a fashion photo shoot. They decided I was fashionable. Argent. I'm sorry. What fashion magazine in hell?

Scott Galloway: It's called, you'll see. It'll be good. It'll be good. I offered your apartment as a photo shot for taking pictures. Anyway, I'm not going into that. We'll talk about that later. Where do you spend your time? You're saving eight and a quarter hours. Where are you spending it?

Kara Swisher: I was on Post, texting you, texting a lot. 11 hours, texting a week. It's crazy.

Scott Galloway: You're reconnecting with people?

Kara Swisher: Yeah, I guess so. In real time.

Scott Galloway: So you just tweet to people via text?

Kara Swisher: Yes, I guess so. You're like, "George Santos is an idiot." You just start texting it to people. I do, I do. That's funny, my own little Twitter. But I went back on, I literally got an ad for crappy ads everywhere, all over the place. And then the For You was stuff I do not want. And I keep saying, "I do not want." It wasn't even George Santos. It was like, I don't know. And I got off and I just got off. And of course he's somehow managed to push my stuff down. Everyone's tweeting at me like, "I can't see you anymore." Like I said, I'm mostly not here, but I also think he's been pushing me down. I don't know. I don't care. I'm only here 40 minutes, down to 20 minutes, 10 minutes a week, except just to market our stuff. That's what I use it for. So how can he make money, Scott?

Scott Galloway: Well, just to go back. So I went off Twitter for a month. I decided I'm just going to take a break and I want to pour some of that energy into Post. And I found it's beneficial to your mental health. You hate to admit that this shit impacts you, but it does. There's just no getting around it. And I went back on and immediately on almost any tweet, it's not even the tweet, it's the comments. You get comments like...

Kara Swisher: I block comments now, all of them.

Scott Galloway: Yeah, I'm going to... I think I'm probably going to block my comments because you get just constant tweets of... I put out a thing about population decline, which has started a shit storm. And people say, "Scott, you should really do, as an academic, you have an obligation to pursue the truth and your data is flawed." And I'm like, that's a pretty serious accusation. And I'll click on it and it'll be someone with three followers and a picture of a dog. So it's clearly a fake account. And then you go into your head and you're like, who has decided to anonymously try and undermine my professional credibility? And you think, is it people who work for companies who are investors whose investments I've criticized? Is it the GRU? Because I've been critical of Putin. And you go to these very weird conspiracy places, and it's just not good for your mental health. And then people just say stupid, angry things. And then they say stupid, angry things that other people in the comments feed. And I realize this is an ad brought to you by a Post investor, but people are just more civil. They disagree. They're like, "I disagree. And this is why. What do you think?" They want to have a conversation. And I don't mind that. Wherever you go elsewhere tends to be nicer.

Kara Swisher: So you go... now you're doing it regularly, you're back?

Scott Galloway: I'm not. I'm on 10 minutes a week. It's going to go to 10 minutes to just post our stuff. I'm taking your advice. I use it to market my content. So if I put out a No Mercy, No Malice podcast, when I drop a Prop G pod or when we drop Pivot, take a clip and post it on Twitter. But I don't use it to engage or to put stuff out. After a day, you're like, what am I doing? I'm spending 15, 20 minutes at night that I could be spending watching Netflix or hanging out with my kids or something because I think I've got something funny or interesting to say. And I just, why the fuck do we need this?

Kara Swisher: I've stopped myself a lot. Yeah, I do. I'm actually enjoying Post quite a bit. It's very pleasant. It's a really pleasant... I've never been a big social media person, Instagrammer. So it's really nice to just have a nice, interesting place. We'll see how it develops too. So payments. Go ahead. Payments.

Scott Galloway: Payments. Just makes all the sense in the world. There's a lot of people, a lot of higher income people, not younger people, but higher income people who are so comfortable with Twitter that if they can figure out a facile way to compete with Revolut or PayPal and just a quick, easy payment system that brings speed, utility, and also for remittance in terms of avoiding some of those fees. And he's technically one of the early founders of PayPal. So he has skill there. And if he plans to ever take this public again, he needs a story outside of advertising revenue. And also, just to be blunt, he's just not going to recapture the 80% or 70% in advertising revenue that he's lost. He's not. The ads are so fucked up on that site now.

Kara Swisher: Would you trust him? When we were talking yesterday, I was like, I'm not giving him any of my financial information. I'd rather give it to Apple. There's consumer dissonance around this, around privacy and trust.

Scott Galloway: I think with payments... I'll give you an example. I think I have been shadow banned. All of a sudden, my engagements and likes have gone way down. I think that most likely Elon winks at someone and gives them a list of people that aren't fans and don't support his lies and bullshit, and they just slowly but surely get less engagement. That's a conspiracy theory. You can't... but it's very difficult to prove. Whereas with payments, if your money disappears or a payment doesn't get there, there is a digital breadcrumb trail. So I don't think you need to trust them.

Kara Swisher: I just don't want to. I'd rather use other people. I'd rather use other people. I'm not going to use this service. I'm down with that. I hear you there. It's always been shitty in terms of privacy, Twitter, and I don't think it's any better now. It's worse. I wouldn't have trusted it in the previous administration, by the way. But API, charging for it? Sure, why not?

Scott Galloway: Well, say more.

Kara Swisher: I just... I've written about this for years and years and I don't even understand it most of the time when I'm writing about it. But they've given access to this API for various reasons over the years. And people use it. They wanted to develop these third-party services. That's what they wanted. Now he obviously doesn't want to. So if people want to use it, pay me. He'll probably want us to pay for marketing our stuff on there. That's a good argument. And I'm not going to do it ultimately, but he can make that argument. That's a decent argument. I think the researchers should get it for free, for example. There's value to it. That's all I got.

Scott Galloway: The long ball edge case or moonshot here that could end up making Twitter... The only thing I could think of, people will say, is there any way he gets this thing back to $45 billion? Is there any way this isn't a loss for him and his equity investors? And the only thing I can think of to try and recover that massive value, and this is a long shot, is that if the API and that data set ended up being a really valuable unstructured data set to feed into some sort of artificial intelligence prediction engine. The data set and the activities and the content that Twitter captures, and it is substantial, if it gets fed into the right artificial intelligence machine, which is essentially a prediction machine, I think there might be a lot of applications for artificial intelligence. Because over time, I think a lot of the big winners in artificial intelligence... it's garbage in, garbage out. So what they need is great data sets.

Scott Galloway: I was really moved. I heard a story, a friend of mine named James Roven, he's this incredibly agile entrepreneur and he lives in Bangkok now, and he has this sort of AI little app, AI for copywriters that he's been using that helps them edit their texts. And his brother was in Ukraine and had a small business. His kid brothers are really entrepreneurial. And he hired a bunch of engineers. There's a lot of tech talent in Ukraine. And he had about 12 or 14 people. And all they would do is pull together data sets to feed into AI applications. So this has been going on for a while because these AI machines need data sets to start learning. And this is not the story. The thing that was so moving about it is that when Putin invaded... these are like 12 or 14 engineers in their 20s, overweight, eating Doritos and drinking Diet Coke. And the day that Putin came across the border, they didn't show up to work the next day. They joined the Ukrainian army. He said they've all left, they've all joined the army. And two are missing, two are MIA. And I thought, Jesus, can you imagine something happening? It's just so unfathomable for us to realize what often happens in the real world. Can you imagine a small VC-backed tech startup with a bunch of dopey guys and engineers, the next day whoever invades us, and the next day they leave the company and join the army? It was like a snapshot into what's going on. Anyways, I'm sorry, back to Twitter and payments. Anyway, I don't want to talk about him anymore. He's going to... whatever. Good luck, Elon, because one of the things he's blaming is the economy, which actually there's a soft landing going on.

Kara Swisher: All right. Let's get to our first big story. The Fed raised interest rates again this week by just a quarter of a percentage point. Inflation has eased somewhat, but remains elevated. There's still signs of easing and yet signs of spending. Data shows customers are spending less. A few people moved last year, moved to more affordable areas. The labor market's still tight. Credit card debt is up. Gas prices look like they may be up. McDonald's profits are up, meaning people are eating cheaper food. You have talked about this, this sort of softer landing and that inflation would go down as fast as it came up.

Scott Galloway: I think there's... I'm sure there's a scientific term for it or a psychological term for it, but I'm convinced if you worry about something long enough, it doesn't happen. It's the shit you're not expecting. How many of us were worried about a pandemic killing a million Americans?

Kara Swisher: Yes, that's true.

Scott Galloway: Yeah, that's true. It's the shit you're not thinking about that gets you. Remember all the hand-wringing over Greece's sovereign debt? That if Greece defaulted on their debt, all of Europe was going to fall economically? We spent six or 12 months talking about this shit. We have been talking about the coming recession for so long. I'm now of the mind, I don't think it's going to happen. What's interesting is polling is showing that many people think we're in a recession, even though they say their economic situation is good.

Kara Swisher: That's the thing, convincing them that it's not because it's been so relentless. Last night, I spoke at this thing called the Finding a Rose Club... they have this social and cultural club. It was very fancy. And I did one of my presentations. Here's the thing. We have a media that needs to keep you engaged. CNN and Fox put out alerts to your phone every 30 minutes. Now imagine they could only put out one news story for the last hundred years. It's the cadence of media that creates catastrophizing and everybody believing... like 80% of Americans think the economy's bad, right? It's like everybody thinks Congress is fucked up, but they like their congressperson. But it really is a function of the media. If you could only have one headline for the last hundred years, I think that headline would probably be "Western democracies repel tyranny." We have to go. The big story of the last 100 years is we pushed back Hitler. If we could only have one headline for the last 50 years, it would probably be "Historic, unprecedented prosperity led by America and China." If you could only have one headline. But the thing is, because we have headlines every 10 minutes, we have to capture people's attention. And guess what captures? But you know what is a shitty headline that no one clicks on? "Things marginally better today."

Scott Galloway: You're an optimist. You're just a cock-eyed optimist. Emphasis on cock. But the problem is I look at the data. Here's the U.S. economy right now. It's growing. Inflation is plummeting. We've got the Goldilocks economy right now. Jerome Powell, I think, has put on a masterclass around leadership and how to ignore all these real estate developers that want to have zero cost financing for any project that works, or wealthy people who want to maintain lower artificially low interest rates. Companies are incredibly agile in America. They're like, "OK, we have too many people. Sorry, we're laying you off," and they're back to massive profitability. It's certainly a contrast to Britain. The Bank of England raised rates by half a percentage point. Hundreds of thousands of British workers went on strike demanding better pay. Striking workers including civil servants, rail workers, plenty of teachers demanding a pay raise. Rishi Sunak has promised talks with the union. It's a contrast, let's just say.

Kara Swisher: Brexit. I mean, directly because of Brexit. So you feel good about the U.S. of A.

Scott Galloway: Well, the honest question is, distinct to the headlines, distinct to Fox and CNN trying to convince you how fucked up America is... Who comes close right now? What country on this green earth has nearly the economic growth, freedoms, democracies, ability to live the way you want to live, love who you want to love, letter of law?

Kara Swisher: And with that, Scott and I announce our presidency, our run for the Republican nomination.

Scott Galloway: I thought you were going to say we were engaged.

Kara Swisher: We're going to run for the Republican nomination before Nikki Haley can get in. Swisher Galloway, a chicken in every pot of Cialis in every medicine cabinet.

Scott Galloway: Yeah, something like that. Anyway, I think I would give you credit for talking about inflation and this earlier. So you get the credit, but you're going to get credit for something else in our next big story.

Kara Swisher: We're going to go on a quick break. I'm enjoying this podcast already, I know. And when we come back, some good news from Meta's investors, maybe not its employees. And we speak with, as I said, friend of Pivot, Jonathan Kanter, about how to fight big tech.

[Ad break]

Kara Swisher: Scott, we're back with our second big story, which you get credit for. Meta's stock is off to the races. This is a prediction you had. It's up nearly 26% as we record this, but the news might not be what it seems. We'll see. The company reported that its revenue fell by only 4% last quarter. The market expected much worse. It announced it will spend $40 billion on stock buybacks, but he declared 2023, quote, "the year of efficiency." I don't know what that means, which is a sign that more layoffs could be ahead, or also that he was cutting into the metaverse. A lot of the money, he said, is not going to the metaverse, it's going to their core services. A lot of the research and development money, which I think was key, like a billion, some enormous amount of money that was going to Meta, it seems not to be going to Meta. There may be more layoffs because of that. They already laid off 11,000 employees last year, but people like what they see when he's talking not metaverse. And maybe you can change the name back. What could he call it? Facebook, maybe.

Scott Galloway: You called this, you had it in your predictions deck. You just mentioned it in London. We talked about it yesterday.

Kara Swisher: So I think these losses at the Reality Labs, that's the VR division, $4.2 billion, up from $3.3 billion. Jesus. So where do you go? But they also have good news. The FTC lost a challenge against the company to stop it from acquiring a VR games company called Within. They have a game called, I think it's Supernatural. But the judge has already thrown the case out, according to the New York Times. We'll see where it's going. The decision is sealed. We'll see if the FTC appeals. I thought this was kind of a stretch for the FTC. Nonetheless, what do you think? Because other earnings were not as good. Shares of Snap fell 10% on a disappointing Q4 report. That's roughly three quarters in a row for Snap. PayPal announced layoffs of 2,000 employees. Electric vehicle maker Rivian will lay off 6%, which may be good news for later downstream, good news for all these companies. Anyway, Spotify had some stronger user growth and Netflix, of course, did much better than they thought. But we don't have hard numbers on that or people think they're going to do better. So talk about Facebook specifically and what's happening here.

Scott Galloway: Well, there was a lot of good things and there was one great thing in this earnings report. For the first time, they crossed a milestone. They now have two billion daily active users. There is no religion, there is no society, there's no construct that attracts two billion daily active users. I would argue it's still, for a while before TikTok takes over, the most successful product in the history of mankind. And then the word "Reels" grew 20%. And I got to admit, I don't like to admit it, I'm watching a lot of Reels. And here's the thing, you go to TikTok and then you're like, immediately register, "Oh, TikTok's better. The algorithm's better. There's a depth of content there that's better." But because I'm on Instagram, Reels is just very easy. It's sort of an argument for Jonathan Kanter, but Reels was up dramatically. But the word that sent the stock skyrocketing was their focus on, and I'm sure they thought about this word and had a lot of very high-priced consultants determine this was the right word to use, was "efficiency." Because what that's basically saying is, this might be the anesthesiologist bringing Mark back from his ayahuasca hallucination trip and saying, "Okay, you're losing over a billion dollars a month on this fever dream of yours." If they just closed the whole thing down, it immediately goes to the bottom line because they expense it all immediately. Just their savings on Reality Labs alone would make it one of the 20 most profitable companies in the world. They would save $12 or $15 billion. They would increase their profits by $12 or $15 billion a year. There's maybe a couple dozen companies in the world that do $12 or $15 billion in profits a year. Maybe there's 50. But still, the whole market went, "OK, he's starting to wake up. He's put the meth down. Maybe, who knows, right? He showed up at practice." He's Mbappé, the world's greatest player. And I'm not saying Mbappé has a substance abuse problem, but he showed up to practice and he's not drunk. We're going to win this game. The year of efficiency. It's so boring, isn't it? But you're right. They love it. They love the idea.

Kara Swisher: So it's not clear. I think it doesn't mean layoffs. I think it does mean, I think he's talking about cutting back. He loves to double down, this guy. But I think he's smart. He's also a very canny young man. He's still a younger man. He's a great business person.

Scott Galloway: Yeah, he really is. He's kind of Bill Gates-ian in that way.

Kara Swisher: He's also a bit of a sociopath and very immature. But other than that, he's a great business person. No, look, compared to so many we know now, he seems very lovely. Let's just say. I love that the best thing that's happened for him is so many shittier people have come on the scene. TikTok and Elon.

Scott Galloway: Like he's had a good year. Mark? He's been the ultimate heat shield for every other tech company. And then TikTok and Elon showed up.

Kara Swisher: Yeah, it's true. It'll be interesting what the year of efficiency means. But that word is such a dull word. The year of efficiency. It's so unsexy and so perfect for this. We'll see. So where do you, you did say the stock was going to go up. Very good call. What about the other companies? Any of the others?

Scott Galloway: You know, Snap really got kicked in the teeth, even though my kids use it all the time. Another prediction was that the subscale ad market, and I called out Snap, was going to have a terrible year. They can't. There's subscale in it. I love Snap. I think Evan Spiegel is just such an impressive young man. And I do think he has a much broader sense of the world than some of the, quite frankly, the men running these companies his age. But here's the thing. With TikTok and with Apple and Amazon and Netflix now showing up and trying to get advertisers to spend money on their platforms, he can't compete. He's subscale. He can't make the types of investments. And there's all the streaming, all the things are so... He's got to sell that company. It's a good product.

Kara Swisher: Good product. 100%. Good product. My kids love it. Yeah. They hate Instagram. They hate, you know, a lot of people depend on it. And speaking of a communication system, but time is not on his side there. Speaking of which, I mean, Instagram's been a real boon to Facebook. And by the way, Kevin Systrom started a new company. Maybe we'll talk to him at some point. I heard about that. He's starting a new service.

Scott Galloway: Yeah, it's a news delivery service. It's like a Twitter competitor, isn't it?

Kara Swisher: I have just started using it. It's more like a newsreader. Anyway, there's been a lot of these attempts. He's so clever. We'll see. And he seems to have gotten a lot of media partners. So we'll see. I think people are looking for a place to do newsreading, too. It's purely newsreading. It feels like it feels like so far, but I haven't used it enough to know. So I'm not going to comment on it. I don't have time. I don't. I do have time. I'm not using Twitter very much. Hello, Vanity Fair. In this way, please. Welcome. Welcome to Scott Galloway's apartment.

Scott Galloway: Kevin, Kevin, you sold that company for too little money. Kevin's a really wonderful entrepreneur, too. Mark Zuckerberg owes his debt of gratitude to Kevin. A wonderful entrepreneur who founded it with Mike Krieger. And it ended up being the best acquisition and the most underpaid.

Kara Swisher: I would agree. And I think Mark knew it at the time. He went on a walk with Kevin Systrom, as I heard about this, where he turned to Kevin right after the acquisition and said, "I really took you guys." Like that. "I really took advantage." Can you imagine getting a big... They paid $19 billion for WhatsApp. I mean, yeah, they got a great deal. That was probably as good... The close second to that is probably YouTube. You know, Twitter tried to buy Instagram, and then Kevin sold it to Facebook instead. Twitter would have messed it up, though.

Scott Galloway: It's a great story. Actually, it shall be in my book. It shall not be recounted in Vanity Fair, but it shall be in my own book about that. That was some time. I remember that very clearly. With Rivian, it just doesn't. It takes a lot of money to build a car company.

Kara Swisher: What was the Civil War like, Mommy? It was the Civil War, it was.

Scott Galloway: Poor Dick Costolo, they got run over. Him and Dorsey got run over by Mark Zuckerberg in that. Sorry, Dick, but that's what happened.

Kara Swisher: Electric vehicle maker Rivian thing, that was interesting. I was reading a lot of stories on, I'm super interested in the EV sector. I think it's just expensive to build. They got to build manufacturing. Elon took that pain a couple of years ago. The whole stack is expensive to build a car company. And if you don't have it in place, it's a great car. From what I understand, truck, I understand. But it's going to be hard. And they're going to struggle because it's costly to build plants and to get them going, et cetera, et cetera, and have that stack you need to start to really sell. There's certainly going to be demand out there for all these cars. I just got an update. You know, I bought a Rivian or I put a deposit down. I'm going to look so ridiculous in that thing. I'm just going to look so ridiculous. I'm so excited. We're going to do a cross-country drive. Do you know that? So it's either the Bolt or your Rivian. You always promise these dates.

Scott Galloway: That literally sounds like hell to me.

Kara Swisher: No, we're doing, I have a new idea. You and I, remember when Gail and Oprah went on a cross-country trip in a car and then they argued the whole time and they had a little camera in like the dash cam or whatever? We're doing that.

Scott Galloway: Okay.

Kara Swisher: We're driving around the country. We'll do it in the Rivian. I don't care. We can switch cars.

Scott Galloway: That's one of the ways I can tell I'm getting older. The idea of a cruise or a trip in a Winnebago doesn't sound as horrific as it used to.

Kara Swisher: Oh, Winnebago. You and I will visit people, wave.

Scott Galloway: Well, you know what we could have? Oscar Mayer had the wiener mobile.

Kara Swisher: I'm sorry. I'm sorry. A lesbian and a guy with erectile dysfunction are going to roam the country in a wiener? I think it's perfect. Let's see if we can find the wiener mobile.

Scott Galloway: You know, I made a penis joke earlier. You missed it. I called you a cockeyed optimist, emphasis on cock, and you missed the entire joke.

Kara Swisher: I didn't. Yeah, I didn't get that.

Scott Galloway: You didn't, yeah. See above, hungover.

Kara Swisher: Yeah. OK. Thank you. All right. Anytime.

Scott Galloway: I'm moving into penis jokes. I'm trying to muscle.

Kara Swisher: I appreciate that. Sidle into your penis joke area. Anyway, let's bring in our friend of Pivot. Jonathan Kanter is an assistant attorney general at the U.S. Department of Justice. He oversees the department's antitrust division, including its new lawsuit against Google that claims the tech giant illegally monopolizes the online advertising industry. Welcome, Jonathan Kanter.

Jonathan Kanter: Thank you for having me. It's great to be here.

Kara Swisher: Thank you. Finally. I'd be remiss. I've known Jonathan for a long time. He's been a lawyer and various things, and he worked in the tech industry a lot. So we've talked many times over the years, but now you're in a very new and important position, which took a while to get there, correct? Explain where you came from so people can understand.

Jonathan Kanter: Sure. So I started my career actually at the government, working for the Federal Trade Commission. Then eventually I went into private practice, where I worked on both sides of the "V," as they like to say, meaning I represented both defendants and plaintiffs. And then over time, I built a somewhat unique practice for Washington, D.C., which is representing companies who are advocating in favor of antitrust enforcement. And through that process, I became very familiar with the arguments and the ideologies that surround the importance of antitrust enforcement. It's an area of deep passion for me.

Kara Swisher: So why is that? Explain. This is something that has not been, I guess, renovated or fixed in 100 years. Is that about right? Hasn't been shifted in our country.

Jonathan Kanter: Yeah, well, it has. So about 40 years ago, it took a shift in a very different turn.

Kara Swisher: It was Bork, correct?

Jonathan Kanter: Exactly. And so sometimes people call that Chicago School economics or the Bork revolution, which put forward a frame that antitrust should be viewed through a very narrow lens. And we should only enforce the antitrust laws when there is a very high degree of certainty regarding anti-competitive effects. That high degree of certainty is even higher than what the law requires because of a concern around things like error costs and chilling innovation. And as a result, antitrust took a turn to be very narrow. And enforcement was dialed down, particularly in the area of monopolization, where we stopped seeing the kind of old trust buster type cases that people associate with the antitrust laws back from the old Teddy Roosevelt and Robert Jackson, Thurman Arnold days.

Kara Swisher: But there was Microsoft.

Jonathan Kanter: There was Microsoft.

Kara Swisher: For people who want to get, I'm getting to Google in a second, but there was Microsoft, which was mixed, correct? Am I correct? Like when you look back at it?

Jonathan Kanter: No, it was a success for the Department of Justice. They not only won a monopolization case, they won it in a dynamic tech industry and set forth a really important precedent. The problem was that that precedent wasn't applied very often because there weren't many cases after U.S. v. Microsoft. The last major case that the United States government at the Department of Justice filed on monopolization grounds after Microsoft was when the Department of Justice filed against Google.

Kara Swisher: Against Google, which was during the Trump administration, correct?

Jonathan Kanter: Correct. Correct. Relating to search.

Kara Swisher: So relating to search. And yours is related. So tell us where the government is right now, but tell us, lay out the case.

Jonathan Kanter: Sure. And obviously we have two matters in active litigation against Google. And so there are significant limits in terms of what I can say regarding cases in active litigation. But let me just give you the lay of the land briefly. We have two cases. One relates to search and search advertising. That case is here in Washington, D.C., and it's scheduled for trial in September. That's the case that was initiated in around 2019, 2020, sorry. That case is pending and we are preparing to litigate that case.

Kara Swisher: And your argument is?

Jonathan Kanter: They're too big. They monopolize the search industry. And they monopolize the search industry, among other things, through a series of agreements that locked up default search positions on things like Apple and browsers and elsewhere. And then there's a second case, which we recently filed and that the Attorney General had the pleasure and privilege of joining him at the podium to talk about this case about a week ago, that relates to ad technology. And this is the kind of the pipes and plumbing that are used to sell, distribute, and present ads online. So these are the services that websites, news organizations, and others use to buy and sell ads.

Kara Swisher: So they're on both sides of the equation in that regard.

Jonathan Kanter: In that case, yeah. We talked about this during our press conference and in our complaint, but online ads are sold more like commodities or stocks than they are like Mad Men-style ads. And the allegations in our complaint is that Google has the dominant position as the exchange. They represent the buyers. They represent the sellers. And then they buy and sell on their own exchange. And that they engaged in a wide range of conduct including exclusive deals, tying, and manipulation of auctions in order to monopolize that market and build a moat around that business.

Scott Galloway: First off, nice to meet you, Jonathan. Thanks for your good work. Can you give us more insight into what it is exactly that Google is doing to kind of lock up the online advertising market and how it impacts advertisers and consumers?

Jonathan Kanter: Sure. So as the Attorney General explained during our press conference, the conduct cuts across a broad range of categories. So the first is they own an ad server and they tie that ad server to their ad exchange, for example. Others are exclusive deals, so saying that if you want to get access to the Google advertising demand, you have to use their advertising technologies and tools. Others relate to auction manipulation and creating auctions so that it either punishes folks who use competing technologies or disadvantages rivals.

Scott Galloway: And how does that, does that just raise, I've always said that Google is not a service. If everybody has to pay an organization and there's, it's impossible to establish differentiation, it's not a service, it's a tax. And I would argue that Google has become a tax because everybody has to use it. What specifically, if I'm an advertiser, why do I ultimately, and as a small business person, I feel this, you ultimately all pass lead to paying Google at some point. What is it? And Facebook, correct? Well, I mean, between Google, Facebook, and Amazon, 40% of all VC flows through one of those three toll booths. But specifically at Google, my sense is they've been especially adept in making it nearly impossible to have an online business without paying the piper at some point. Aren't they on both sides of the market, both buying, selling, and making the market?

Jonathan Kanter: Exactly. And so in our press conference, we talked about a document, an internal Google document that analogized this ad tech market, we call it, to as if Goldman or Citibank owned the New York Stock Exchange. This is an internal Google document that made that analogy. And that's exactly the kind of concerns we have. But Scott, to your question, the impact here is substantial. We're talking about going back 200 years, newspapers, news industries fund the creation of content reporting through advertising and advertising revenue. And when that advertising revenue starts to decline or the content gets commoditized, it becomes really difficult to sustain the kind of high-quality journalism that is foundational to our democracy and our political discourse. And so in our complaint, we talked again about this during our press conference, Google talks internally in its documents about how it takes at least 30 cents of every ad dollar, and in some instances, much more.

Scott Galloway: So when they're doing that, focusing on the larger ad business, because that's where Google's going to go, is that they're only a small part of the ad business. How do you push back on that with them, even though they are the game in ad tech, for example?

Jonathan Kanter: Yeah, so I'll step away from the specific case. Antitrust law focuses on marketplaces. And so who's buying the products that are at issue in an antitrust case? And so one of the things we look at are relevant markets. And so, in our complaint in the ad tech case, we talk about publishers, online content creators who need tools and technologies to sell ads. And so who are the set of competitors that are available to sell those ads and to serve those ads and to target those ads?

Scott Galloway: Google, correct?

Jonathan Kanter: Okay. You're being silent. I'll leave it to you.

Kara Swisher: Okay. So when you think about how you divest this, because some of these things do tend towards big companies, right? That's what the argument from Silicon Valley is. They need to be this big in order to be able to serve things. And these things tend to go to networks like this, where there are big networks that allow them to do this. How do you get more competitive? Is it divestitures? It changes the way ad tech is sold? Because you think about a lot of different industries like this. Like, how do you create, especially in tech, how do you create a situation where there is competition now at this point?

Jonathan Kanter: Yeah. So I'll talk about it more broadly outside the context of any specific case, because I think these are principles that can apply broadly. First and foremost, we have to get better at earlier intervention. And so markets that have huge network effects, scale effects, feedback effects, whichever phrase of choice you like to use, are highly prone to tipping. And they can evolve in ways that are competitive or they can evolve in ways that are not. And so if we see violations of law and the facts in the law case, it's important that we act appropriately to enforce the antitrust laws. And part of that is understanding the market realities that are present in tech. And so one of the things that I've talked about publicly is how a lot of our antitrust laws grew up with poles and wires rather than ones and zeros. And we need to understand that ones and zeros lead to big moats. And building, for example, digging the moat in front of the castle is not a separate act from digging a moat in the back of a castle. And these are dynamics and marketplaces that we need to appreciate better.

Kara Swisher: But they wouldn't act then. You know that. I mean, I went back. I'm working on one of my memoirs, and I'm finding stories of me when Google tried to buy Yahoo, or at least take over their ad business. And nobody moving. And I wrote a series of stories saying, "They're thugs. You need to get them out of this now before it's too late." And this was the Obama administration, as I recall. And then it continued. It continued and continued. There was no action then because they didn't want to squelch innovation. So how do you get that to happen? So we can't go back and do the time machine and say, "Oh, President Obama, maybe you should have not been so cozy with the tech companies."

Jonathan Kanter: Yeah, I think we can have an honest conversation about what we see in front of us. And I think that starts with a real understanding of where the opportunities are for tech, but where the problems might arise as well. And understanding those market realities.

Kara Swisher: But there's a persistent political tendency not to do that. It continues to this day, whether it's anything, even today, things that need to be AI or things like that. So in this case, what has to happen, because you cannot go back in time, you can unwind, I assume, or you force sales, correct?

Jonathan Kanter: Yeah. Remedies, and this was the principle in the case against Microsoft, because it wasn't just the violation of the law that was litigated, but it was also the remedy that was litigated. And in that instance, the court said, when you have a technology market, it's important that remedies are forward-looking and that they not just consider erasing the conduct that occurred in the past, although that is an important part of the equation. It's also really important to think about how do you restore competition in the future. And in network industries, that might mean things like interoperability, understanding those market realities. It might mean things like a whole-of-government approach, which is something that, through the president's executive order, we've undertaken and has changed the conversation in Washington and has allowed us to think more holistically about how we approach these competition problems. I do think your point is well taken, Kara, but I also think that the conversation has shifted. And I think, yes, I think it is shifting and we're experiencing that now. And I think there's a greater appreciation, perhaps more so than any other moment in my lifetime, as to why we need competition in all markets, including digital markets. And so this is not a conversation that's just happening here in the United States.

Kara Swisher: Well, the EU Digital Market Act wants to force interoperability in chat apps, for example.

Jonathan Kanter: Correct, correct.

Scott Galloway: So tech looms disproportionately large in our lives and also just in terms of attention that it gets from the media. But there's other industries that slowly but surely, because of a decline in actions followed by the federal government around antitrust, have gotten increasingly concentrated, maybe even more concentrated than tech. Are there any industries you look at, Jonathan, whether it's big pharma or big health or big chicken, what have you, that you think don't get enough scrutiny in terms of the concentration and the resulting increase in prices and market power?

Jonathan Kanter: Yeah, so we have a wide range of industries where we enforce the law. And so we have a very vibrant program in the agricultural space, including in meatpacking and seeds and a wide range of areas that we think are-

Scott Galloway: Book distribution.

Jonathan Kanter: Book distribution. There's only one. There's only one. And so we're thinking about healthcare. One of the areas that we're seeing is-

Scott Galloway: Hospital networks, yeah.

Jonathan Kanter: Yeah, but it's not just hospital networks, it's payers and providers consolidating. And so we are actively thinking about how to be forward thinking and understanding the impact of those shifts. So you're absolutely right, Scott. This is not a problem that's confined to tech. I think tech is a problem that many people relate to because of their products and services that they see in their daily lives. But we hear from so many different stakeholders across so many different industries, agriculture being chief among them.

Scott Galloway: So I would agree with you that the mood has changed. It does feel like there's a tectonic shift in the support for some of these actions, but the actions have declined consistently. And whenever you're at a conference, you're talking to economists, there's general agreement that many markets have become too concentrated. Yet today, the government, to be blunt, just hasn't been that effective with remedies and enforcing these types of actions. Hopefully, that's changing. But why has that, why over the last 30 or 40 years has the power so asymmetrically swung to the incumbent monopolies? Is it that you're outgunned in terms of lawyers? Is it that money has washed over Washington and politicians get this great deal of "I'll give you money, all you have to do is nothing, just ask continued thoughtful questions and never do anything"?

Scott Galloway: But why? He's asking why. But isn't it more than that? Is it money? Is it that consumers love these companies and there isn't enough public support? I mean, it just feels like antitrust just slowly but surely lost its mojo?

Jonathan Kanter: Well, it goes back to the conversation, the beginning of our conversation, which is, there became this sort of movement against enforcement. And it led to a mood that erred toward under-enforcement even when violations of the law were clear based on key longstanding principles of antitrust and sound economics.

So what we see now is, I think, more courage in the willingness to use the law when it's the appropriate tool. Again, I want to be very clear, we follow the facts and the law wherever it takes us. And we look at every case on its own merits. But we have to be willing to use the laws that Congress gave us in order for those laws to be effective. And I think that's what we're doing here. And I think we're being successful.

We're bringing cases. We brought more monopolization cases in the last year than we had in the prior 25 years before that, including two criminal monopolization cases. We blocked a large publisher merger—Simon & Schuster and Penguin House—on a theory that was not just focusing on what people pay for books, but was focused on the ability of authors to have advances and to get the kind of compensation they deserve to fund the creation of the content that's necessary for that important market.

We've blocked two shipping mergers that relate to supply chain, including one that would have allowed a Chinese company to control a significant portion of refrigerated shipping containers. We are taking a more principled and sound approach toward merger remedies where we're always happy to listen and entertain remedies for mergers, but we're not willing to accept remedies that present unnecessary risk for the American public.

We're also revising our merger guidelines. These are a tool that the agencies use to set forth and explain to the world, businesses, their own staffs, and courts how we enforce the law. We did a public comment period for our merger guidelines, and we received over 5,000 comments from the public. By way of comparison, the last time around, I think we got about 100 about 15 years ago. So we're actively taking steps to redefine and rethink how we approach the law so that it's more faithful to precedent, more faithful to Congress.

Kara Swisher: So there's also the heft they have. There's two things I see that you have a problem with. One is big tech has a lot of money, as Todd just noted, but they also argue—talk about innovation almost constantly—that they need this. That's always their argument. They are already being regulated by the marketplace, and let's believe in the marketplace. Facebook can say, "Look, TikTok's suddenly out of nowhere, and now they're a huge hit." Apple's app tracking transparency did more damage in a single update than regulation has done in years. Although I asked Tim Cook about this and he said, "I don't want to be the chief regulator of the United States. I really don't. This is not my job."

And Makan Delrahim, your predecessor, had said the slow roll of these companies—how much money they have, how much time, and how long these cases take to happen—is problematic for the government. And related to that, it's that maybe judges are not so amenable to this, that you have a real problem with judges. And this just happened to Lina Khan this week with Facebook—she got pushed back on a purchase of an Oculus-type developer that they bought, Supernatural, to make VR better.

So how do you look at those two twins: this idea of slow roll and the money they have, and "hey, the market's already taken care of it," and having judges being open to this idea?

Jonathan Kanter: These are challenging questions for us. But ultimately, it's our responsibility. And I think the only way for us to have meaningful impact is for us to use the laws that Congress gave us and to use them as effectively as possible when it's the right thing to do.

Kara Swisher: What do you say to their marketplace argument? Lobbyists are lobbyists, and they've got a lot of them, obviously. And there's nothing to be done about that on some level, although there certainly should be. But their idea that the marketplace is taking care of it. "Look at Facebook's down this much percent. There's lots of competition here." AI, they'll have the same arguments going on. "We're viciously fighting each other." But they're giants fighting each other.

Jonathan Kanter: Well, I think it goes back to what you were saying earlier. One, it really depends on the market. We have to look at each market on its own merits and its own facts. But this idea that somebody can just use the word "innovation" and then magically think that they can convince antitrust enforcers not to act—I don't know that that was ever the case, but it's certainly not the case now. The fact of the matter is, you can't have competition without competitors. And we're looking around the economy and we're seeing more concentration than we have in generations. And I think that's something that the public understands.

Kara Swisher: And judges? I mean, can you comment on the Facebook decision, the most recent one?

Jonathan Kanter: So I haven't read the Facebook decision. It's still under seal. That's a different agency. I look forward to reading it.

Kara Swisher: It's the FTC.

Jonathan Kanter: Yeah. One of the things I will certainly be looking for as I read it is not just the outcome, but also the reasoning that the court used to reach that outcome. From a forward-looking perspective, there are instances where courts will not agree on the facts, but perhaps endorse a legal approach that an agency took or reject it. And I think we need to see that. My view is if we see a violation of the law and we think it's appropriate to act, we have to act. And it's our job to figure out how to bring those cases to courts, to judges, and to juries. And that's what we need to do.

Kara Swisher: Is losing a fear, though? I mean, Lina Khan has said we have to go out there even if we lose, even if we lose some. That's something I think she's said publicly.

Jonathan Kanter: We bring cases to win. I just want to be clear. That's our job. And when we file a case, it's because we believe we will win and we should win. And in instances where we don't, we understand, we assess the outcome, but we're also not afraid to move forward and bring additional cases if we think it's the right thing to do. But we play to win.

Scott Galloway: So just to bring it down to a worker level—and this is something close to my heart as I've been subject to them—we talk about anti-competitive behavior in the context that it's a bad thing. And yet in almost every acquisition, dozens if not hundreds of employees are subject to something actually called a non-compete. I was really heartened to see that the FTC is talking about action or legislation to eradicate non-competes. I'd love to hear your thoughts. I know it's not the DOJ, it's the FTC here. I'd love to hear your thoughts on non-competes and what you think the likelihood is that they'll be outlawed.

Jonathan Kanter: So I'll let others run the assessment on the likelihood there, but we've made labor and the rights of workers to benefit from competition a top priority here at the division. We've brought cases on wage fixing, no-poaching agreements. We filed amicus briefs. We focused on the gig economy. Competition benefits everybody. Competition benefits people. That includes people who buy things, but it also includes workers. When you have more options to go work somewhere, you get a better salary, you get better benefits, you get better opportunities, you get better choice of where you want to live. These are things that affect real people. And we absolutely have to focus on that. To me, it's a centerpiece of our enforcement agenda.

Kara Swisher: This week the Department of Commerce issued a report criticizing the control of app stores by Apple and Google, and calling for more antitrust action. What do you make of that report? And where are those actions? Where is—with Apple, I think, is Amazon with the FTC? I forget how you split it up.

Jonathan Kanter: I can't comment on that, but I appreciate the question. We read that report with great interest.

Kara Swisher: What does that mean?

Jonathan Kanter: Whatever you want it to mean, Kara.

Kara Swisher: Would you like to refer—Jonathan behind him has an obsession with a hippo in Cleveland named Fiona.

Scott Galloway: Cincinnati.

Kara Swisher: Cincinnati, excuse me.

Jonathan Kanter: I will defer to my friend Fiona the hippo, who is a whimsical and wonderful hippo in the Cincinnati Zoo.

Kara Swisher: Do you have any broad thoughts on that idea of app stores, if there are remedies for those? Because it's very hard because there are only two phones. There really are. And that's it.

Jonathan Kanter: Well, that report was the outgrowth of an executive order by President Biden to look at that issue. And I think it's a very important issue. It's one that we're very aware of. And beyond that, I can't confirm or deny the existence of any investigations or actions.

Kara Swisher: All right. What about partisanship? How do you feel? There's always been a problem around—obviously, the Supreme Court's going to hear a 230 argument very soon. There's all kinds of things happening there. But each side has a different opinion of Section 230, although they all seem to want it gone in some fashion. Does partisanship really affect this, or are the sides together? And will that, if that happens, what will that mean for your cases and everything else? Because liability opens up.

Jonathan Kanter: So I'll stay away from the 230 issue specifically, but in terms of partisanship, I've been really heartened by the broad continuum of support across the political spectrum. I have wonderful discussions with people on all sides of the aisle about these issues. I think there's a greater appreciation that free markets require competition. So I think the work that we're doing is, in my view, law enforcement. And in my lifetime, I don't think I've ever seen the level of support for the work that we're undertaking from so many different corners of the country and at so many different points along the political spectrum.

Scott Galloway: So if we're talking about competition, full stop, it's good. And if we're talking about an assault on the middle class through a lack of competition that's resulted in an increase of prices of 1,400% over the last 30 or 40 years, I would argue that higher education literally makes OPEC look like a weak cartel. We all raise prices exactly the same amount every year. What a coincidence—we raise prices 4% and every other university raises prices 4%. Not three, not five. We have accreditation run by the incumbents that basically says which students at which universities qualify for federal funding.

I mean, isn't higher ed the monopoly, or the anti-competitive structure to end all anti-competitive structures, that has just been horrible for middle class households? Do you agree with that? And if so, does the government have any plans to potentially file an action against higher education?

Jonathan Kanter: Well, certainly if we did, I couldn't say so, Scott. So I'll pause and let your comments speak for themselves. And they're duly noted. I will say I do want to point to your point about the middle class and competition working for people. This is why I'm here. I grew up in as middle class as you can get in Queens, in an apartment, with school teacher parents. And I have a deep belief in the American dream. And to me, the American dream is about opportunity. It's about the opportunity to build your own business, get an education, pick your own path. So I do believe that you need a competitive economy in order for that opportunity to exist, regardless of whether you're growing up in Queens, Iowa, San Francisco, Austin, or Dallas. It doesn't matter. So I think it's important that we are very focused and thoughtful about issues that affect economic opportunity for everybody.

Scott Galloway: I love that, but just a more pointed question. Do you think higher education reflects the type of competitive market we want to see?

Jonathan Kanter: I defer to Kara and my hippo Fiona on that question.

Kara Swisher: Oh no. Oh dear.

[Laughter]

Kara Swisher: I have a final question about AI, because obviously it's getting a lot of attention now with ChatGPT, which is doing an excellent marketing job of seeming like it's changing the world when it's still very small. But you can see it happening that way. You can see that trending in a way that looks like early search or early ad tech. Is that something you need to be looking into now before—OpenAI was created so there would be competition, right? That was the concept when Elon Musk, in fact, funded it. Is that a problem now that Microsoft is going to own this thing or is going to be a big part of it? Is this something you need to be looking at now or doing something about?

Jonathan Kanter: So let me zoom out a level. I've talked a lot about the importance of new technologies disrupting, and I think we need to preserve opportunities for new technology to change the competitive paradigm. But one of the things I remember giving a talk about this 10 years ago is that if you look at revolutionary theory, after a revolution, what does the new leader care about most? The next revolution. So it's important to make sure that we preserve those inflection points. But if we've learned anything from the last 30 years, it's that we have to understand those market realities and make sure that we enforce those market realities.

So just because something new and competitive comes along—let me say that's great. We want to encourage that. But on the other hand, we need to make sure that the next platform is allowed to give rise to future platforms and to future technologies and competitors. So when it comes to AI, we are hiring technologists, which we've never had here before. We're hiring AI experts. We are understanding the market realities that flow from the feedbacks connected with machine learning, which are those positive feedback effects that are more powerful than we've probably ever seen in our lifetimes. And they're only going to get stronger. So we have to understand that, and we have to be willing to have an enforcement program that's tethered to those realities.

Kara Swisher: Early on?

Jonathan Kanter: Absolutely, if appropriate.

Kara Swisher: My final question is about China. One of the other things they put up all the time—and obviously there's a lot of China activity in Congress with their China Committee. Is that a good excuse by the tech companies? I've heard it from Mark Zuckerberg directly, or various people. How do you respond when they say, "We've got to be national winners here because we've got China"?

Jonathan Kanter: The way to compete against China is not to look more like China. It's to look more like ourselves. The foundation for our economy, for our democracy, and for our nation's success is innovation, freedom, openness, and opportunity. And we will be best and we will be most competitive when we allow those values to shine and rise to the surface.

Kara Swisher: What can consumers do? Or what would you ask of Americans who buy into this notion that competition is good and a lack of it has hurt workers and the middle class? What would you ask of us?

Jonathan Kanter: Speak up. Speak up.

Kara Swisher: Does it matter?

Jonathan Kanter: Yes, it matters. So one of the problems that I believe has happened over the last 30 years is that antitrust has become the domain of the elite class. And we've stopped thinking about how it affects real people, but instead have made it into this laboratory experiment that is often detached from reality. And I think we need consumers, we need market participants, we need workers saying how these things actually affect real people in order for us to be more tethered to that reality. So yeah, it makes a difference. And it is making a difference because we're listening. And for the first time in a while—at least what we are doing affirmatively—is making sure that we're going out and accessing a broader range of opinions. We're speaking to broader portions of our country. We're speaking to different communities, not just folks who can hire lawyers for $2,000 an hour to come talk to us. We think in order to be effective, we have to engage with farmers. We have to engage with folks from across the country, all different ways of life and stripes.

Kara Swisher: And I would note that you have the anti-monopoly game behind you, which is kind of cute, but the antitrust bill did not pass Congress. Do you need that?

Jonathan Kanter: We were full-throated in our support for that bill, and we will continue to support or provide technical assistance and views. I'll leave that to others. In this job, my job is to enforce the laws that Congress writes.

Kara Swisher: Were you surprised it didn't pass?

Jonathan Kanter: I leave that to others. Again, we were supportive. The Attorney General is supportive. We think it would have been helpful. But in the absence of new legislation, ultimately it's up to Congress. They have to make that decision. They write the laws, we don't. So we just enforce them.

Kara Swisher: One of the things that had been talked about when you came in is that there were mugs about a law firm. I think it was Kanter, Wu, Khan, or something like that, which was the three of your names. That's Lina Khan, your name, and Tim Wu. Tim has left the White House. I did an interview with him recently. Lina is at the FTC. She's working on a number of cases. How closely do you work together? Is that something that happens, or do you work separately or figure out, just split things up and go that way?

Jonathan Kanter: So our work on enforcement is independent. We investigate our cases independently and pursue our cases independently. And the FTC—there's a lot of coordination with respect to policy issues. For example, the merger guidelines is something that we're doing with the FTC. We work on policy initiatives with the FTC. We have some degree of overlapping jurisdiction, so we have to work out who's going to investigate what. But ultimately, when the rubber meets the road, we're focused on our own investigations. And there is some degree of collaboration with our enforcement partners at the commission. In terms of enforcement actions, though, I should be very clear, are done independent of the White House.

Kara Swisher: And so the attacks by tech on all of you—actually, especially you and Lina—that you're against tech, et cetera. Did they land in any way from your perspective?

Jonathan Kanter: I keep my head down and focus on doing the job. That's all I can do. Again, I think the most important thing we can do is just really follow the facts and make the right decisions for the right reasons. And try to fan out the noise.

Kara Swisher: All right. Thank you. Is it Honorable Assistant Attorney General Jonathan Kanter?

Jonathan Kanter: It's really just Jonathan.

Kara Swisher: Okay. All right. Thank you so much. We really appreciate it. What a fascinating time.

Scott Galloway: Thanks for fighting the good fight, Jonathan.

Jonathan Kanter: What a fascinating time. No, I'm so delighted to be with you. First time, long time.

Kara Swisher: Okay. All right, Jonathan. Thanks so much. Take care. Bye.

[Break for advertisements]

Kara Swisher: All right, wins and fails. You go first.

Scott Galloway: My win is just the agility of the U.S. economy. I've always said the faster an economy can fire people, the faster it can hire them. We have what I think is a masterclass—all the criticism Chairman Powell gets, the whole world holds their breath to see what he's doing. And it looks like he has aggressively raised interest rates, some of the most unprecedented historic increases in interest rates. And what do you know? Inflation is starting to come down as fast as it went up.

These companies, American capitalist companies, read the tea leaves. They are not afraid to make crisp, aggressive moves. And we have effectively—potentially we might avoid a recession. It looks like we're growing again. The markets appear to love this. It looks like Chairman Powell has done his job and might be able to slow the increase in interest rates or even—by end of the year, maybe beginning of next year—he might actually bring interest rates down.

There is just no economy that has the leadership at a federal level, that has the amount of capital, innovation, and quite frankly, the agility. In Europe, there would be strikes and government would weigh in and say, "You can't fire these people." And they would turn it into some big drawn-out soap opera that got in the way of these private sector companies making these hard but important and probably correct decisions. And by the way, what is the technology that everyone is talking about right now? OpenAI. And where is that? Oh, it's in the U.S., of course. So just the agility, the innovation, the leadership at a federal level. I just think we are the triangle of innovation and agility.

Kara Swisher: And we're at each other's throats at the same time. But that's what's so sad.

Scott Galloway: It's ridiculous. The biggest threat to America is not an external force. It's not an invading army. It's not the CCP. It's not Putin.

Kara Swisher: A little bit China, but go ahead.

Scott Galloway: It's that we have decided through our media and our algorithms to pit one another against each other. And that is the biggest threat. It's like the call is coming from inside of the house. And we catastrophize everything, and then blame each other.

Kara Swisher: Although Putin's still a rogue, turned into a rogue, as your friend Ian Bremmer talks about.

Scott Galloway: Yeah, but you have one party who wants to cozy up to him because they see an opportunity to make Democrats look bad. It's just—okay, that makes no fucking sense. If we can't unify around a murderous autocrat, what can we unify around? Like, okay, you stop doing the Hunter Biden thing, we'll stop doing the whatever George Santos thing. You stop doing that. We could have a thing where we give in and we just have to say, "Buy guns on that."

Kara Swisher: No? You don't think that's going to happen?

Scott Galloway: So my loss or my fail is—I don't know if you saw the clip of Kevin McCarthy, but he has passed in the House a repeal of the increase in funding to the IRS. And it just shocks me that the Republican Party has been so effective.

Kara Swisher: It's not going anywhere.

Scott Galloway: I'm sorry?

Kara Swisher: It's not going anywhere. He passed it, doesn't mean the Senate's not.

Scott Galloway: I know, but yeah, the Senate's not. I think it'll hit a brick wall in the Senate. It'll be a partisan vote just as this one does. But he stood up there and he said, "Promises made, right?" First off, the speaker is supposed to be somewhat apolitical. You just don't say that shit. He's supposed to pass legislation. You're just supposed to take the votes and sit the fuck down.

Anyways, this notion—the Republican Party is so effective. They essentially represent the top 1%, full stop. And they managed to convince people on the lower income side that they're representing them. And the notion that the IRS is some sort of demonic force here to harass American households—defunding the IRS is nothing but a tax increase on lower middle-income homes. Because here's the thing: the rich have figured out a way with their lobbyists and corporations to take the tax code from 400 pages to 4,000. So to audit a wealthy person or a corporation takes an army of skilled auditors that are expensive. So what happens? All the technology and all the automation has increased the audit rates of lower middle-income homes who cannot get away with any sort of tax avoidance, but they don't have the resources to go after the top 1%. And it's estimated that every year the top 1% avoid about $160 billion in taxes because there's no cop on the beat.

And it just amazes me that the American people and Republicans feel like they have brilliantly positioned the IRS as some sort of invading army. No, they're not. When you defund the IRS, you are raising taxes on the lower and middle-income household. Because if the 1% and corporations don't pay their fair share—by the way, 50% of all profits from U.S. corporations have been offshored to lower tax domains. It's a zero-sum game, folks. Small and medium-sized businesses and lower and middle-income households—if big business and the top 1% don't pay their taxes because there's no enforcement, then guess who pays more?

Kara Swisher: I'm still riveted by his Ozempic face, Kevin McCarthy. His friend Elon must have given it to him. Elon's talked publicly about taking Wegovy and Ozempic and fasting and stuff, but Kevin McCarthy's clearly borrowing some of his or something. I keep staring at it. I'm like, "Okay, sure, sir." I'm sure he's counting his calories.

Scott Galloway: I have no idea what you're talking about. He's skinny. He lost enormous amounts of weight. You haven't noticed it?

Kara Swisher: I find it lurid. If we said that about a woman, you'd be triggered.

Scott Galloway: No, I'm not going to comment on it.

Kara Swisher: I think it's very strange, this sudden weight loss. But nonetheless, it looks great. It's performativeness. It's performativeness on behalf of the Republican Party. It's the same thing, which is my fail, which is Governor Sarah Huckabee Sanders endorsing legislation limiting drag performances. Really, Sarah? Is that a huge problem in Arkansas? Let's enrage, let's demonize the other side rather than focusing on real issues. It's ridiculous. Why don't you focus on things that matter to actual people? I know she's going to say this matters. This is not legislation. Legislation helps people. Anyway, she endorsed these bills, and it's just insane that this is what they're spending their time on.

You know what? Again, it's going to happen the same way with this red wave thing that they thought was coming. People care about their pocketbooks. They care about their families. They are not obsessed with the things that these people are obsessed with. I am certain of this. I am certain of it. And we'll see where it goes. But this is also a state that elected Bill Clinton. So it certainly can go lots of different ways, this state. In any case, this is not what makes you a great leader, this kind of thing.

Scott Galloway: I don't know if you've heard the rumor, but supposedly Governor DeSantis was at some point a drag queen. He went by the stage name "Misinformation." I'll be here all week. Try the veal.

Kara Swisher: This is a joke. Let's label this a joke.

Scott Galloway: God, he'd be not. I'm not down with him.

Kara Swisher: George Santos, though, was very good at karaoke. Did you listen to that? Very good, good karaoke. I'd like to say something nice about everybody.

Scott Galloway: I think George Santos is literally the best thing that's happened to the Democratic Party in a long time.

Kara Swisher: I don't know. Oh, my God. Every day you're like, "What? Huh?"

Kara Swisher: What my drag name is? You know my drag name, stage name?

Scott Galloway: Oh no. What?

Kara Swisher: Jenna Talia. Oh, that's good.

Scott Galloway: That's Zizacapa speaking. God, now I'm about to talk about my three-year-old and peach pie. And you introduced that into the situation.

Kara Swisher: Peach pie. I made a peach pie. I came home last night from Miami. I have a ton of work. Amanda said I'm procrastinating by baking. And I baked a peach pie out of frozen peaches I found in the fridge that I put in there this summer. They looked like a hunk of nothing. I defrosted them and Claire and I made a delicious peach pie from scratch. It was delicious and fantastic. It was so good. I was like, I made something. I even called Louie and I said, I made something as good as you made. Louie's my older son who's a cook. I have to say the peach pie is my win of the week. Clara was my helper in it. It was delicious and it made me happy. And I wasn't on Twitter. I'm almost so much happier making peach pie and not being on Twitter. That's really the goal in my life.

Scott Galloway: So, you know, I married a drag queen because they say makeup sex is the best. I'm sorry.

Kara Swisher: No, I got to pull us back from the peach pie win here. I was trying to be wholesome, but nonetheless, you drag us back into filth and degradation where we belong, really.

Scott Galloway: Did you enjoy seeing me? We were together yesterday. That was nice, right?

Kara Swisher: We were actually. Yes, I did. I liked it. I've got to spend more time with you. We've got to strategize.

Scott Galloway: You and I. We went to Tiger 21. Therapy for rich people. It was good.

Kara Swisher: You know, I had one question on that thing from someone. It was a really unpleasant question from a gay man about Don't Say Gay. And I just didn't answer it. What I would like to say is, I think it's a great thing. I'm like, yeah, covering up books is a great thing. It's a great lesson for kids, just because there's one picture of gay parents in it. Like, please, I'd like to take your children from you, but I can't.

Scott Galloway: So anyway, I had a great time with you though. On the other hand, I had a good time.

Kara Swisher: We had a nice time. We had a good time. I like doing things together. We're going to be doing more.

Scott Galloway: More is coming. Live Kara and Scott is coming to your town soon. Where should we go first?

Kara Swisher: Where should we go first? Let's go to Arkansas.

Scott Galloway: Arkansas. Arkansas and drag. I've never been to Arkansas.

Kara Swisher: Let's do a casual fall in Arkansas.

Scott Galloway: I used to wear drag all the time. And then the father of a trans person asked me not to. So I stopped.

Kara Swisher: I know you did.

Scott Galloway: If I put on a dress, it would seem like drag. That would seem stranger than me putting on a dress. I'm going to go out on a limb here. That would seem so strange.

Kara Swisher: Let me just say, we're coming to Arkansas, Governor Huckabee Sanders. And we'll say Latinx whenever we feel like it. And we'll do all kinds of things. We'll talk about how Black Lives Matter and all kinds of things like that. We'll have fun. We're coming. We're coming. We're so excited to go there. We're going to bring Hillary and Bill Clinton, too. That'll be real. They'll be our friends at Pivot. Let's have some fun. We're going to do things like that. I'm up for it. We're going to plague people across the country.

Scott Galloway: Okay, Scott, that's the show. We'll be back on Tuesday with more Pivot. This was highly enjoyable, very long show. Jonathan Kanter is so impressive. He's really impressive. I like public sermons that are like that.

Kara Swisher: All right, Scott, read us out.

Scott Galloway: Today's show was produced by Lara Naiman, Evan Engel, and Taylor Griffin. Ernie Intertott engineered this episode. Thanks also to Drew Burrows and Mia Silverio. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for another breakdown of all things tech and business.

Kara Swisher: Peach pie.

Scott Galloway: Peach pie. Some things never go out of style, like trust, reliability, and driving a Toyota. Take the legendary Camry and Corolla. Designed for comfort. Engineered for performance. Hurry in. Offers end September 30th. Toyota. Let's go places.