Loading summary
Transcript105 lines
- [00:01]
A
Support for the show comes from Anthropic, the team behind Claude. When you're analyzing market trends or trying to understand what's really driving economic shifts, you need more than surface level takes. Meet Claude, the AI thinking partner that works through complexity with you. Whether you're dissecting earnings reports or exploring the ripple effect of policy changes, Claude helps you dig deeper into the analysis that matters. Try Cloud for free at Claude AI ProPGMarkets and see why the world's best, best problem solvers choose Claude as their thinking partner. Support for the show comes from blueair Purifier. In markets and in life, the fundamentals matter, and taking care of your health is a big one. The Blue Signature Air Purifier by blueair.
- [00:44]
B
Is the most powerful yet compact air.
- [00:46]
A
Purifier you can get. It quietly removes pollutants that affect focus, sleep and longevity.
- [00:51]
B
Blueair is one of the most awarded air care brands in the US and UK. Use promo code PRPG25 to save 25% at Blueair.
- [00:59]
A
Blueair.com.
- [01:03]
C
Adobe Acrobat Studio so brand new. Show me all the things PDFs can do. Do your work with ease and speed. PDF Spaces is all you need. Do hours of research in an instant with key insights from an AI assistant. Pick a template with a click. Now your prezo looks super slick. Close that deal. Yeah, you won. Do that, doing that, did that, done. Now you can do that. Do that with Acrobat. Now you can do that. Do that with the all new Acrobat. It's time to do your best with the all new Adobe Acrobat studio.
- [01:33]
A
Today's number 42. That's the percentage of consumers who say they didn't know lay's chips are made with real potatoes.
- [01:41]
D
True story.
- [01:41]
A
I'm thinking about starting a boy band with other lovers of potato chips. We're calling it Panic at Nabisco. I like that one.
- [01:53]
E
These are my favorite jokes. It's the terrible dad jokes. Those are my favorites.
- [01:57]
A
The dad jokes.
- [01:58]
E
Yeah, I think we should lean more into that.
- [02:03]
F
Listen to me.
- [02:04]
A
Markets are bigger than us.
- [02:05]
E
What you have here is a structural change in the wealth distribution.
- [02:07]
A
Cash is trash. Stocks look pretty attractive. Something's going to break.
- [02:11]
E
Forget about it.
- [02:12]
A
We do things out of order here for some reason. But we just interviewed Jonathan Cantor from the ftc and I literally saw my future. You're going to be chair of the sec. I'm convinced. And Jonathan Cantor is going to get like five minutes with you every other week over, you know, a Diet Coke or Crystal Pepsi or some stupid drink you. You drink or whatever. Or kombucha, Whatever.
- [02:35]
E
Such a strange vision that you popped into your head.
- [02:38]
A
Oh, yeah, And I'm gonna be your driver. Cause you're gonna feel sorry for me and you're just gonna sit in the backseat and you're just gonna sit in the backseat and scream at me that I'm going the wrong way to Dulles. I think you're gonna be abusive of me in my senior years. When you're 40, I'll be 74. And I see you just. Just humiliating me. And I will have lost my all, and you'll feel sorry for me and make me your driver.
- [03:03]
E
I love that.
- [03:03]
A
That's the future I see.
- [03:05]
E
I doubt that'll happen. I think I'll be. I think you'll be doing very well. I'll be coming over and caring for you.
- [03:11]
A
I don't see that. I think men leave. That's why I should have had. My advice to you is keep having kids until you have a daughter. Because as I wish I'd realized this when I was younger, daughters come home and take care of their dads. Boys take off and find some other woman to rule their lives. And they're not allowed to be in your life any longer. That's true.
- [03:30]
E
That is very true.
- [03:31]
A
I have daughters head.
- [03:32]
E
Yeah. Actually, my grandma recently made that point. I was visiting her and she has this friend and she was saying, I just. I feel like she needs someone to take care of her. And the trouble is she doesn't have a daughter.
- [03:44]
A
When I was. When I moved, I'm virtually singling now. When I moved in with my mom when she was very sick, it was at the Del Webb Active Living Community in Summerlin, Nevada. And we got a letter saying, it's come to our attention that you are cohabitating with a man who appears to be under the age of 50, which is against the bylaws of the Del Webb Resort Community Guideline. So I had to march down there and say, actually, I'm her son. My mom's very sick, and I moved in to take care of her. And of course they were like, very like, oh, no problem. We understand now. And they said, there's a support group for kids taking care of their parents. And I went once, and they had it at the clubhouse, and it was me, a gay guy, and 12 women.
- [04:27]
E
Wow.
- [04:29]
A
Straight men. I don't know if I'm. I'm sure I'm committing a hate crime here, but straight men don't appear to be that interested in taking care of their parents. Or at least that's what I took away from this caregiver meeting of kids who were involved in their parents lives at this place.
- [04:49]
E
I'm impressed that you decided to do that. I feel like it's very, I don't know, mentally healthy thing to do. Go to a support group and talk about problems. It doesn't seem very Scott Galloway, but it's.
- [05:02]
A
I was hoping I'd meet hot chicks. Oh my God, he's so sweet. He's taking care of his mother. I'll give him a random oral sex. I mean, he seems like such a nice man. Welcome to property markets. Today we're discussing antitrust. Yeah, no, I, I was, this was how bored I was. I was living with my mom and her rabid alcoholic friend who showed up with a Scottish Terrier and 12 bottles of Jack Dan of Johnnie Walker Red. And it used to get so fucking strange. I'd be like, I gotta get out of here. And I read that there was a caregiver support group and that was my best option in the afternoon to go just listen to other people talk about their dad's stage eight pro, you know, prostate cancer and just like, oh, what cancer does your parent have? But it was. Did I tell you about this? Let's talk about May Ed. During the day I'd hang out with my mom and Carson, her friend, and we watch Jeopardy and everyone loves Raymond. And I take my mom for a walk and I'd manage her healthcare. My mom said that she wanted, you know, her only thing on her bucket list. I asked her when, when near the end, what's on your bucket list? She has one item on my bucket. Want to die at home. So I thought, I can make that happen. And then, and then at night I'd go down to the Strip. I'd take a 20 minute Uber and I'd party with entrepreneurs and strippers. And I'd get ridiculously up too up to go home. So I, I'd get a room at. I forget what it's called. I think it's called the, the Delano now, but back then it was called something else. And during the week you could get a room in Vegas for like 29 bucks. And I'd wake up and I'd go have the buffet breakfast and I'd cruise home to Everyone Loves Raymond and rabidly drunk Carson, who was fucked up by 1 or 2pm and at 1 point I walked in on Carson. I came in to the living room to see what was going on and Carson, the 78 year old woman was topless with one of the maintenance workers on my mom's couch fooling around. And the really strange thing is it seemed almost normal. I was in such a fucking Wes Anderson film at this point and I'm like, okay, here's my mom's 78 year old friend with big fake tits and a guy with his fully clothed with a shirt that said like Manuel on it. Fooling around with her on my mom's couch. And it didn't even seem strange. It didn't even seem strange. Anyways, what's the S and P doing today, Ed? What's the S and P doing? And you wonder why I'm fucked up? You wonder why I'm fucked up?
- [07:47]
E
I have a lot more questions than I can't get to because we have to get to this conversation with Jonathan Cantor. We have to talk about this boring thing called antitrust. I want to hear more about Carlson.
- [07:58]
A
Let's get on. This is not cnbc.
- [08:02]
E
Okay. Here was our conversation with Jonathan Kanter, former Assistant Attorney General for the Antitrust division of the U.S. department of Justice. Jonathan, great to have you back on profit markets. Thank you for being with us.
- [08:15]
D
It's always a pleasure.
- [08:19]
E
So we really wanted to bring you on to get your reaction to what is happening in AI. We've discussed potential antitrust concerns when it comes to AI before. We've been talking about it going way back to when we realized that all of these board directors on all of these different AI companies, they all serve on each other's boards. And then it kind of progressed to these AI companies or these big tech companies investing in AI startups and then swallowing them up and taking their employees and oftentimes taking their profits. We saw that with scale AI, we saw that with inflection. We even saw that with OpenAI. And now we're getting to a point where they're all financing each other through these circular deals where you invest in an AI startup and then the AI startup turns around and spends that investment money on your chips and on your compute. It's all getting a little bit shady is what we would say. And we have a lot of concerns in the community, in the investment community that we are seeing a bubble. So that's sort of the picture that we're seeing. We want to get your reaction as a preeminent antitrust expert, what do you think of what is happening in AI right now?
- [09:33]
D
I think this goes right back to why would the antitrust laws were created in the first place? The trust in antitrust laws referred to the oil trusts and the railroad trusts and the sugar trusts and the like that had these tentacles in all different businesses. So you had these holding companies, these trusts that were invested in all sorts of different industry competitors and rivals and they were pulling the puppet strings. You can go back and you can see these great cartoons of the day, the octopus, the antitrust octopus, who had their tentacles in all these different businesses. So what did the United States Congress do? They created and enacted something called an antitrust law. And that antitrust law was designed to break up interlocking board directorates. It was designed to prevent these holding companies from having their tentacles over all the different competitors. Now, as we sit here in 2025 at the dawn of a new industrial revolution around AI, we have the exact same thing happening, which is a small number of companies led by modern day versions of J.P. morgan, J.D. rockefeller and others who are putting their tentacles in all of these different businesses through these circular investments, creating the exact same circumstances that led to the creation of the antitrust laws in the first place.
- [11:01]
E
So when you look at the big players here, who would you consider to be the new Rockefellers, the new JP Morgans? Who are those players that you think are the most apt to compare?
- [11:14]
D
OpenAI certainly sits at the center of all this, but you have Google, you have Amazon, you have Microsoft, and you certainly have the likes of Elon Musk. And then the other new linchpin in a lot of this is Nvidia. And so if you look, for example, take Anthropic, right? People hear of Anthropic and Anthropic sounds like this nifty, neat independent competitor. But who are some of the largest investors in Anthropic? Amazon and Google. Who are some of the largest investors in OpenAI? Microsoft. And then you now have shareholdings with Nvidia, AMD. And you know, you can trace this out and what you see is, you see an interdependent network of companies who are, who are behaving almost as if they're one business to some degree when they're supposed to be fierce competitors.
- [12:15]
E
What is the danger here with all of this? I mean, collusion might be a strong word, it sounds sort of like conspiratorial. But what we're describing is these very, very large and powerful companies that are cooperating with each other. Instead of compet competing against each other to build market power, they're investing in each other, they're becoming friends with each other and sitting on each other's boards. I think Colluding probably describes what's happening here. What is the danger there? Because on the one hand, you've got this fear of a bubble that they're kind of creating their revenue by just going out and saying, oh, we'll invest in you and then turn around and pay for our products. But then on the other hand, maybe this is an effective monopolization strategy. Maybe this is how the Rockefellers of the past built up market power. And ultimately, I mean, those were good investments because generally speaking, investing in a monopoly can work out, where is this all headed?
- [13:15]
D
Yeah. So there are a number of different risks. Let's unpack them. First is resiliency risk. Our economy is extraordinarily dependent on small number of businesses. The magnificent seven or ten, whatever number fits the moment. But the companies we just mentioned are propping up the US economy and markets globally. If they're all interdependent and there is an issue with one of them, or one of them turns out to be significantly overvalued, or if there's fraud or one fails, there can be this cascading effect on all of the other dependent companies, which are in turn propping up the market and could force us to enter into a collapse. So the resiliency risk, even if you set aside all the competition concerns, is something we should be really focused on as a country. Second is we are at our best as a country and we compete best globally when we have fierce competition domestically. And so we want these companies duking it out to innovate, to outdo each other, whether it's in terms of the safety of their foundation models, the accuracy of their models, the innovative nature of their chips, and so forth. And so we want competition to force people to do a better job, to innovate faster, to put more money back into the economy. And this becomes a shortcut sometimes, this cross investment, this circular investment. Finally, I would say we want more money being reinvested back in the US economy. One of the things that struck me when I was at the Department of Justice is just how much money is going back and forth among these companies. Let's take one of our more famous cases, which was the Google search case. At the heart of that case were payments by Google to apple of over $20 billion a year. Right. This is not money that's being reinvested back in the US Economy. It's money that's going to and from these companies. And you see the same thing happening with chips. Compare that to take a company like Apple, it spends substantially more in stock buybacks than it does in R and D. And so across the tech sector, we are not seeing enough money being reinvested back in the US Economy. Instead we are seeing it used to prop up share price or to spend money back and forth among the other dominant firms. And that is I think, a risk and in something we should discourage, not encourage.
- [15:59]
A
I agree these circular deals are kind of a sleight of hand that the concentration of power creates this anti fragility. But in terms of money actually going into the economy, you're seeing a lot of people, investors and you would argue 10% of the population owns 90% of the stocks. There is a lot of, a lot, an extraordinary amount of capital going into capex that is going into the economy. Right. We're going to spend more on data centers this year than I think on new office building construction. We're talking about new nuclear plants redoing the grid. So there is, my understanding is somewhere between one and a half and two and a half trillion dollars that will likely go into the economy. One, do you acknowledge that there is an extraordinary amount of capex that is going into the real economy?
- [16:49]
D
So let me start by saying first, I do very much agree. I'm not anti AI, I'm not anti technology. I think these are the US has been the cradle of innovation and these are amazing companies and amazing innovative technologies that are exciting. And yes, there is a tremendous amount of investment. My concern though, however, is a lot of that investment is being distributed among the small number of companies. And so when you think about data centers, yes, they're important, yes, they're necessary. But a lot of that money is going to buy chips. And they're not creating lots of jobs back in the U.S. economy. And so the value is being captured by a small amount of folks who also include people who invest in the stock market. But there is also a lot of money still sitting on the sidelines. If you look at the big tech companies, they still sit on tremendous amounts of cash. A lot of that's offshore. And a lot of money is using for being used for things like buybacks. What competition is supposed to do is it's supposed to maximize the amount of that money that is being put back into the economy through R and D, through job creation and through lower prices. And so all of these things can be true at the same time, in my view.
- [18:08]
A
So we're sort of. And we've got to educate young Jedi. What is it Jedi? What's the student? What's Luke's up Padawan? Young Padawan Ed here. We're just older and smarter, Jonathan. That's what I'm trying to say.
- [18:23]
D
So I agree. See, now we're talking.
- [18:25]
A
There we go. Now we're speaking each other's language. We're about the same age. You were actually at, you were at the FTC in the late 90s looking at this train wreck. I was in the caboose in the train wreck and you know, raising money for Internet companies. And I remember a bunch of us at an E commerce startup called Red Envelope where we were trying to get an investment from AOL who would invest 10 million in us in exchange for us spending $10 million in AOL's marketplace. And they were doing these kind of like, I don't know if, remember Purchase Pro, but it feels very similar. Smells like Teen Spirit. It feels very similar again, these round trip related party transactions. And then when the company got in trouble and could no longer make the payments to aol, and then AOL had to write it down, it took a big hit to their earnings. And then, I mean it was just like the unwinding was almost as fast as the downward spiral. Was almost fast as the upward spiral. When you look back at how the dot com implosion played out and you try to project this is what I'm hoping. I think a lot of people see nothing but upside and have trouble actually visualizing the downside. Can you talk a little bit about what happened in 2000 and if and how it relates to what might happen here?
- [19:37]
D
I think there are two things that pop out for me. First is valuation rather than profits. And so the time there is this euphoria in some degree, rightly so, that the Internet was going to change the world and it was going to create all this opportunity. So what happened is everybody started imagining every Internet company or every good idea would some way somehow translate into a very profitable business. And you saw these inflated valuations based on this outsized optimism about what these technologies could achieve. And then there was the rationalization where a lot of these companies may have had good ideas, but they weren't likely to generate the kind of money that was necessary to justify those valuations. And so I think that's one thing that happened. And whether we experience that now, it's hard to know, but it certainly does feel the same way. The second is the interdependence. And that's kind of the point I was making at the outset, which is the companies we're talking about here. Again, I don't want to overlook the fact that many of them are great companies and they do lots of great innovative things. But resiliency is an important part of the equation here. And if there are so many dependencies among so many companies that are so powerful and there's one failure, I mean, look what happened with Enron and some of the other failures of that era. It took down a lot of other companies with it. And so I think we want to make sure that, you know, we're not too exposed by having all these connections among various different companies.
- [21:20]
A
Well, I'll put forward a thesis and you tell me where I might have this wrong. Because what I find is as long as the markets are screaming up and the majority of investors don't really remember 99, it's very hard to create any sense of urgency or concern as long as you keep seeing your 401 going up. But you have essentially, if these companies could get cut in half, Amazon and Cisco went down 90% from 99 to 2001. That doesn't mean they aren't great companies. Amazon since then has gone up 40 or 50x, but they went down 90% from their highs of 99. Say these companies get cut in half. And by the way, if you woke up tomorrow and didn't know what had happened to these companies the last two years, they're run ups. They wouldn't look cheap even if they got cut in half. That represents a, a 20% decline in the S&P, which represents a 10% decline in total market cap globally. That strikes me as almost no way to avoid a recession if in a short period of time you had 20% of the S&P eroded and 10% of the global market cap go down. Am I overstating the danger here? And, and then I guess the follow up question is if you do see a lack of resilience or kind of an economy that's becoming fragile, other than I guess it's do we break them up? What do we do? How do we rationalize this market for what I would call a soft landing?
- [22:53]
D
I characterize it more as resiliency risk. And let's hope that we don't have a crash. Let's hope that things stay on the steady. Right? But I do think there are things you want to do to put it and have circuit breakers in your system to help mitigate resiliency risk. And some of those are things like antitrust laws. And the antitrust laws are not just about penalizing the monopolist or holding a monopolist accountable like at, AT and T or Microsoft or Google years later. Antitrust is also about acquisitions used to gain power. It's also about something called interlocking directorates, and it's a little known part of the antitrust laws that we revived when I was at the agency. But you're not supposed to be on the boards of computer companies. It's about cross ownership and investments that help again keep independent companies or companies separate from each other so you don't have these kind of cascading economic effects that can result in a downward spiral. I do think we need to be responsible about dusting off some of those laws and making sure that we are protecting ourselves. I'll also say to your point, Scott, which I very much agree with, and I've been pounding the table on this for a while, is we are too dependent on a small number of companies. My view is we need more public companies. We need more companies going public. We need more businesses starting not to be acquired but to build, thrive, go public and become the next great US Company. And I think we kind of lost our way. And that is a difference between the late 90s and early 2000s, the time the path to prosperity was to build a company, then take it public. And I think now the path to prosperity is to build a company and either have it be bought by private equity or bought by a big tech company. And I think that's an unfortunate development. We'd be a lot better off if we had more companies making go of it.
- [24:56]
E
We'll be right back after the break. If you're enjoying the show so far, be sure to give Profgue Markets a follow wherever you get your podcasts.
- [25:12]
A
Support for the show comes from Anthropic, the team behind Claude. When analyzing complex market movements or policy implications, the difference between surface level commentary and real insight comes down to asking better questions about the data. Cloud is for AI for minds that don't stop at good enough. It's a collaborator that actually understands your entire workflow and thinks with you, not for you. Whether you're strategizing an expert business move or diving deep into economic analysis, Cloud extends your thinking to tackle the problems that matter. For finance professionals exploring earnings reports or economic policy ripple effects, Cloud works through complexity rather than rushing to conclusions. It helps spot connections across multiple sources, challenge assumptions, and develop insights that go beyond the obvious. Try Cloud for free at Claude AI Propagandarkets and see why the world's best problem solvers choose Cloud as their thinking partner.
- [26:05]
B
Support for the show comes from ZBiotics. You know what sounds great? A night out celebrating with friends. And you know what sounds even better? Waking up feeling great the next day. Zebiotics Pre Alcohol Probiotic Drink is the world's first genetically engineered probiotic. It was invented by PhD scientists to tackle rough mornings after drinking and here's how the folks at ZBiotics say it works. When you drink, alcohol gets converted into a toxic byproduct in the gut. It's a buildup of this byproduct, not dehydration, that's to blame for rough days after drinking. Pre alcohol produces an enzyme to break this byproduct down. Just remember to make pre alcohol your first drink of the night. Drink responsibly and you'll feel your best tomorrow. I have used Zbiotics. I am trying to drink less, but when I do drink I have found on average it takes away maybe 20 to 40% of that kind of gross feeling the next morning. So I'm a fan and I do use it. Go to ZBiotics.com propg to learn more and get 15% off your first order when get you use propg at checkout. ZBiotics is backed with 100% money back guarantee, so if you're unsatisfied for any reason, they'll refund your money, no questions asked. Remember to head to zebiotics.com profg and use the code profg at checkout for 15% off.
- [27:12]
F
Every great company story is defined by moments when the founders make bold decisions. These are high stakes moments that risk the business but can lead to greatness. I'm Rudolf Botha, Managing Partner of Sequoia Capital and the host of Crucible Moments. We're returning for a brand new season. Join us as leaders from Stripe, Zipline, Palo Alto Networks, Klarna Supercell and more. Share what it's actually like to navigate the make or break decisions. Crucible Moments is back on October 23rd. Until then, catch up on seasons one and two wherever you find your podcasts.
- [28:03]
E
We're back with property markets. When I look at these interdependencies, there's a sense in which this is actually beneficial and that this is the way that markets should be headed. How do we draw these lines as to what is actually good competitive behavior? What level of monopolization and the intention to monopolize and to accumulate power, at what point does it become a problem where it actually causes an issue for markets? It's sort of a general question, but how do we draw that line between you are competing in a good way, you are trying to buy up your Competitors you're trying to compete versus you are causing issues in the markets.
- [28:49]
D
Listen, those are hard lines to draw, but I'll give you a few things that jump out to me. First, conflicts of interest. If you own a platform and you compete on that platform and you have power, those conflicts of interest are something that should be easy to address. We've done that in financial markets, for example, where you can't be on both sides of a transaction. And so I think, I think, for starters, we need to find conflicts of interest and we need to address them, whether it's through regulation, antitrust, or any other legal mechanism or instrument. I think it's important that we do that. The second is competitors should compete. When you start seeing competitors investing in each other and around each other, and you can start drawing all those complicated lines, it should be a cause for concern. The simple rules of the road should be competitors should try to beat the crap out of each other. That's their job. That's what yields all the great things that flow from competition, including lower prices and more innovation. And so if you see in an economy of intermediaries, if you start to see conflicts of interest and you start to see interconnecting circular investments, interlocking directorates, those are the kinds of red flags that should suggest intervention.
- [30:06]
E
So you left the antitrust division after the end of Biden's term. If you were back at the DOJ and you were regulating what's happening in AI, what would you go after? What would you focus on? How would you solve for these issues?
- [30:26]
D
These kinds of moments, when we see new technological revolutions are wonderful in many respects. They can be scary, but they create opportunity, and they only come along every 20 or 30 years. And so it's really important to maximize this moment, meaning make the opportunity to innovate at a time when the technology is changing available to as many as possible. And so it's much harder to clean up a mess, as we learned 15 or 20 years later. And so during the Internet era, a number of us in the early aughts and 2010 timeframe were raising red flags about Internet companies becoming dominant. The companies like Google and others. And we were told that, oh, we should err on the side of doing less rather than more. But the result of that was the incumbents exerting a tremendous amount of power. And then when we tried to bring antitrust cases, we were stuck trying to retrofit remedies into markets that had calcified a little bit of intervention in some of these markets, not a lot A little bit can go a long way early on, but it often becomes a very Messy exercise if 15 or 20 years later you're trying to clean up a mess with lots of dominant firms. So my adv would be focus on doing a little bit. Now, little things like cross investments, interlocking directorates, acqui hires can help oxygenate a market and mitigate the need for invasive intervention. Let's say 10 years from now, if.
- [32:00]
A
There'S a change in the White House in 28, I can't imagine you would have the opportunity to play a senior role in making these decisions. So as I'm sure you would do, you'd immediately call me and Ed and say, guys, I need your insight on potential solutions. I want to propose a potential framework for a solution and have you punch holes in it. So what do we have? We have. The private markets have largely been sequestered institutional investors and private equity funds. And these guys no longer take Google public at 30 billion. They wait till it's worth a half a trillion or a trillion. And I feel like essentially existing investors take companies public when they only have run out of what I'll call rational investors. And that, as they say, okay, who is willing to continue to bid our stock up? Let's now go to the retail markets. And most of the juice has already been squeezed. Most of the upside has been captured by the private markets, which mostly consist of institutional investors, which only exacerbates income inequality. So we want retail investors to have more opportunity to access the private market. At the same time, we want to not protect. Well, yeah, protect. We want to make sure that there's not a lot of widows and orphans investing in fraud, fraudulent companies. And one of the reasons the S and P trades at such a high multiple is that there are reporting requirements that largely starch out the fraud. There just aren't a lot of enrons in the S and P. Right. So what about embracing new technologies and doing something along the lines of the following. Creating a tokenization of, say, companies doing over 10 or 20 or 30 million in revenue, or maybe smaller if there's a technology or recurring revenue component to it. You issue a token, which is essentially, you know, million tokens equals 1 million to the ownership stake of it. You put it on the chain and you have AI basically tap into the APIs of the bank account, the receivables, a bunch of key information flows within the company. If you want to do this, you have to to let AI tap in. And AI, every moment of every day, issues a compliance ranking Or a smell test that says this firm looks very legitimate from everything we can tell using AI as opposed to regulators or reporting requirements or earnings calls or it doesn't. And Give investors everywhere 24 by 7 access to this tokenization or access to private companies globally. So tokenization with some sort of AI driven compliance that issues some sort of rating.
- [34:36]
E
Well, I was, I don't see why we can't just make it, call it a stock and say put it on the stock market and say, you know, retail investors can invest in these private stocks or, or just create a market. I don't see why we need the tokenization and the chain and the AI. Why can't we just use the Internet and call it a stock? But anyway, look, I would like to get your reaction generally, Jonathan, this is.
- [34:58]
A
This is what I put up with it. My co host pushes back on me before the guests can push back on.
- [35:04]
D
I like to just sit here and watch with my. Grab my popcorn next. No, I think they're both and right. So one is a sense of evolve or die. Right. I think when it comes to marketplaces, technology is great and AI and tokens will allow for greater access to markets, greater monitoring, greater assessments of where you want to invest and hopefully create more opportunities to buy and sell. Right. And so yes, all of that should be on the table at the same time. They should be used to help investors take part in a marketplace. But we can't have a marketplace unless folks are putting their companies on public markets. And so I think they're both true. Not to try to make peace here, but I think you're kind of talking past each other more than talking at each other.
- [36:05]
A
Let me just talk. Direct me to my little Padawan bitch. The reason why you'd want a tokenization between stocks is stocks traditionally trade on exchanges which are open 30, 35 hours a week and also are very expensive to trade. And also why wouldn't you just put it on something that's 24 hours, that's more efficient and lower costs of transaction and lower gas fees, if you will.
- [36:30]
D
Some of the regulatory challenges, some of the overhead and barriers to entry of going public. I, in your mind can be addressed through technology. What makes it easier to be on the market, makes it easier to go public, makes it easier to get the full benefit of demand in the marketplace. And so maybe if it's not just about removing regulations, it's about modernizing the system so that more people can participate, you can get more demand, you can get more participation in the marketplace.
- [36:59]
E
I just Want to get your reactions to any other the important antitrust lawsuits or areas of antitrust that are happening right now? I mean, just some cases we could bring up, like the Google AdTech case or the Live Nation case or the Apple case. I mean, so many other antitrust lawsuits going on. Anything that you think is particularly important right now or deserves more attention?
- [37:23]
D
Yeah, I think the remedies in the ad tech case are really important, both in terms of accountability and addressing conflicts of interest. I think we got the, the puck down the ice by saying, okay, yes, the antitrust laws can apply in a modern economy. They can apply to companies like Google and Apple and others. Now we need to mix metaphors to complete the tackle and say, okay, not only can we win in court, but we need to make sure that the cost, that antitrust accountability isn't just the cost of doing business, but that it's better for investors, it's better for shareholders, it's better for the company's bottom line to comply with the law up front rather than viol it and then just getting a parking ticket on the back end. And so I think meaningful remedies that not only address the problem but have a deterrent effect are going to be important. And the Google Ad Tech case in Virginia is one to watch on that front. I think the Ticketmaster case is really important. It's not the biggest market of our economy, but it's the one. It's like maybe the most popular antitrust case in the history of antitrust. It was an example. I mean, when we brought it, I mean, people coming up to me left, right and center, practically giving me hugs for having brought the case to break up Ticketmaster. It's a way in which people can relate to the government working on their behalf. They feel like they feel oppressed by big companies, powerful companies. And Ticketmaster, fairly or unfairly. I think fairly has become a poster child for that.
- [38:55]
E
Could you briefly just explain the Ticketmaster situation? Just for anyone who might have forgotten.
- [39:00]
D
When I was at the antitrust division, DOJ running, we brought a case to break up Ticketmaster, Live Nation, the promotions they own, the ticketing, they own 60 of the top 100amphitheaters. They have tremendous amount of sponsorship and other revenue that's generated from inside of those arenas, either the ones they own and operate or the ones they contract with. And they've basically monopolized the entire stack from top to bottom. And you have this opaque system where people feel like they're out of control, artists don't like it, consumers don't like, like it. And that was the product of numerous mergers and numerous failures, swings and misses by antitrust enforcement authorities. And so part of what we had to do when I got there is we had to clean up the mess and say, okay, no more. We're going to bring big cases, we're going to take big swings. And if companies are breaking the law and breaking them up is the right thing to do, then fuck it, that's what we'll do.
- [39:56]
A
Let me help you out here, Ed, on how it actually impacts people at ground level, because you don't have kids yet, so you go to the Taylor Swift concert. My understanding is Live Nation controls somewhere between 50 and 70% of the tickets by dollar volume of all live events. Is that accurate, Jonathan? It's something extraordinary.
- [40:15]
D
It's something extraordinary like that if for certain kinds of events, in certain types of arenas, the number's even higher.
- [40:20]
A
So you go to SOFI to see the Taylor Swift phenomena and you see every white 15 year old in Southern California. And as you're leaving the venue, all you see are all these dads in cargo pants, like hundreds of them on the, the, the terrace outside of SoFi, because the tickets are $1,400 for shitty seats. So the dads don't even go in. They wait outside and they just sit there with their cargo pants tapping. And then their parents go to the Oasis concert and the ticket, the decent ticket, was $2,300. They pay 23 songs. So when you're an old man like me and you don't want to deal with traffic, you leave three songs early, which is like giving up $300 because of the monopoly. It strikes me, and I don't know if anyone's done any research here, the inflation around live events has outpaced almost everything. The pricing has just gone absolutely crazy. And my sense is they've used technology to put ticket brokers out of business and capture that additional margin. They've said, all right, we'll charge $4,000 for a floor seat rather than having people line up for $200. But where is the back end? Where has the inflation been most severe? Or pricing as a function of concentration of power? Because I think it's hard to look at big tech because there's been a concentration of value, but those products are free. What other markets do you look at and think the pricing is just way too goddamn high because of a concentration of power?
- [41:57]
D
I'll give you a few examples, although I'll say the advertising side and the hardware side I mean, look at your phone. Your phone is getting more expensive, not less expensive, and for an extra megapixel here and there on your camera. But healthcare is one payer provider. Consolidation is out of control. The other area I would keep an eye on to kind of mix the two questions from Scott and Ed is energy. As data centers consume more energy, natural resources are becoming scarce. It is going to get significantly more expensive for families and businesses who need power. And I think the conversation that we're all going to be having five, 10 years from now will be around things like health care, but frankly, it's going to be around power and energy. And those are the new frontiers I think we need to to. We already see prices going up and they're going to continue skyrocketing as data centers absorb more and more literal power from local communities.
- [43:00]
A
But how would antitrust fix that?
- [43:02]
D
That may be an issue of regulation and competition policy and power, but we need to make sure that our businesses and communities can have access to power. But there are also a bunch of issues around wholesale and access to energy and grids. And we've seen a bunch of antitrust cases over the last number of years in connection with the ability to have wholesalers and others getting the proper, affordable access to power. So I think we're going to see a bunch of action around that. But when something gets scarce, prices go up, people try to make money, and people are upset that they're not paying more, and that's a recipe for litigation. And it'd be nice if we can try to get out ahead of that. Also, we should think about the extent to which these data centers really are to bring us right back to the beginning of the conversation. More of that money is being reinvested back in the economy and whether if we're going to subsidize the creation of data centers, we make sure that there's enough power left for the rest of the of us. We make sure that there are enough jobs left for the rest of us because otherwise the money is going to be sucked up by a small number of folks and everyone else is going to suffer.
- [44:18]
E
I was just going to bring up the capex that we talked about at the beginning of the show. It's like, yes, we're investing or the big tech companies are technically reinvesting into the economy by spending and creating the demand for themselves by investing in each other and spending all of that money on the data centers. But I hadn't thought of the other downstream of that, which is, yes, that's going to create more demand on the energy side. I mean, infinitely more demand when we look at the amount that these data centers are going to use up, which is going to drive prices up for the rest of us. And again, it was demand that was kind of created out of thin air because of the size of the balance sheets of these companies and their ability to partner with one another.
- [44:59]
D
And what they're saying is the only thing that's keeping us from AGI or the only thing that's keeping us from competing with China is, you know, is more energy and more data centers.
- [45:08]
E
Yeah.
- [45:09]
D
And even as I was leaving government, I mean, there were, you know, massive government subsidies that go to building out these data centers. And that's, you know, that's taxpayer funded. And so what are taxpayers getting in return for that? I think that's a question, a legitimate question that people should be asking.
- [45:28]
E
We'll be right back after the break. If you're enjoying the show so far, be sure to give Property Markets a follow wherever you get your podcasts.
- [45:43]
F
Avoiding your unfinished home projects because you're not sure where to start. Thumbtack knows homes, so you don't have to don't know the difference between matte paint, finish and satin or what that clunking sound from your dryer is. With Thumbtack, you don't have to be a home pro, you just have to hire one. You can hire top rated pros, see price estimates and read reviews all on the app download today.
- [46:09]
G
Mercury knows that to an entrepreneur, every financial move means more. An international wire means working with the best contractors on any continent. A credit card on day one means creating an ad campaign on day two, and a business loan means loading up on inventory for Black Friday. That's why Mercury offers banking that does more all in one place, so that doing just about anything with your money feels effortless. Visit mercury.com to learn more. Mercury is a financial technology company, not a bank. Banking services provided through Choice Financial Group, Column NA and Evolve bank and Trust members FDIC.
- [46:48]
H
As marketing channels have multiplied, the demand for content has skyrocketed. But everyone can make content that's on brand and stands out. With Adobe Express, you don't have to be a designer to generate images, rewrite text and create effects. That's the beauty of generative AI that's commercially safe. Teams all across your business will be psyched to collaborate and create amazing presentations, videos, social posts, flyers and more. Meet Adobe Express, the quick and easy app to create on brand content. Learn more at Adobe Express Business.
- [47:28]
E
We're Back with Prof. G. Markets. Just going back to the Ticketmaster situation. You mentioned how it's like the most popular antitrust case of all time. And I think that's probably because it's such a consumer specific case. It's like everyone knows everyone buys tickets to go to stuff and to go to live events and concerts. And it's very obvious to people how a monopolized economy could result in higher ticket prices. It's very easy to see that link and make that connection. So it's very popular. My question is, how important is popularity when it comes to antitrust enforcement? When people come up to you on the street and they say, oh my gosh, you're the guy who did that Ticketmaster case. Thank you. Really appreciate it. Is that important when it comes to enforcement? Like, do you need public support? Does that help your case? Does it advance the case? What role does popular support have in antitrust?
- [48:34]
D
People want faith that their government is protecting them. And so, yeah, we brought cases involving agriculture and meat processors. And those are important, important, really important to our farmers and to our economy. But we need public support for the work. We need public support for representatives who are gonna fund the work. We've had a lot of people when I was at the agency trying to squeeze our budget. And listen, right now there's a crisis of confidence in capitalism, There's a crisis of confidence in the marketplace, there's a crisis of confidence in government. And how do we fix that? Well, you give people more faith in all of those things. You give them faith that markets and capitalism can work because you have competitive markets and companies that behave responsibly. You give people confidence in government so that they know that their taxpayers are being used to address the kinds of things that they piss them off, like their concert tickets. And so I think we as government officials, in my case, a former government official, yeah, it matters. It matters a heck of a lot. It doesn't mean we should only do the stuff that is, you know, popular because consumers can see it from street view. But it means we need to do the work of the people and let them know that we're doing it and why we're doing it and then have them, you know, have faith that people are out there looking for their interests and that markets actually can work if we protect them and we make sure that, you know, bad actors are held accountable.
- [50:09]
E
Just on that note, when you look at, at the rise of someone like Zoran Mamdani and people are not happy with capitalism right now, and then someone like Mamdani comes along, who is a democratic socialist, and his view in many cases is that one, that affordability is a problem. And I think we can all agree with that. But in some cases the solution isn't about trying to figure out how to let competition and markets bring prices down, but how to, to enable government to sort of take ownership and then have government bring prices down. So as an example, the city owned grocery store, I think that's probably gotten maybe too much attention, it's a pilot program, whatever. But the reality is his view is, okay, the government will come in, they'll run the grocery store, they'll bring the prices down. And I think that that is indicative of a growing belief among Americans right now that capitalism doesn't work for us and we need to go to more state heavy solutions, something closer to socialism. I just want to get your reactions to what we're seeing in terms of that trajectory.
- [51:21]
D
It's a natural reaction. When markets fail to produce and deliver for people, they're going to look to something else. I mean, Donald Trump preyed on this as well, right? What he talks about is not capitalism in its traditional sense. I mean, I grew up believing in the American dream. I didn't come from a lot of money, the son of two school teachers, living in a 1200 square foot apartment in Queens. But I believe believed in opportunity. If I worked hard, I can own a house, I can own my own business, I could be successful. And that dream is just cut off to too many people. And so in the absence of that opportunity, which I think is exacerbated if not caused by massive wealth inequality, they're going to look to other systems. Those other systems might not be better, but what they see in front of them isn't working. And so how do we, you know, that's one of the reasons why I went into antitrust and one of the reasons why I went into government is to try to figure out if we can make these systems work. So things that I had access to, which was the ability to go to state university, earn education, attend law school, be the first lawyer in my family, make a good living, buy a house, all of those things are available to other people. I think it's a wonderful thing when it works. It's a beautiful thing when it works. It's worth fighting for. But we need to work to protect it. And right now there are too many people in the country who think it's not working for them. And they're angry. And I understand that frustration, I understand that anger. And I'D rather see a positive solution to that by reinvesting in marketplaces, reinvesting in markets, reinvesting in the opportunities, reinvesting in education. The worst thing we can do right now is de invest in universities. It's crazy to think that we are making life harder for the centers of scholarship that have made us such an innovative country. We are going in the wrong direction. And so I don't begrudge anybody who looks to Mamdani or someone else and says, hey, at least they're talking to me. At least they're giving me a way out. But I do think we need to have a broader conversation about what we want our country to look like and how do we get there.
- [53:34]
E
But your view is the solution is capitalism, not socialism, but regulated capitalism?
- [53:40]
D
That's my view, yeah. I think accountability, competition, markets, basic regulations for safety, security, market failures and a thriving middle class. But without a thriving middle class, we're going to continue to have these differences. People are going to continue to hate each other. They're going to continue to see no pathways way to upward mobility and they're gonna seek out other things, some good, some frankly bad. And I think that's a dangerous path and we need to do something about it.
- [54:16]
A
Refereed capitalism, that's. I think it's, as Churchill said, it's the worst system in the world. Except for all the rest. Exactly.
- [54:26]
E
Jonathan Kanter is the former Assistant Attorney General for the Antitrust division of the U.S. department of justice under the Biden administration. During his tenure, he brought major antitrust lawsuits against Google, Google, Apple, Live Nation and Ticketmaster, UnitedHealth, RealPage, American Airlines, the meatpacking industry and many others. He also previously served as an attorney at the FTC and founded his own law firm, Cantor Law Group. We really appreciate your time, Jonathan. Thank you so much for joining us again.
- [54:55]
A
Thanks Jonathan.
- [54:56]
D
Thanks for having me. Always good to see you guys.
- [55:08]
E
Scott, your thoughts?
- [55:09]
A
I like Jonathan and I, I think the concentration of power is. He's talked about it and the lack of, I mean he said some really cogent things and that is I have a tendency because of my anger to want to go in and take on the big guys and break up these huge monolithic companies. And the reality is they're so, so intertwined now to breaking them up. There'd be a lot of kind of what I'll not technical debt. But there'd be, you know, the surgery would be painful, right. Trying to, you'd be trying to separate Siamese septuplets. There'd just be Some damage. And his, one of his key insights I thought was smaller intervention early on, almost like preventive medicine. And I thought that was really, really interesting. Your thoughts?
- [55:57]
E
Well, just responding to what you just said there about the surgery. One thing that's really frustrating to me is agreed preventative medicine is easier and more effective. But what is so upsetting to me is they actually did figure out the surgery. They did identify where to make all the cuts between the Siamese twins, especially with Google as an example, and the search division. And they figured that whole thing out. They laid out the plan, they laid out the remedy. And I think one of the craziest things that we saw when it comes to antitrust this year was the judge agreeing that Google had a monopoly. And then when it comes to dishing out the punishment, he sort of backs off, retraces his steps and he says actually AI is happening and AI means that Google's going to be competing and they have to deal with this really difficult thing called chatgpt. So I'm not really going to, to punish. And that to me was like a giant slap in the face to all of the work that all of these antitrust guys. And to your point, yeah, they spent years and years trying to figure out how do we make that surgery. They figured it out and then the guy, all he had to do was just carry the ball across the line and he didn't do it. And now we see like Google is actually beginning to dominate in AI. We didn't saw those statistics. It's eating OpenAI's lunch.
- [57:23]
A
So.
- [57:23]
E
So I don't know. I agree with you that this stuff is difficult. It doesn't mean that it's impossible. And they proved that. And yet still our system bent in favor of big tech, concentration of power, monopolization. So I was certainly disappointed about that. I know Jonathan was too. I would like to just get your reaction to the capitalism socialism discussion that we had at the end there. These are large, very kind of overly generalized philosophical discussions and I generally don't like them because I think they simplify things too much. However, they are having a place in the national conversation now. The question of capitalism versus socialism actually is a conversation that is being had right now now because so many people are losing their faith in capitalism and we are of course seeing a rise of more socialist minded political leaders. And the obvious example is Mamdani. I want to get your reactions to that. What did you think of what he said? Where do you land on all of this?
- [58:39]
A
I think the purpose of an economy is to create a middle class. That's the whole point. And in order to have a robust middle class, you have to have incentives for people to work hard, take risks, make sacrifices, innovate. And one of the ways you create incentives is by having exceptionally wealthy people and billionaires. And there's nothing wrong with that. The question is, at some point when those billionaires garner so much political power and can engage in regulatory capture where they garner 10, 20, 30, 50% of all wealth now controlled by 26 families, there's just no doubt about it. It's not a growth agenda. It's a transfer of wealth from lower middle income homes to the top.01%. And that erodes the middle class. It erodes faith in America. And for the first time in the history of America, a 30 year old isn't doing as well as his or her parents were at 30. Which to me means America isn't working. And what's so disappointing about that is if you said that that were true in Europe, the politicians could blame it on a lack of growth, overregulation, a lack of a technology, a technology investments, a lack of entrepreneurial risk taking, the rise of China. We have no excuse in the United States. Prosperity is here in terms of wealth creation. It's just we have made a conscious decision not to distribute it equally. And one of the ways that there's regulatory capture is this weird form of oligarchy, cronyism meets socialism, where the President decides after leaving a trail of unpaid subcontractors and bankruptcies, that he understands business better than anyone. And rather than going through the process of checks and balances to pass laws, he says no, we should invest in intel. No, we should have one golden share in US Steel and control it. No, I'm going to write laws unilaterally that transfer wealth from 490 of the 500s and P to the 10. I'm going to neuter the IRS such that the wealthiest Americans, where there is a tax gap of 6 or $700 billion a year in uncollected taxes, continues to go uncollected. We have all these arguments, these false arguments around left versus right. It's not, it's top versus bottom. And it's also the fact that our taxes would not need to go up if everybody paid them. The only place the President isn't advocating for AI is AI or in the irs. Because there is so much incentive now to skirt tax laws and the tax code going from 400 to 4,000 pages, there is so much incentive for the Wealthy to continue to sequester educational certification and housing from anybody else because they already own these assets that the middle class are being priced out of America and there's a lack of distribution of wealth. And the unfortunate thing is that America puts up with it because Americans are so optimistic that they believe there's a decent chance that they or the kids at some point will be in that 0.1%. Where it's most apparent is the boring shit. 17% of our GDP goes to healthcare. $4 trillion. If we brought those costs down to what they were in the rest of the modern world, we'd save $2 trillion a year, which indirectly would solve our deficit. So we are in late stage capitalism where the top 1 or 2% are capturing all the gains. And the point of government is to have refereed capitalism and you have to have a redistribution of wealth. And the far right and incumbents would like to convince people of your generation that there'll be more opportunity and the middle class will heal itself naturally. Bullshit. Throughout history, the middle class doesn't exist. It existed for a brief period in post World War II Europe and America and in China because of a constant redistribution of capital and opportunity back to the households who are less fortunate. And we have given up on that in America or we're slowly giving up on it. So it's, you know, the illusion of complexity gets in the way of everything here. There are common sense solutions for all of this. Do you need to cut spending or raise taxes? The answer is yes. Do you need to provide young people with a shot at buying a home, build a ton of houses, tax incentives to unleash the private sector on building a massive number of houses, reduce regulation? Do you need greater taxes on corporations? Do you need to break up the cartel and the trust of modern my industry academia such that kids can achieve certification at a lower price? Do you need more tax policies that tax capital, not labor, such that it takes money out of my pocket and puts it into your pocket, such that you are more attractive to the opposite sex and can provide for them. And we acknowledge that women want providers and protectors and you can have kids and you can feel good about America and you decide to serve and you decide to run for office. This. And we reinspire this upward spiral. Instead we make all of these bullshit excuses for why the rich should get richer and richer and richer and we elect a strong man because we'd rather have a strong man who's an autocrat than a bunch of weak liberals who have, as Jonathan said, no north star. There are basic common sense fixes to all of this shit. It just requires political will.
- [63:58]
E
This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our research team is Dan Shalon, Isabella Kinsel, Kristen o' Donoghue and Mia Silverio. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Proftree Markets from Proftry Media. If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
- [64:29]
A
You have in kind reunion.
- [64:58]
F
You're a guy who just wants to look nice. The kind of nice where you might get a nice compliment on the niceness of your nice new outfit.
- [65:04]
E
Good thing.
- [65:05]
F
Men's Wearhouse has everything from polos to jeans and yes, suits. Plus a team to help you find the perfect fit to make sure you look nice. Nice.
- [65:11]
E
Love the way you look.
- [65:12]
F
Men's Wearhouse.