Litigation Update: US v. Apple

Edith Harold: Hello everyone and welcome to this Federalist Society virtual event. My name is Edith Harold and I'm an assistant Director of Practice Groups with the Federalist Society. Today we're excited to host this litigation update on US v. Apple featuring Professor Rebecca Haw Allensworth and the Honorable Maureen K. Ohlhausen as speakers and Deborah Garza as moderator. Deborah Garza is a partner at Rule Garza Howley LLP and she has served as an advisor to firms for over 40 years on strategic transactions, civil and criminal investigations and litigations, and she's the 2022 recipient of Global Competition Review's Lifetime Achievement Award. She's also served in key government enforcement and policy roles, including as Deputy Assistant Attorney General and Acting Assistant Attorney General of the Antitrust Division of the US Justice Department and as Chair of the Antitrust Modernization Commission. If you'd like to learn more about today's moderator or speakers, their full bios can be viewed on our website fedsoc.org. Near the end of the program, we will turn to the audience for questions. If you have a question, please enter it into the Q&A function at the bottom of your Zoom window and we'll do our best to answer as many as we can. Finally, I'll note that as always, all expressions of opinion today are those of our guest speakers, not the Federalist Society. And with that thank you Deborah for joining us. I'll hand things over to you.

Deborah A. Garza: Thank you. Thank you Edith, and thank you for the very kind introduction we'll be discussing today, US v. Apple with two guests, professor Rebecca Haw Allensworth and the Honorable Maureen Ohlhausen. I think Professor Allensworth will be joining us in a minute or so. In the meantime, let me do a little bit of introduction of the two of them, and as Edith said, you can review their more extended bios on the webinar webpage and I encourage you to do so. Both Maureen and Rebecca are probably very well known to most of you, and if you don't know them, you should know them. Maureen is currently a partner in the DC office of Wilson Sonsini. She also spent 12 years at the Federal Trade Commission, first as a very consequential head of the Office of Policy and Planning and as a commissioner and an acting chair of the Federal Trade Commission as head of OPP, she shared the internet task force, which produced a very influential report analyzing competition and consumer protection issues in the broadband and internet sector.

So Maureen was really thinking about all these hard issues back at the beginning, and I have to say that I find that her thoughtful analysis of these issues and her writings have been really helpful and she's been for that reason, really very influential in development of the law. And so we're lucky to her here today. Professor Allensworth is an antitrust scholar in her own right whose work focuses on part on competition policies that relates specifically to tech platforms as well as professional licensing. And her work has been cited by the Supreme Court and she has been recognized for her groundbreaking antitrust scholarship. So we have two speakers, very knowledgeable in the area today to make the best use of our limited time. While we wait for Professor Allensworth, I'm going to just do a very brief summary of the US versus Apple case just so we have the context for the discussion.

Today. In March of this year, the US Justice Department and 16 states filed a sweeping complaint against Apple alleging that it has monopolized and attempted to monopolize the US market for in the US for smartphone and performance smartphones. An issue is an array of current and past Apple policies and restrictions that govern the way that third party applications access and engage on the iPhone platform. Plaintiff's claim that Apple's failure to open its platform prevents the development of super apps and cross platform functionality that would make it easier or more attractive for Apple users to select or switch to rival smartphones. And according to the plaintiff's, this inability, the stickiness and inability to switch has had an effect throughout the industry in suppressing innovation and better features and apps for the iPhones. In contrast, apple characterizes its practice as a pro competitive way to differentiate its products and make them more attractive and safe and secure for consumers to use.

The case is just beginning to get moving. Apple recently was permitted to file a motion to dismiss, which will be coming up. Apple says that it intends to address all of the claims in the case in its motion to dismiss, and it appears that they will challenge the claims under existing section two jurisprudence governing company's duty to deal and design choices. So that's a very quick summary of the case and maybe we'll get to some of the more details of that in our discussion. And I'll start with Maureen. So Maureen, the Biden administration and the Trump administration have been very different in terms of antitrust enforcement, but they have one common area in that they both have focused significant resources in investigating large tech companies. The wide ranging conduct investigations of Apple, Facebook, Amazon, and Google. All reportedly started under the Trump administration, which brought the first Google case challenging Google's search products as well as the Facebook case or meta case. From your perspective, how is the Biden administration's enforcement philosophy for high-tech platform markets different from prior administrations, particularly the Trump administration, which also has a deep skepticism of big tech?

Hon. Maureen K. Ohlhausen: Deb, thanks so much for the question and thank you to the Federalist Society for having me here today. I'm delighted to be on this panel talking about these interesting topics. I think that there is this overlap between the two administrations of a focus on some of the biggest players in tech. So as you mentioned under the Trump administration, they started investigations a handful of the biggest players, and as they brought forward the cases under the Trump administration, I think they were focused more on traditional types of antitrust law theories. So I think in the meta case it was monopolization through a series of, well through acquisitions that later on according to the complaint, were seen in a different light than when they were reviewed by the commission.

But less this idea of a focus on tech's obligation or platform's obligation to interconnect with their rivals to avoid things like self preferencing. Self preferencing is not really in antitrust term, but we're starting to hear about it in antitrust. I think it's the Biden administration in its approach is taking a more regulatory type of approach of regulating the platforms almost like a utility style regulator like we're seeing in Europe occurring with the digital regulation over there. And I see there, of course this is Apple is a DOJ case, all they have is they can't rely on unfair methods of competition like the FTC to try to broaden what might be a violation. But I see the way they're arguing things, they're deploying these theories, I think they're looking to that idea of an obligation to interconnect, interact, help your rivals in a way that I think is a little different than we've seen previously accepted in cust.

And as for tech more generally. So kind of outside these collection of cases, in my impression in the Trump was it was the big platforms that were the focus in the Biden administration. They're certainly still focused on those platforms, but they are also taking I think a much broader brush approach to scrutiny of the tech, what we might even consider a little tech or medium tech. I see concerns there and they're talking a lot about things involving, they say things like, well, we kind of missed things when the internet was first getting started and we don't want to miss those same kind of things. We want to intervene earlier and we want to be more involved in AI and Cloud and the staff for that. And I think, so they're looking to go with broader theories earlier in the development of new technologies. And it's also kind of a piece of skepticism I think across the board or maybe just more critical lens put on business conduct more generally.

So it's not limited solely to tech, I'll put it that way. But certainly tech has been a rather large focus for the current administration and we'll see how these cases play out. I mean it's interesting because we have the Trump cases still rolling through. We have the new cases and then we have attempts in Congress to actually change in 2021-2022, we saw attempts in Congress to really change the antitrust laws and to kind of embrace these more regulatory theories for the behavior of big platforms, for how big platforms have to deal with competitors who need access to the platform or want access to the platform. So I think some of that sort of, while it didn't get through in Congress, I think there's an interest in trying to develop those same obligations through these cases.

Deborah A. Garza: So more, I do remember back in the nineties, eighties and nineties, there was a concern by regulators not to intervene too early. So there was a little bit of regulatory humility, if you will, and a desire not to influence who would be the winners and losers and not to inadvertently suppress innovation by doing something that was too soon. And there was also a sense of nascent industry development, et cetera. But of course, as you mentioned now the Biden administration antitrust enforcers said, well, but you missed things, right? You were asleep at the wheel and what you didn't see, you didn't catch. And now we've got these super platforms with moats around them. So I guess my question to you is, since me, you were there at that time and we're focused on these issues, did prior administrations miss something? In your opinion? Was there a basis and would it have been good to do something to set the rules for competition for the platform or competition on the platform back then?

Hon. Maureen K. Ohlhausen: I think that it's important to do retrospectives and to actually put some data behind those kinds of assertions. I think it's kind of easy to say, oh look, we have big players and we don't like big players because for whatever collection of reasons one might not having big tech platforms, ergo something was missed early on. And so I'm not defensive to say, look, there's certainly that's possible, but can somebody sort of show the example of where it was missed and how it was missed and put some data beyond it, beyond I think merely a broad statement, a broad statement like that. I think we're seeing that it's also can be a little hard to untangle some of that because companies become large and effective for a lot of different reasons, including we talk about network effects, we talk about technological innovation on the merger side.

So I know the Apple case is not a merger case, but on the merger side I think there is this idea that well, a bigger player bought a smaller player and then sort of brought that into the fold and then it became a very important part of the platform and that had that smaller player just stayed independent, they would've grown up to be this big giant killer. And I don't think you can really make that presumption. One of the reasons we know that smaller startups run what they run into is that at some point, yes, they may have a great idea and they may have some smart people working on it, but do they have the professional management, do they have the resources? Do they have the ability to grow it into that big successful part of the business? And even going further back in the chain without having that exit strategy for the smaller players, does this whole system even. So anyway, just a way to say, I don't think you can, I'm not saying that it's not possible, but I don't think you can just say there's something in the market I don't like today. Ergo, antitrust has failed in the past.

Deborah A. Garza: So one of the things that Professor Allensworth has written about and that we would talk with her when she joins is this difference between competition for the platform and competition on the platform. So there's a period of time in which you have competition for the platform in which you're basically trying to present a product that consumers will buy into and you're trying to make it attractive. So for example, with Apple, they start out with the iPhone or the iPod I guess, and then the iPhone and their job is to basically build something that people will want to use and to develop the apps that will bring everybody together on the platform, et cetera at some point. So they win the platform so they succeed and they do what we want them to do by building and offering a good product. And then you switch to competition on the platform. When does that happen? So if I'm little tech right now and I'm coming up with some killer app or I'm coming up with something, at what point do my antitrust obligations and the rules of the road change for me?

Hon. Maureen K. Ohlhausen: Yeah, that's a really good question. A couple of years ago I wrote an article, a paper, actually first it was a speech and then became an article, a paper called "Brother May I? The Challenge of Competitor Control Over Market Entry." And that's something we've seen really throughout antitrust and one of the areas that I talked about in that case, in that article had to do with this question of if I need access to my competitors' infrastructure to compete with them, what are the obligations there? And I think that's sort of what we're looking for in the Apple case that's really teed up very clearly in a way that some other cases, the brother may I cases that I had talked about were more about a monopoly. So first of all, you need market power. You need to be able that your decisions are going to affect competition in the market.

You're large enough for that and case law has set that bar pretty high. I think that there is sort of a question of whether it has DOJ made out a market for performance smartphones that a court will accept, right? But basically that's a threshold you have to have, I think market power. Then I think the question is, is there just the, it's useful for, I would like to have access to that platform, it's cheaper for me as a rival, I just prefer it, or is it actually, that's really the only way to enter the market, right? I think is a key question there for competition on the platform. I think courts have been pretty reluctant to say that there's some sort of obligation for a competitor to just simply give access to rivals because rivals want. It kind of goes back to some property rights ideas and independent business judgment.

So I think that's one of the questions that really comes to the fore in this type of case versus some other cases. I think about the McWayne case that when I was at the FTC that we brought and won in the 11th Circuit and that was more about a classic distribution, like exclusive dealing saying if you buy from us and someone who has market power, you can't buy if you buy from our rival, you can't buy from us, that kind of thing. And that is not really what's at issue in the Apple case, but that's certainly one where of this single firm conduct kind of question. So here I think it really is brings up all these interesting issues of do they have market power? Are they the only door to the market? Are their refusal to basically give rivals access on the conditions under which the rivals prefer? Is that anti competitive or how does that balance with basically their own decision? So I think that we will talk more about those kinds of questions, but I think that that is kind of classic competition on the platform kinds of issues that need to be hashed through in the courts.

Deborah A. Garza: Which brings us to the next segment of our discussion, which is what will be the key issues of fact and law in this case? The government's core allegation is that Apple has and competitively refused to permit third party developers access to the iPhone platform. Apple has raised cases like Aspen Skiing on refusal to deal. They've also raised, I think they're also trying to maneuver around the Amex case in talking about trying to distinguish this iPhone platform from the kind of platform that was a transactions platform to argue that when they look at efficiencies, it's net efficiencies on both sides of the platform. So there are going to be a lot of issues of law and fact, but my question to you is what do you see as the most significant issues of law and fact that will have to be addressed in this case as it goes forward?

Hon. Maureen K. Ohlhausen:

So I kind of put the factual issues first. I think it really drives the legal analysis and that's also something that drives me crazy is because people often it's like antitrust is intensely factual kind of inquiry, but so rivals want access to Apple's platform under certain terms that the rivals prefer. I think there are some important questions in there, which is are there, first of all, has Apple ever provided access on those terms to others? So that's kind of the classic, was there a prior course of dealing that now has been abandoned and you can have some presumptions that it was previously a profitable thing and that now it's being abandoned for any competitive reasons and the profit sacrifice tests and all that that goes into that. So I think that's an important question. And then is this something that would be hard? We see this in the Trinko case and some other cases.

This is not just plugging in accord to plugging something in that's already made there and they have a price and that's already been established. So I don't think we have that in this case, but that's an important factual thing. Then are there reasons why Apple - pro-competitive reasons - Apple has created the system the way that they've created it? I think that's another really important factual thing. So once we have those factual things, then I think we flip to those legal questions, which is this like Aspen Skiing or Otter Tail where they were offering this product service, what have you, access in the market for a price and they turned away from it. Is this a choice that was made specifically to just work competition and doesn't have other pro-competitive reasons, quality, safety, kind of what have you? And then I think there's also the question of does this system the way they have it make apple's own product work better? Does it make the phone work better? Because as we look at cases, we look at the Microsoft case, this question about the Java thing was like, well yeah, they changed it but it made Microsoft's product work better so the court didn't find there anyway, that's sort of like the facts should then lead to what the correct legal analysis is.

Deborah A. Garza: Okay, and Professor Allensworth, we were just talking about the issues that are likely to be determinative and hotly contested in the case. If the government's able to meet its initial burden, Apple's defense will likely focus on pro-competitive. As Maureen was suggesting, procompetitive justifications for the policies the government is challenged and early advocacy by Apple suggests that privacy and security will be a prominent part of its defense. How do you think the court is likely to weigh apple's defenses based on privacy and security and how much will the judge test privacy as a justification?

Rebecca Haw Allensworth: So thank you. First, let me thank the Federalist Society for inviting me and also sincerely apologize. Sometimes when I adjust things for central time, I add an hour and sometimes I subtract an hour. One of those is correct and I did the wrong one today, so I'm really sincerely sorry about that and I'm sorry to have missed the beginning of this discussion, but to answer your question, the procompetitive justifications are going to be crucial here. And some of the things that Maureen said I think are correct in terms of how litigation is likely to go. There will be argumentation about whether or not there was a prior course of dealing and there will be argumentation about whether or not the things that are not being provided in terms of access could easily be provided or are easily found on the market. However, I would argue that neither of those things are elements, they're not required.

The question here really is are these product design choices primarily motivated by an idea of exclusion or are they really about delivering consumer value? And that question is aided by questions about did you have a presumably profitable course of dealing? Is this something you could easily provide? In fact you provided at retail terms to others, that question is furthered by those things, but I wanted to get out there the idea that it's not my view that that is a part of the initial burden that will have to be carried. The initial burden will be: is this something that makes it harder for other people to compete? Then it will shift to this very crucial set of procompetitive justifications and in my view, this is where the case is going to be won or lost. So Apple is fortunate in the sense that it has a longstanding reputation of valuing privacy and of doing a sort of integrated streamlined design where everything works together and therefore doesn't always work perfectly with things outside of the ecosystem.

The idea that Apple has cultivated from the beginning is that it is an that you can trust everything within it and everything works well in terms of interoperation. It was a competitive offering at the time to the more kind of open texture, maybe not open source, but more open environment of the Microsoft universe. And so that gives it a headstart that gives Apple a headstart for these procompetitive justifications. On the other hand, at least what we know from the complaint is that the government is going to be prepared to argue that these are pretextual. So this will be a very fact heavy set of questions that the court will want to see answered in deciding whether or not it's carried its procompetitive justifications.

Deborah A. Garza: So let me go back to what you were talking about in terms of the government's initial burden, which I think you characterize as did it make it harder to compete but to be more precise? I mean I assume that the government has to, and they have alleged market power and they base that on revenue-based market shares in sales in the US for the smartphones and smart or super phone performance phones and then I think they have to allege exclusionary conduct. I mean, is there a difference between alleging exclusionary conduct and alleging conduct and alleging that they made it harder to compete? Where do you draw the line?

Rebecca Haw Allensworth: Well, it is a great question. I mean, yes, so for example, in a different case in the Amazon case, it's awfully hard to compete with Amazon because nobody has the distribution systems that Amazon has. That does not sound to me like a great case for a plaintiff, whether the government or otherwise to bring as an initial matter. But the closer we come to asking the question, is this exclusionary? The more I think that we're tempted to collapse all of the, and I think this is actually what courts do to be quite honest, collapse the whole inquiry into that question. Yes, the question in section two cases is this exclusionary in a way that gives you a competitive edge by disadvantaging your competitors without any pro-competitive justification that's not having the best distribution system that's not competing on the merits. So I guess part of what I'm saying is I resist the idea that this burden shifting system does a lot of work.

I think even at stage one, if that's what the judge says they're doing, they're thinking about the competitive justifications in asking the question, does it make it harder to compete? So in that sense, I sort of agree with you, but the way in which I disagree with you is that is this idea that there's a tight burden shifting question, which is first the plaintiff has to make its arguments putting all of the procompetitive justifications in this little box for later because of course they're part of that initial question of is this exclusionary in a way that antitrust law is prepared to condemn?

Deborah A. Garza: Okay. Maureen, do you have anything to add to that?

Hon. Maureen K. Ohlhausen: I mean I think the Microsoft burden shifting approach is pretty well accepted, but I do agree that sort of psychologically when a judge is looking at this, I'm not sure it's as airtight as it might suggest, but I think you're right in that regard that while there is this framework and I think court is likely to follow that, it's hard to just completely cleave those things off because I think you're right, there is this question of is it a competitive design choice or whatever, however you characterize the choice that they made, whether it's design or business choices or things like that.

Deborah A. Garza: And so I guess going further than that, so we talked about this a little bit before you joined Professor Allensworth there. So in the Amex - there appears in the complaint it appears that the DOJ is anticipating and trying to differentiate itself. Its complaint against the Apple alleged Apple iPhone platform from the kinds of platform that the Supreme Court was talking about in the Amex case. So Amex in the American Express case, which involved the payment systems platform, the court held that when you're looking at these competitive justifications and efficiencies, you have to look at net efficiencies. So you've got to look at efficiencies on both sides of the platform. In that case you've got to look at for the banks and the vendors and the consumers here, the DOJ seems in the states seem to be positioning to say no net balancing. They say that this is not transactions, not purely a transactions platform. People select an iPhone because of the other sort of features and functionality have nothing to do with transacting. And so therefore we're going to look at the efficiencies on that side of the platform, if you will, and each side separately. Do you have any views on that and how the court is likely to sort out in light of Amex what they need to do when they're looking at these competitive justifications and alleged asserted efficiencies?

Rebecca Haw Allensworth: Well, I think this is actually kind of connects very nicely with the point I was trying to make earlier. So in fact the holding of Amex kind of does the thing that I think the burden shifting framework is trying to push against, which is it does it kind of all in one chunk and I think that what you are likely to see is Apple using the holding in Amex to its benefit to say you have to look at this all at once. At step one you do the whole thing, you decide whether or not this is pro anti-competitive on balance. And like I said, there is some precedent for that and the government will argue no, we go stepwise and we don't have to look at it all at once. But yes, it's sort of the smushing together of the two sides of the platform that I think that Apple will try to make.

Try to sort of like, well don't look over here, look at the whole do you like your iPhone? Does it work well for you? Is it a popular product? Oh great, okay, so we can agree Paris is the capital of France, now we move on to the next thing. And then I think that the litigators on the side of the government will be doing everything they can to dance around American Express. I think there's a real sense that American Express was an overreach. Now it is a Supreme Court precedent. So overreach or not it's the law, but I think this will be an important opportunity for the courts to clarify what exactly American Express meant when it defined the market by including the platform and not the two sides of the platform.

Deborah A. Garza: Thank you. So another issue that's common in many high tech antitrust cases is the latitude that a company has to pursue as preferred design choices. For example, ample may want a closed ecosystem, and we've referenced this already because it may make it easier for customers to use its products such as having a smart watch automatically sync with a cell phone, et cetera. How does a court draw a line between design preferences of a company and where those choices may also be on a competitive, how does the court weigh any and a competitive effect with the pro-competitive benefit of ease of use, particularly when it comes to technology that can otherwise be difficult for many consumers to use?

Hon. Maureen K. Ohlhausen: So design choices are not per se legal, so it's not that you can do anything, but it is very, very rare. I think for a court to say a design choice is a - the often used term is predatory, a predatory design design choice - where there have been cases like that. There is one that involved redesigning a needle gun for needle biopsies and the competitors needle cartridges fit in it. They redesigned it so that they didn't fit, but there was no quality improvement. That's kind of what the court found. There was another one that involved a, I think it was an Alzheimer's drug to go to a single day dose rather than twice a day dose. And that created a problem with generic substitutability. The generic twice a day dose was about to enter the market and the court found that that design was an antitrust violation. Though I think that one is pretty debatable. There probably is some benefit to having a single day dose for those kinds of medicines, but it's pretty rare. So if you just design your product in a way that is like an improvement, it is just an improvement and everybody's, sorry, you got to catch up later. It's improvement. 

Courts have been very, very hesitant to say no, you foiled competitors who were kind of relying on your previous design, they can't interoperate or whatever reason they're relying on your design.

That alone, the effect on competitors is not sufficient. It really has to be something where it's designed with no real benefit for improvements for consumers and it is simply designed to foil competitors. So I think that that is, like I mentioned in the Microsoft case with the Java virtual machine, so it was incompatible with rivals, but it helped Microsoft's product work better and the court said, well that's okay. So I think it's an area where in this case it might be I think particularly difficult because Apple, its whole approach is the closed system, is the easy curated approach. So I'm not saying that it's impossible and maybe there's evidence and documents or something that show this is solely to foil competition, but that is not something that I think is intuitive about how Apple operates and how it is consistently positioned itself over time.

Deborah A. Garza: Rebecca, I think you've thought about these issues and thought about in the context of concerns about competition for the platform versus on the platform. Do you have any comments on that?

Rebecca Haw Allensworth: Yeah, so I mean I agree with everything Maureen said. If what we're observing is the holdings that courts have made various facts specific over the last few decades, and if you look at those, the constellation of those, it's the case involving heart rate monitors that aren't compatible with the heart rate machines. It's actually very similar to the needle case and the court's very deferential there to product design choices. The thing that I guess I do want to push back on is I think that this deference to product design, this policy that courts have been pursuing that's not particularly spelled out in the antitrust laws, that's not particularly spelled out in the antitrust case law prior to 1980 is really coming under pressure right now. I think there's a mounting recognition that giving companies carte blanche in terms of their product design choices has the potential to really impair competition and it will impair competition in one of two ways.

One for the platform. So if you can design your platform however you'd like, as long as you raise some even flimsy competitive good for consumer product design argument, then you make it harder to topple that platform competitively. And if you design your platform to be very exclusionary of other companies that might sit on or use the platform, then you're not going to have competition on the platform. This realization that the policy that courts have pursued by being so deferential on the facts, and that's a point I want to get to in just a second on the facts over the last 40 years is going to put pressure on courts to adjust the way they decide these cases. Will it be enough for the government to win In this case? I don't really know, but I think the key thing here is that everybody could agree even over the last 40 years that a product designed choice that is designed and has the effect of primarily being exclusionary without really having a significant offsetting benefit to consumers is potentially a bad act under the Sherman Act.

The way that the courts have kind of gotten around that for 40 years is to say, well, we'll accept kind of any argument, any argument you want to make about how this slightly improves the product. We're going to go for it. We're not going to roll up our sleeves and balance it against the anti-competitive effect. We're not going to try to figure out what you were really thinking. I think those two choices are not necessarily going to survive this current moment that we have of pushback against the laissez-faire. I'm not sure the courts are going to maintain their willingness to turn a blind eye to what's really going on behind these business decisions.

Deborah A. Garza: So I'm glad you said you referenced this current moment that lets us segue into the next part of our discussion, which includes the fact that we we're going to get a new administration one way or another after November. Do you think that the change in administration will matter to the Apple case? I mean based on what we know about at this point, what we know about whether Kamala Harris would continue to pursue the current approach of the Biden administration and what kind of approach would occur in the Trump/Vance Administration, do we have any sense of whether we're going to see a swing of the pendulum back or continue the momentum that exists right now? Either one of you,

Rebecca Haw Allensworth: Maureen, you have the longer view on this. I'm interested to hear what you think.

Hon. Maureen K. Ohlhausen: Well, my experience has suggested that the antitrust agencies don't immediately, if there's a change in administration, don't necessarily immediately come in and stop the presses on all the current enforcement action. They may review it. I mean, sometimes there is a real sea change maybe when the Reagan Administration started, and Deb, you probably have more experience being closer to that. And so I think that there will be the cases that are in court happening. Well, I think they'll continue at least for a while. I think that there may be some preliminary decisions that get made and also whether there is a decision that maybe a case should get settled, maybe there's a way for something to get resolved. So you think about the Microsoft case, right? There was an administration change and then you did have after the court decision eventually kind of a settlement with remedies. So I think these cases will not immediately get thrown out the window if there's a Trump administration. And I also think a lot of this inquiry started under the Trump administration and particularly of these large platforms. So who knows, they may just be like, keep going. So I think it's a little bit hard to tell right now other than I don't anticipate some sort of immediate stop.

Deborah A. Garza: Okay, so notice early the record suggests that any remedy is likely to be behavioral in the Apple case, which is reminiscent of US v. Microsoft settlement from 20 plus years ago. How does the range of likely remedies in Apple compare Maureen to the Apple settlement and should the Biden administration use the Microsoft settlement as a roadmap to address the issues in Apple? And clearly the complaint relies on the Microsoft case to a substantial extent, making the assertion that Apple, after all benefited in the government's view, benefited from the settlement in the Microsoft case by being able to have iTunes on the Windows platform, which helped to with the launch of the success of the iPod. So what would you predict would be the likely course here with respect to remedies and how significant is the Microsoft settlement to trying to figure out what remedies might be? And did you think that M, do you agree that the Microsoft settlement was a success?

Hon. Maureen K. Ohlhausen: So starting with your last question first, I don't think the Microsoft settlement is necessarily considered as a very successful settlement, and it really brought up a lot of issues of ability, which we also think about with the at t breakup and things like that. And going, I think to some of these questions also about product design and if this product isn't already on the market and what price and under what conditions, how does a court decide what's the right price, what are the right terms? And a court saying, well, how do I know what's the technical interoperability kind of things is the right decision? I think a court is going to consider pretty carefully administ ability. I think that the Microsoft remedies, I mean some of them offer the same product, one with reduced capabilities for the same price. Like surprise people didn't choose that option.

But I don't think that's really quite an issue here. So I don't think a structural remedy is so, I mean, this isn't a merger case where we're pulling back apart two entities who had been previously separated. This would be kind of dividing up a company that grew organically and consciously to have this. So I think behavioral is really all there is, and I think it would have to be the type of remedy that would be easy to administer that would say, you can't have X or Y terms in your contract and kind of go from there. But once you start getting into pricing, once you start getting into technological kind of connections, I think it might be a little hard for a court to say that they know how to do that appropriately.

Deborah A. Garza: So one of the things, and one of the things that the Microsoft settlement involved was a, I've forgotten now what it's called, but a tech committee. There was an element of self-regulation, and I'm raising this Rebecca, I know that's another area that you focus on, which is industry self-regulation, right? And we didn't discuss this previously, so if you don't have a view on it, that's okay. And I was around during the Reagan administration and I'm acutely aware of the problems of ability with respect to the breakup of AT&T. That was a nightmare. But do you see Rebecca a way to deal with that administration problem and use some form of self-regulation or reporting or a tech committee or something here for Apple?

Rebecca Haw Allensworth: Well, I'm very skeptical of self-regulation. I think most antitrust people would be, and in my other life I write about professional licensing. I actually have a book coming out called "The Licensing Racket." So that gives you an idea of what I think about self-regulation in the professions. I think that we are at the beginning of an era of courts rolling up their sleeves and doing a little bit of this forced sharing, even the things that Maureen's identifying of in your contract, you can't have this, you can't have that, that could be characterized as forced sharing and all of the downsides of courts getting involved with figuring out how much you should share on what terms with what kinds of competitors, all those downsides are real. But I think we're at the beginning of realizing that there are some really serious downsides to not doing that at all.

And so these questions of administ ability I think are well made. But when you say that the AT&T breakup was a nightmare, you could mean one of two things. You could mean that it was an administrative IT nightmare from an administration perspective, or you could mean that it was a failure from a perspective of opening up competition. I think the second point is pretty controversial. I think a lot of people would argue that the at t breakup actually did eventually and as messy as it was, make telecom more competitive and pave the way for some of the telecom innovations that came after that. And so the question is, is it worth the nightmare for the longer term, better state? And I think the other thing is since we're at the very early stages of figuring out through case law, by braille really, how to do these forced sharing cases, settlement by settlement consent decree by consent decree, there will start to be some sort of precedent and some sort of norms around how it's done.

And then it will become easier for companies to know what they can and can't do. And it will not be courts having to regulate every single, it won't be self-regulation, and it also won't be direct regulation by the courts. It will be something that people can pull out of the case law and pull out of the settlements to understand what is on and off the table. So I mean, I guess I don't have an easy solution for how to come up with an administrative way to do some forced sharing. First thing I would do is probably not call it forced sharing, but at the end of the day, that is kind of what it is.

Deborah A. Garza: So just to be clear on what I meant by in the AT&T decree, one of the things, for example, in the decree was to limit the lines of businesses in which the R box, the regional bell operating companies could engage. So you had antitrust division lawyers and economists looking at applications by the R box to enter into lines of business or to engage in certain, use certain technology, and then that needed a recommendation. Then I had to go to the court, and the problem was antitrust lawyers and economists are really not well placed to assess those kinds of applications. And ultimately we had piles of backed up applications by the companies. It was essentially holding up their business operations and not a very good way for us to make a judgment or for the court to make a judgment about the impact of going into these lines of business.

So you basically had antitrust enforcers standing there as part of the process of innovation and how it was going to work, and that was the nightmare part of it. I think it really highlighted the difficulty that I think Justice Breyer had noticed and had talked about in some, I can't remember the decision, but the difficulty of courts and antitrust forces of really engaging in quite focused regulation of a company. So it is a really hard or hard problem. And now, Rebecca, before we wrap up, I want to talk to you a little bit about how the EC has approached this issue. So Apple has faced scrutiny from the EC in addition to fines. They have been order to undertake a series of behavioral remedies. I guess to what extent do you think that the Biden administration is influenced by these international antitrust enforcement efforts, and how might that change the way that we in the US tend to look at these things? What do you see them importing from Europe, which has quite a different system from ours?

Rebecca Haw Allensworth: Yeah. Well, I mean it's a little bit of a proof of concept. I did a lot of interviews with the media on the day that this lawsuit dropped, and my favorite one was from abroad. I think it was a British outfit, said, why is America suing its most successful company? Why is it trying to destroy the golden goose? And my answer was, they're not trying to destroy the golden goose. It's not going to be a breakup. I totally agree with Maureen on that, they are not trying to destroy Apple and Apple's under these kinds of regulations in Europe and still able to do well and compete there. So it's a bit of a proof of concept, but it's also a political liability. Not a lot of Americans want to be seen as further aligning themselves with the regulatory system in Europe. I mean, maybe some progressives are happy to embrace that, but it's not going to fly bipartisan. "Hey, let's model our antitrust laws after the European system." And so I think the key thing here will be to put it in terms that I think are really real, which is about innovation. I think that America's all about the next great idea. I think America's all about competition that leads to new ideas. Apple was started in a garage or a dorm room. I forget, everyone's a garage or a dorm room.

The question is how can we create a competitive environment that lets those garage and dorm room businesses thrive? And I just want to again highlight that the kind of innovation that the agency stood in the way of that you were describing with the AT&T case, that's a very important kind of innovation, but there's also another kind of innovation that regulation actually empowered. So how are we going to balance these two different kinds of innovation? One, the big incumbent companies making new and exciting products, giving a lot of money to R&D. That's an important kind of innovation. And then the upstart next big thing, new thing that needs access to the network, to the platform to compete also important. I think we're increasingly seeing that. So you were asking about Europe, does Europe strike the right balance between these two things? I'm not sure, but they talk about it in those terms. They recognize that there's two different kinds of competition for the platform and on the platform.

Deborah A. Garza: I guess my final question is, does the US v. Apple case really matter given a very assertive, aggressive European approach? I mean, if Europe is taking the lead in regulating digital markets or platform markets and Apple has to play globally, doesn't matter. I mean, are we just being overtaken? Is Europe basically setting the standard for regulation of these markets? Maureen, do you have a view on that?

Hon. Maureen K. Ohlhausen: I mean, I think that's a really good question. And also when you look at the European approach and you look at European innovation and development in the tech industry, the difference is stark, right? It's not happening in the US and that is increasingly so. I mean, there's a very stark divergence. So I think it's an important question to ask, which is maybe they're doing that, but isn't that the right answer for consumers and innovation and for the race that we're in with rising competition in these important areas from China? So I think that's a really, really important question. And to the bigger question of where do we want to end up?

Deborah A. Garza: How much? That was one of the things that triggered the formation of the Antitrust Modernization Commission, which I chaired, which is basically whether we were, in part it was question of is our antitrust policy ripe and does it even matter what's happening with China and in Europe? So there's a lot to see. Maybe we'll have another one of these. Maybe someone else will moderate it, but maybe we'll have another one of these after Apple has filed its motion to dismiss and we see the briefings in that case and see the initial court ruling. But thank you very much Maureen and Professor Allensworth. It certainly has been educative for me and enjoyable. Edith?

Edith Harold: Yes, and on behalf of the Federalist Society as well, thank you to Maureen and Rebecca for speaking, and Deborah for moderating. We appreciate you giving your time and expertise today. And thank you also to our audience for joining us. You can stay up to date with announcements and other webinars on our website fedsoc.org or on all social media platforms. Thank you once more for tuning in and we are adjourned.