WHEN: Today, Friday, March 22, 2024
WHERE: CNBC’s “Squawk Box”
Following is the unofficial transcript of a CNBC interview with U.S. Department of Justice Antitrust Division Assistant Attorney General Jonathan Kanter on CNBC’s “Squawk Box” (M-F, 6AM-9AM ET) today, Friday, March 22. Following is a link to video on CNBC.com: https://www.cnbc.com/video/2024/03/22/doj-antitrust-chief-kanter-our-concerns-are-with-apple-telling-others-what-they-can-or-cant-do.html
JOE KERNEN: You’ve probably heard by now, the Department of Justice is suing Apple in a landmark antitrust case, charging that the iPhone ecosystem is a monopoly. Eamon Javers joins us now with a special guest. Good morning, Eamon.
EAMON JAVERS: Good morning, Joe. That’s right. I’m here with Jonathan Kanter. He is the head of the Antitrust Division at the United States Department of Justice. And as such, he is the man who led the U.S. government’s effort to bring that lawsuit against Apple yesterday. Jonathan, thank you so much for being on CNBC this morning.
JONATHAN KANTER: Thank you for having me. It’s wonderful to be here.
JAVERS: So I know you guys can’t talk about remedy, which is sort of the legal term for what happens to Apple if you win. But I wonder if you can tell us right off the bat if you’re taking off the table some kind of a breakup of Apple, if you are to win this case.
KANTER: Yeah, let me take a step back. So the Attorney General explained during our press conference yesterday that when a company violates the antitrust laws, there’s a law for that. First and foremost, we are a law enforcement agency, and our objective is to make sure that companies are held accountable if they violate the antitrust law. Our lawsuit against Apple is designed to ensure that Apple is held accountable for antitrust violations and to ensure that the remedies achieve their intended result, which is to restore competition now and in the future.
JAVERS: So would a remedy that involves a breakup of Apple achieve that desired result?
KANTER: Our lawsuit asks for remedies that are necessary in order to address the anticompetitive conduct and violations, whatever those remedies may be.
JAVERS: So it sounds to me like you’re not taking it off the table.
KANTER: We are focused on liability, and we are focused on making sure that we can bring our case to a court and explain why Apple has violated the antitrust laws, and then the remedies will flow from that. But we explain the relief in our lawsuit.
JAVERS: Another area where I think you probably can’t give us a whole lot of detail, but we have to ask anyway is, what were the negotiations like with Apple before this case was brought yesterday? We saw reports that you met with them about three weeks out and had that sort of last meeting with them. Did Apple make any offers in terms of behavior changes, business operations changes, to stave off what you did yesterday?
KANTER: Sure. I can’t talk about conversations with Apple, but what I can say, and I think is evident from our lawsuit, is that our investigation was methodical. It involved millions of documents. It involved 16 state attorneys general working alongside lawyers at the Department of Justice for many years to uncover the facts and provide an explanation in our lawsuit that has sufficient detail to support our claims.
JAVERS: So let’s not talk about Apple specifically, but the entire business ecosystem around Apple. If you are to succeed, what does that world look like in a world where Apple has less pricing power, Apple has less control over the development of app technology in the future? I mean, are there app developers now that we should be looking at? Are there businesses we should be looking at? Like, for example, banks being able to offer their own wallets inside Apple’s ecosystem.
KANTER: Absolutely. We talk about this throughout the lawsuit, which is that consumers, if you ask them whether they want to pay less for their iPhone, the answer will be yes. If you ask developers if they want to pay less to reach users on the iPhone, the answer will be yes. If you ask banks whether they want to pay additional fees for credit card transactions when people are tapping to pay inside a retail establishment, the answer to that will be no. Competition leads to lower prices for consumers, lower prices for developers, more opportunities for entrepreneurs, and ultimately more innovation that benefits society.
JAVERS: One of the headlines in recent weeks has been that Apple and Google want to work together on AI technology, the absolute cutting edge of the future. You’ve brought antitrust cases against both of those companies. What do you think of that potential partnership, and is that something that the Department of Justice is going to review?
KANTER: Yes. I can’t comment on any other matters outside the four corners of our lawsuit against Apple, which I believe is quite comprehensive.
JAVERS: Ultimately, though, do you think that there needs to be more competition or less in the AI space generally?
KANTER: So we — competition is vital in all industries, in AI especially. And so I’ve talked about this quite a bit, which is that we think about AI from the chip to the user. And just as we saw with the growth and development of new technologies going back to railroads and the industrialization of our society to telecommunications, to PCs, to the Internet, now to AI, the antitrust laws are flexible and they are capable of making sure that we have open, fair competition so that businesses, U.S. businesses, can build and thrive and compete to deliver better prices, to deliver better innovations, and to deliver more for society.
JAVERS: I think Joe Kernen up in the studio has got a question. Joe, go ahead.
KERNEN: We appreciate you being here, Mr. Attorney General. And I — we’ve had you on, you’ve been on set, and I know you’re totally ready for anything I can ask you. I don’t care. I’m going to ask anyway.
KANTER: Fire away.
KERNEN: We know that — we know that there are people that totally disagree with you, reasonable people on this in the political spectrum. And I’m just wondering, how do you know for sure that people just don’t love Apple because it’s so great at doing what they — they offer premium products. They offer premium services. I’m fine paying up for it. I’d like to pay less. I’d like to pay less for a Porsche, too. But they offer premium services, and that’s what I want. And do you ever, when you wake up in the middle of the night, you know, say to yourself, am I absolutely sure that I’m not, you know, herding the goose that lays the great golden American egg that is Apple? And do customers — I’m not complaining. Am I representing customers, or am I representing complainers from other big tech companies that aren’t as good as Apple?
KANTER: Yeah, so I think it’s really important to read the lawsuit, because what you’ll learn is that, first of all, this is not — this was a methodical, lengthy investigation that involved extensive review, including Apple’s internal documents. At the end of the day, we have a system of laws that say competition is what should result in benefits to consumers. Competition is what should result in benefits to entrepreneurs. We just want to make sure that there is an open, fair playing field for all competitors, including Apple. Apple — and if you read our lawsuit, what you’ll see is that our concerns are not with — necessarily what Apple is doing with Apple’s products. Our concerns are with restrictions when Apple tells others what they can and can’t do with their products. That is our primary area of concern, and that is the primary area of our focus in the lawsuit. And ultimately, allowing others to innovate will yield more benefits, including the kinds of benefits that Apple was able to generate — and we talk about this in our lawsuit — when it had access to the Windows operating system in the early 2000s so that it could launch products like iTunes, iPod, and the iPhone.
BECKY QUICK: I guess, Jonathan, the other issue is, look, just because you’re big doesn’t necessarily mean that you’re anti-competitive. Sometimes you get there because you have a better product that consumers choose. Is it your understanding that any big company, even if they’ve invested in the system and built it themselves, is going to have to open that system to all competitors, even if there are concerns about privacy or hacking or anything else along the way?
KANTER: Yeah. So this lawsuit is not about saying just that Apple is big. A monopolization lawsuit obviously will focus on companies that are big or have monopoly power. But what we do is we detail, in the course of almost 90 pages, a pattern of exclusionary conduct, contractual restrictions. When Apple says to other companies, you can’t build products and services the way you want to do it. And what we say in our lawsuit is that the conduct that we are addressing is not necessary to protect privacy and is not necessary to protect users. In fact, in some instances, Apple’s conduct, as we allege in our complaint, makes the device less secure and less private.
JAVERS: Jonathan, one of the things that we saw yesterday was Apple’s share price, take a big hit Apple investors lost money yesterday. What’s your message to shareholders who are watching this all play out and it’s hitting them in the wallet?
KANTER: So my message to shareholders is encourage companies that you invest in to compete on the merits. Competition on the merits is good for everybody. It’s good for businesses. It’s good for consumers. It’s good for the economy. And so ultimately, that is what this lawsuit is about. It’s about making the market more competitive so that people can pay lower prices, including for their iPhones.
JAVERS: Let’s spin it forward a little bit. Obviously, we’re at the tail end of President Biden’s first term. Maybe there’s a second on the way, but maybe not, right? I mean, there’s an election in November. Donald Trump could win that election in November if you look at the polls. How do you think this case, which is going to go months, if not years, would be affected by a change of administrations? If Trump wins in November, a Trump Department of Justice takes over this case. How does that affect the outcome?
KANTER: Yeah, I can only speak for my job. I took an oath, swore an oath to defend the public against antitrust violations. We’re going to keep our head down, working alongside, as I have, the extraordinary professional staff at the United States Department of Justice and State attorneys general to bring a case that we believe is right on the facts and the law. And we’re going to focus on bringing that case to court and proving it.
JAVERS: And given the fact that there’s only, you know, a few months left in this term, is this the last case that this Department of Justice is going to bring against a major American company this year or are there more to come?
KANTER: I can’t speak for any other cases right now. I can say that so long as companies are violating the antitrust laws, they should be unnoticed, that we will bring additional lawsuits to hold them accountable.
JAVERS: Let’s talk about corporate America generally, right? In the C-suite, you have been incredibly active in your term in office. And sort of reset expectations about what antitrust is and how it will be enforced in this country. I wonder if you can share what your message is to American executives as they contemplate all their activities, whether they’re partnering with another tech company, whether they’re acquiring another firm. What do you want executives to be thinking about antitrust this year, next year and going forward?
KANTER: Well, a few things. First, I want executives to know that the vast majority of companies are never in our sights. The vast majority of mergers, the vast majority of practices never show up on the desk of the antitrust division. Why? Because they don’t break the law. And so if companies are on the right side of the law, they’ll have no problem at all competing hard and delivering benefits to the economy. Also, that competition benefits everyone. Businesses benefit from opportunities to compete. That is the beauty of our system, which is that if people have great ideas, if they can succeed on the merits of their innovations, they can achieve new heights. We want to protect that opportunity for all companies. We don’t want it to just be available to a small few.
JAVERS: Let’s talk about some other sectors beyond just technology, right? I mean, obviously, health care is a sector that’s important to the U.S. economy. We’ve seen a lot of activity there. What do you think about the health care sector as you look at it right now and say, is there anti-competitive behavior going on there?
KANTER: Yeah, so we’ve — we’ve brought cases in the health care sector, everything from payers to pharmaceuticals. This is an extremely important area of our economy, not just because it’s — it’s valuable to the markets. It’s because it saves lives. And so we need to make sure that markets are competitive so that participants in the health care sector are delivering the best outcomes for people, keeping people healthy, keeping health care affordable. It’s hard to imagine a market that is more important to our daily lives. We all know somebody who has suffered, who has received care that they believe may not be up to snuff in a hospital. We all know people who have had difficulty with medical bills and the billing system and the insurance system. And we need competition to help make sure that that is working for Americans.
JAVERS: So if we’re looking for another case out of your Department of Justice, maybe we should be thinking in the health care area?
KANTER: Nice try. We’re focused here today on the case that we filed yesterday against Apple. And I think the message to come away with is that we care about competition throughout the entire U.S. economy, and that includes health care.
JAVERS: Jonathan Kanter, great conversation. Thanks so much for being here.
KANTER: Thank you for having me.
