In simply over a yr in workplace, Jonathan Kanter — one of many two most vital gamers in Joe Biden’s efforts to rein in company energy — has come after America’s largest firms with pressure.
As head of the greater than 800-person antitrust division of the Division of Justice, Kanter blocked the world’s largest ebook writer from shopping for a rival and took on the nation’s largest well being insurer. His half-dozen main company merger challenges are a current high-water mark for the division. In speeches, he has sounded notes not heard from a Washington official in years, invoking the Thirties and worrying free entrepreneurs with guarantees of aggressive new enforcement and a recent method to preventing and blocking large offers. And, he instructed POLITICO in an interview, he’s simply getting occurring his marketing campaign to “reinvigorate antitrust enforcement.”
However interviews with greater than a dozen antitrust gamers out and in of presidency painting a division stretched crucially skinny because it prepares for a yr taking over even greater targets — together with potential landmark circumstances in opposition to trillion-dollar tech titans. As on Friday, a DOJ lawsuit focusing on Google’s on-line advert enterprise is predicted quickly.
As he enters the second yr of his job, he’s one in every of two key officers driving Biden’s agenda on competitors coverage, together with Lina Khan, the hard-charging chair of the Federal Commerce Fee. A 3rd key company skeptic within the administration, the authorized thinker Tim Wu, stepped down from his West Wing job at first of January.
With a military of legal professionals on his aspect, and the flexibility to carry prison in addition to civil circumstances in opposition to firms for overreach, Kanter has immense energy in Biden’s Washington. And with a break up Congress possible hamstrung on any significant new laws, company America’s consideration is popping decisively to companies just like the DOJ.
Kanter, a profession company litigator supported by Elizabeth Warren and allied with a progressive new pressure in antitrust pondering, has pushed the DOJ away from settling circumstances and towards an aggressive technique of taking firms all the way in which to court docket. Within the view of Kanter and his allies, it provides him the prospect to forge long-term precedent that shapes the federal government’s potential to constrain what it sees as extreme company energy.
Nevertheless, Kanter has up to now seen extra setbacks than wins. Final yr the DOJ misplaced three of 4 trials to dam mergers, in addition to a high-profile price-fixing case within the rooster industry and its first prison circumstances difficult collusion between firms in labor markets.
Whether or not he can discover new and extra profitable approaches to these prime targets — and discover the assets to execute a war-on-all-fronts technique — will assist decide simply how a lot Biden’s administration can reset the ability dynamic between boardrooms and authorities.
In 2023, Kanter can also be anticipated to go to court docket in opposition to Apple, which together with Google are two of the world’s strongest and furthest-reaching firms. Each can be protracted, headline-generating campaigns, testing the American urge for food for pushback in opposition to world tech giants. If profitable, they'd quantity to a significant legacy for Biden — and would additionally put Washington within the driver’s seat in a wider contest between U.S. and EU regulators to set the bottom guidelines for world company growth.
Excessive-profile defeats, in contrast, can be a warning for any future leaders trying to tangle with the brand new class of world tech behemoths.
This primary yr can virtually be thought-about a dry run. A lot of the circumstances Kanter pressed ahead up to now had been began by his predecessor — and so the approaching yr is what is going to largely outline his tenure. It may possibly take time to get issues prepared, mentioned one not too long ago departed DOJ official, who famous that Kanter’s full management workforce wasn’t even in place till final summer time.
“Now, the desk is ready. What occurs now would be the true check.”
One of the crucial formidable planks of Biden’s agenda is his reinvigoration of Washington’s century-old antitrust energy, a potent device for the federal government to rein within the largest firms. At their inception, regulators aggressively enforced the antitrust legal guidelines, even breaking apart a number of the strongest firms on the earth. However beginning within the Eighties, the DOJ took a decidedly softer contact, permitting main mergers and bringing fewer circumstances.
That has solely simply begun to vary — largely pushed by a push to rein within the tech giants like Google, Apple, Amazon, Meta and Microsoft.
Of the 2 key gamers Biden put in place as antitrust enforcers, Kanter has the extra sensible, if probably conflicted, background. Khan, his counterpart on the Federal Commerce Fee, is a 33-year-old think-tanker who first got here to prominence by writing a law-review paper in her late 20s arguing for an .
Kanter, 49, took a really completely different route: He was already a seasoned company lawyer when he turned antimonopoly crusader. He spent 20 years at a number of main legislation corporations, usually defending a number of the world’s largest mergers, together with a failed deal between medical insurance giants Cigna and Aetna. He was an early advocate for constructing an antitrust case in opposition to Google — however a lot of that work occurred on behalf of rival tech large Microsoft.
Lately, Kanter shifted to extra “offensive” work representing smaller tech firms like Yelp, Tile and Match Group of their efforts to push again in opposition to Google and Apple.
That generated robust pushback on his nomination from the tech firms in addition to individuals throughout the Justice Division who believed that Kanter ought to recuse himself from these circumstances. His supporters dismissed that notion, arguing that as a result of he has labored to construct circumstances in opposition to Google and Apple, he's on the identical aspect because the DOJ and no recusal is critical.
Only recently, after greater than a yr of inside DOJ wrangling, Kanter was cleared to work on issues involving Google, . It's unclear whether or not he's recused from work involving Apple, and the DOJ declined to remark.
Over time, Kanter’s authorized follow started to quantity to a broader physique of serious about how one can rein in over-powerful tech firms. Kanter’s job was “to not debate the tremendous factors of the legislation, however to know how an company will interpret the legislation, and use that to the good thing about purchasers,” mentioned Rick Rule, Kanter’s long-time legislation associate and a distinguished conservative lawyer who held Kanter’s job within the Reagan administration, and whom Kanter considers a mentor.
“Generally meaning defending shopper’s offers, typically it’s arising with a case in opposition to Google,” Rule mentioned. “Jonathan actually ran with that. It appealed to his progressive instincts, [and he] took it past only a drawback to be solved on behalf of a shopper, to virtually a marketing campaign or a campaign. That’s actually what helped him with being a pacesetter on this type of offensive technique.”
From his non-public follow, Kanter helped affect essentially the most important DOJ motion since its case in opposition to Microsoft greater than 20 years in the past: An earlier problem to Google’s dominance in on-line search. Although filed by former Lawyer Normal William Barr in 2020, Kanter helped form the go well with by representing Google opponents together with small gamers like Yelp and tech giants like Microsoft.
Kanter’s work representing opponents of Apple and different tech firms drew the eye of Sen. Elizabeth Warren who backed him together with Khan and former Biden antitrust adviser Tim Wu. It additionally led him to depart the legislation agency Paul Weiss in 2020, when the agency introduced on legal professionals representing Apple, in response to two individuals with information of the matter, who spoke anonymously as a result of they weren't approved to debate the matter. A DOJ spokesperson declined to remark.
From practically the second Kanter took workplace in November 2021, he signaled he needed a unique method. He inherited a number of circumstances from his predecessor, and as a substitute of taking the extra typical — and less expensive — route of settling them, he introduced he’d be bringing them to court docket to dam the mergers totally. (The profitable case in opposition to Penguin Random Home’s acquisition of Simon & Schuster was filed earlier than he began.)
In his more durable method, he had an ally throughout city: Khan, who was confirmed as FTC chair 5 months earlier. Although the DOJ and FTC have completely different remits and instruments — the FTC additionally polices a wide range of shopper harms, and the DOJ has the ability to carry prison fees — there's little daylight between Kanter and Khan’s aggressive antitrust methods, or their sharp give attention to the monopoly threat of world tech firms.
Kanter’s tenure is a “enormous departure” from his predecessors, mentioned Alex Harman, director of presidency affairs, antimonopoly and competitors coverage on the Financial Safety Mission, the progressive coverage group began by Meta co-founder Chris Hughes. “While you carry arduous circumstances you create a deterrent in opposition to unlawful mergers and antitrust violators,” Harman mentioned.
His tenure began with a string of losses. Since Kanter took over, the federal government misplaced challenges to a merger between rival sugar producers, insurance coverage large United Well being Care’s takeover of a key tech firm important to its rivals’ operations and Booz Allen Hamilton’s deal for a competing nationwide safety contractor. The DOJ is interesting the sugar and UnitedHealth rulings, although it dropped the Booz Allen case.
The DOJ additionally misplaced its first circumstances difficult collusion in labor markets, and didn't win any convictions in an unprecedented three consecutive trials in opposition to a gaggle of chicken-industry executives for price-fixing.
His first large win didn’t come till Halloween when a choose sided with the DOJ in blocking the Penguin deal. It didn’t simply block a deal that may have made the world’s largest writer even greater, but in addition validated the division’s novel argument about why the deal needs to be blocked: As a substitute of simply specializing in hurt to shoppers, it additionally centered on the potential hurt to writers, who would have fewer choices and fewer competitors to publish their books.
Contained in the division, the ruling got here as a welcome aid, in response to a number of individuals on the antitrust division. Within the run-up to the Penguin ruling, there was inside apprehension that if the DOJ misplaced, there would have to be a critical rethink of the division’s technique, the individuals mentioned.
The DOJ has additionally a decades-old pay system for rooster farmers it says is deceitful, and is dusting off a little-used legislation to amongst administrators on company boards. Additionally it is pushing to revive a long-dormant statute criminalizing monopolization, together with a in opposition to a violent group with ties to a Mexican drug cartel.
, the place he was interviewed by Rule, Kanter acknowledged the problem of the job, however portrayed his method as a protracted sport. “I think about our judicial system,” he mentioned. “[If] we do our job, which is to articulate the theories of hurt which are primarily based on financial realities, which are primarily based on sound authorized and professional theories, we’ll see the type of success we noticed within the Penguin case. However that’s a dwelling, respiratory course of.”
Antitrust circumstances might be extraordinarily costly and time-consuming for the federal government, since they sort out the best-funded firms on the earth. The problem might solely develop this yr: Although Kanter has but to carry a serious know-how case, along with the pending Google case that a grievance in opposition to Apple can also be within the works.
Kanter is at present staffing up a litigation workforce to problem extra mergers and convey extra complicated circumstances difficult monopoly energy throughout the economic system. The division reportedly has a number of different main targets in its sights, together with pending investigations of Visa, Ticketmaster, the meatpacking industry, and merger evaluations involving Adobe and JetBlue.
And people are simply issues the general public is conscious of. “A lot of the division’s work is sort of a glacier,” mentioned Kanter’s prime deputy, Doha Mekki, at a current convention in Salt Lake Metropolis, when requested when the DOJ will carry extra monopolization circumstances. “I believe that you simply’re going to see loads of exercise in that vein, particularly as [Kanter] will get previous his first yr and focuses extra on the affirmative enforcement agenda that he’s described to the general public.”
To perform that, Kanter is intently centered on increasing the division’s experience past the legal professionals and economists who've traditionally crammed its ranks. That features the current hiring of the division’s first chief technologist, Laura Edelson, with plans to construct out a workforce of specialists underneath her. “We imagine that it’s vital to have a variety of experience essential to do the evaluation that accompanies an antitrust investigation or enforcement,” Kanter mentioned within the interview, “and so we’re constructing that out, virtually like a enterprise faculty college.”
Kanter has additionally canvassed long-term employees for concepts, asking the division to revisit case pitches that earlier management declined to pursue, in response to an individual accustomed to the technique. Kanter has used such one-on-one conferences with employees to assist construct help for his imaginative and prescient for the division’s work.
The view from company America just isn't so sanguine.
Washington’s elevated antitrust enforcement is a “actual frustration level” for the enterprise group, mentioned Mike Wyatt, Morgan Stanley’s head of world know-how funding banking at a current . “Companies wish to pursue these mergers. They wish to be large, they wish to achieve success, they wish to be worthwhile,” he mentioned. “It's more and more at odds with coverage.”
And there's no scarcity of nameless griping from the protection bar. Non-public legal professionals say that Kanter’s expansive view of the antitrust legal guidelines will result in extra losses, which in flip will result in extra firms calling the federal government’s bluff in the event that they suppose they've a great likelihood in court docket. (Lots of those self same legal professionals nonetheless, are additionally saying their purchasers are extra skittish about dealmaking, so it appears Kanter is having his supposed impact.)
“We're seeing some, however not practically as many extremely problematic offers, which we hope is, partly, a response to robust and vigorous enforcement,” Kanter mentioned in his interview with POLITICO.
His agenda additionally faces friction from a conservative judiciary: Convincing business-friendly judges appointed by presidents of each events to reverse a long time of conservative precedent will take years.
However maybe the most important hurdle is the division’s personal assets, which insiders say are strained.
“Jonathan has an enormous, daring imaginative and prescient that requires loads of large swings. The agenda basically requires dropping some circumstances,” mentioned one individual with information of the DOJ’s antitrust technique, who was not approved to talk publicly. And whereas individuals who work on the division who had been interviewed for this text mentioned he hadn’t misplaced help of the rank and file, the true query even for his supporters is whether or not the tempo is sustainable. The workforce is struggling to deal with its immense workload, and “persons are working actually arduous and are actually drained, and it’s one thing to be involved about.,” the individual mentioned.
Kanter says he's conscious of the difficulty, saying he spent a lot of his first months on the job getting a deal with on the division’s finances. He has repeatedly requested for extra assets, most not too long ago in entrance of , the place he testified that the division had a whole bunch fewer employees members now than it did greater than 40 years in the past.
Kanter instructed POLITICO there’s been a “persistent underfunding” of the DOJ’s antitrust division by Congress. “That comes in opposition to the backdrop of an economic system that’s expanded exponentially, and antitrust enforcement and litigation that’s more and more complicated, when it comes to the problems that we now have to confront, the specialists that we now have to rent, and the paperwork and the information,” he mentioned.
Congress balked on passing a number of payments that may have buoyed the DOJ’s enforcement powers, significantly within the difficult-to-police know-how markets. Nonetheless, in December, it did hand the DOJ an Eleventh-hour lifeline, agreeing to lift the charges firms pay when submitting their mergers for antitrust assessment.
In line with the Congressional Funds Workplace, the Merger Submitting Price Modernization Act, which was tacked onto the omnibus spending invoice on the finish of final yr, might herald an additional $1.4 billion over the subsequent 5 years for antitrust enforcement on the DOJ and FTC. Whereas the cash would profit each companies, the antitrust division stands to realize essentially the most by way of obscure White Home budgetary steering that lets it, however not the FTC, pocket unplanned will increase in charges past what Congress appropriates.
Nevertheless, the precise quantity of latest cash may be very a lot an “if.” Any enhance relies on a growth in mergers, which have slowed in current months.
Morale has remained excessive in Kanter’s division regardless of the losses, in response to three individuals on the DOJ who labored on the dropping circumstances. Whereas individuals might have questioned particular person technique selections in hindsight, there was not large-scale doubt that the circumstances had been unhealthy. “It sucks to lose,” mentioned one one who labored on a current merger trial, and was not approved to debate the matter publicly. However: “I might have introduced the case once more.”
Whereas the losses sting, there's a actual deterrent impact. The legacy of Kanter and Khan has “already began,” mentioned Wyatt, which “is offers that needed to occur that didn’t occur. Loads of that you simply don’t see within the public area, however we see them being mentioned and handed on. And those which are essentially the most fascinating are those that really feel like they'd have, might have, ought to have underneath earlier administrations, however the threat of an hostile consequence blocked individuals from getting there.”
Many elements are at play when a deal doesn’t occur, together with broader financial currents. But attorneys advising firms on antitrust threat additionally acknowledge the present stance at each the FTC and DOJ is scuttling offers earlier than they make it out of the boardroom.
By way of all of this, Kanter has been an outgoing, gregarious chief who appears to have boundless vitality for the position, in response to a number of individuals who work alongside him. He's preferred by employees and has gone out of his option to meet with virtually everybody throughout the division. Previous to the beginning of some current trials, Kanter was on over-the-weekend Zoom calls with the trial groups giving pep talks and speaking about last-minute technique.
And in October, at a sequence of coaching and workforce constructing workouts for antitrust employees, Lawyer Normal Merrick Garland, one of many few current DOJ heads with in depth antitrust expertise, gave a shock pep speak and made it clear Kanter has his full help.
Talking simply earlier than the Penguin win, Garland reassured employees that regardless of losses, the division is bringing righteous circumstances, in response to 4 individuals who had been current for his remarks. He harassed the significance of each congressional actions and the necessity to replace American antitrust legal guidelines — in addition to persevering with its full court docket press with aggressive circumstances designed to form a extra favorable taking part in subject for the federal government.
Marcia Brown contributed to this report.