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‘You're welcome:' Jonathan Kanter on Figma's IPO and Trump antitrust
‘You're welcome:' Jonathan Kanter on Figma's IPO and Trump antitrust

Yahoo

time5 days ago

  • Business
  • Yahoo

‘You're welcome:' Jonathan Kanter on Figma's IPO and Trump antitrust

The News When Adobe's $20 billion deal for smaller, scrappier rival Figma collapsed in 2023 under global antitrust scrutiny, investors set to reap billions complained loudly about Biden's enforcers. Then-FTC Chair Lina Khan was 'not a rational human being,' venture capitalist Vinod Khosla said, and Reid Hoffman urged Kamala Harris to fire her if elected. Marc Andreessen said regulators like Khan and DOJ's Jonathan Kanter were 'punitively blocking startups from being acquired.' It was the Justice Department, under Kanter, that had investigated Figma's case. Now out of the chair, Kanter has a simple message for Andreessen, Hoffman, and Figma's other investors, groups that netted as much as $7 billion each in the IPO. 'You're welcome,' he told Semafor in an interview this week. Kanter and Khan see Figma's early thriving, as a public company worth $44 billion rather than an Adobe offering, as vindication of their antitrust approach, which was the most robust in decades. While both have pointed out that only a small fraction of deals were ever challenged, their crackdown had a chilling effect in Silicon Valley and boardrooms across the world. They particularly focused on Big Tech, worried that it would use its power and huge piles of cash to build an uncrossable moat around AI. 'The Mag Seven, in my view, should be the Mag 70. So I'm very excited for Figma,' Kanter said. Kanter and Khan's expansive view of antitrust — as protecting not just end consumers but other players, from book authors squeezed by consolidating publishers to buyers in the largely invisible ecosystem that places ads across the web — has given way to the Trump administration's muddled approach. Populist factions in MAGA that are deeply suspicious of corporate consolidation, embodied by Vice President JD Vance and informal advisor Steve Bannon, have notched few wins. And the recent firing of two Justice Department executives, related to corporate lobbying for approvals of HPE's acquisition of Juniper, has put a political cloud over competition enforcement. 'It's a big problem if decisions are being made based on political favors and lobbying,' Kanter said. 'We were extremely careful and mindful of that when we were in office. I hope the current leadership at DOJ and the FTC have the same ability.' The View From Jonathan Kanter Semafor: At a high level, what do you make of the Trump administration's approach to antitrust?Jonathan Kanter: Are we going to get a Trump administration that's committed to a more populist, pro-enforcement agenda? That's certainly what they promised when they entered office, and their appointments certainly signaled that they would be pursuing a more aggressive approach. That has to be juxtaposed against the Trump administration, that seems to want to cut deals and settle cases or potentially go around its expert antitrust officials. What did you make of the recent firings of two DOJ officials around the HPE deal? They had very skilled professionals who are well respected on both sides of the aisle at the Antitrust Division, and two of those officials were removed. It's extraordinarily concerning and would be highly out of order, and suggests that the administration is not focused on doing the right thing for the right reasons, but instead trying to settle cases or cut deals based on pretextual arguments or political favors. I hope that's not the case. Critics say that antitrust enforcement was politicized under Biden, too, for example, by making organized labor a focus in some merger reviews. I think it's a false equivalency to suggest that protecting labor and protecting the ability of people to work and bask in the benefit of competition in terms of wages is somehow political. John Sherman — the namesake of the Sherman Act — talked at the time about protecting the ability of farmers to earn a living as one of the motivating factors for enacting antitrust laws. Antitrust is a matter of law enforcement, and to the extent a defendant feels like it's being targeted or there's overreach, they have the opportunity to go to court and challenge it. Sometimes you win, sometimes you lose, but that's why we have a process, and that's why we have an independent judiciary. Our track record is something I'm quite proud of. We beat Google twice in court. Our cases have survived legal scrutiny by courts, including our cases against Apple and Ticketmaster. We brought important cases in real estate. We beat a case against American Airlines to help lower ticket prices. The Figma IPO just last week is another great example of our success at DOJ. We had a similar result with the Nvidia-Arm deal. Both were abandoned in the face of a challenge, and both resulted in companies staying independent and having success. How should antitrust regulators be thinking about the growth of AI? Antitrust is most important at times of great change — when industries are experiencing an inflection point. That's when, particularly in the tech space, incumbents have the greatest incentive to stifle new technologies. The AT&T case helped give rise to integrated circuits and chips, which helped give rise to personal computers, and the IBM case preceded the growth and development of Microsoft. was brought at the dawn of the internet at the urging of companies like Netscape and helped give rise to the Googles and Facebooks and Amazons. Now we're facing a similar inflection point, and companies like Google and others have every incentive to try to keep those new startups from reaching their full competitive potential and transforming the industry. A lot of the deals in AI are acqui-hires and licensing partnerships, rather than mergers. Is the antitrust toolkit equipped to respond? They absolutely have the tools to go after those deals. You have to elevate substance over form. If it looks like a duck and quacks like a duck, then it's a duck. There's a longstanding tradition for corporations to try to outsmart the law, but it's the job of law enforcers to stay one step ahead. You won a case declaring Google a search monopoly, right at the time that AI is threatening to upend everything. If, five years from now, search has been totally eaten by AI, and Google looks back and says, 'See, we were right, and the DOJ was wrong,' is that still a win for you? During the Microsoft case [in the late 1990s], Microsoft made the argument that the internet and mobile was going to kill the operating system and therefore, there was no need for antitrust enforcement. The government won the case. In the process, they established a really important precedent, which helped us win the most recent case against Google. It also allowed the internet and mobile devices and ecosystems to thrive without being stifled by an operating system monopoly of Microsoft. The purpose of antitrust isn't to pick winners or losers. It's to preserve the competitive process so that companies can figure out in the marketplace what wins and what loses. The goal of bringing a case against a company like Google is to stop the anti-competitive behavior, deprive it of the fruits of its violations, and make sure markets are competitive going forward. What happens from there is up to industry. There was a sense, perhaps a little unfair, that during the Biden administration there was a shift away or broadening beyond the consumer welfare standard. Do you agree that such an antitrust approach should have a broader theory of the case? Consumer welfare is a bit of a red herring, but it's often used as a euphemism for less enforcement rather than more enforcement. It was never the case that antitrust laws were only supposed to benefit consumers. It was always about the competitive process, because competition generates all sorts of benefits for society — greater innovation, lower prices, better working conditions, better wages, and frankly, a de-concentrated economy, which is not only relevant to corporate power, but political power. When you have highly concentrated markets, it could lead to companies that have not just an amazing amount of influence over consumers' daily lives, but extraordinary influence over the political sphere, in terms of lobbying. M&A seems to be coming back. We've seen particularly consumer goods companies that are making promises about synergies and price cuts that often never materialize. How should antitrust regulators be looking at those promises? Those promises are made out of convenience and in order to encourage enforcers to approve a deal. One of the concerns that I had expressed during my tenure was relating to consent decrees and settlements. The government would approve the deal, require some sort of divestiture, and a year later, the divested assets were no longer competing effectively in the market. We have to be very careful about 'improving deals,' and then signing off on transactions with consent decrees that don't adequately fix the problem and provide no recourse in the event that the merger results in anti-competitive effects down the line. Notable 'Figma's IPO will begin to crystallise a massive windfall for the VC industry, which is just beginning to return cash to investors for the first time in three years,' the FT's Due Diligence noted. Some analysts recognize the success of Figma's IPO as positive, but don't credit antitrust regulation for it, Business Insider reported. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data

How Live Nation calls the tune for the live music industry
How Live Nation calls the tune for the live music industry

Irish Times

time03-05-2025

  • Business
  • Irish Times

How Live Nation calls the tune for the live music industry

In 2017, the owners of a US concert venue held a meeting Ticketmaster about securing a ticketing partner. They were surprised to be joined by a promoter from Live Nation, its massive US events owner. In the meeting, the Live Nation executive said explicitly that if the venue didn't choose Ticketmaster, it would not stage events there. And when the venue eventually did choose a rival ticketer, Live Nation allegedly made good on its threat. Rather than getting the three or four shows a year expected, the venue instead received precisely zero. The case was one of a number uncovered by the US Department of Justice (DoJ) in 2019 that allegedly showed Live Nation using its position in concert promotion to pressure venues to use its Ticketmaster subsidiary. The probe into the 15-year-old merger of Live Nation and Ticketmaster led to an agreement to extend and amend decrees around the 2010 deal. But the DoJ has found that it needs to step in again. This time, the agency argues that the only remedy will be to reverse the merger entirely, accusing the entertainment giant of a level of control over the US live events industry that has cost fans, artists, rival promoters and venue operators. READ MORE 'It's a shakedown,' says Jonathan Kanter, who until December was assistant attorney-general for the antitrust division of the DoJ. He has since been replaced by Gail Slater, an antitrust veteran and economic adviser to vice-president JD Vance. 'This is a deliberate plan by Live Nation to take a core monopoly in ticketing and flank it with other powerful businesses to create a self-protecting ecosystem,' adds Kanter. 'I have never seen a more popular antitrust case in my 25-year career. Fans are unhappy, venues are unhappy, and the market is stagnant.' The investigation has reinforced fears among competitors in the industry after authorities allowed the world's largest live events business to buy the world's largest ticket company in 2010. Most music and sports fans have little idea of how much of their night out is in the hands of Live Nation. But if the DoJ is right then they will have paid the price in higher fees and ticket prices, and in the choice of artists at their local venues. The fact that it took Oasis and Taylor Swift to get the attention of regulators worldwide is not lost on rivals in the industry who have long complained about the extent of Live Nation's interests in the market. But in part prompted by skyrocketing ticket prices – not least for the Mancunian brothers' reunion and Swift's 2023-24 Eras tour – other competition authorities and lawmakers have started scrutinising the live events market more closely. 100 days of Trump: 'It's like The Karate Kid, tax on, tax off, tariffs on, tariffs off' Listen | 42:49 British MP Liam Byrne, chair of the UK's business and trade select committee, said that Live Nation appears to have 'more arms than an octopus'. 'One part of Live Nation could be dictating the price to another part of Live Nation,' he said at a committee hearing in February. 'That sounds like a conspiracy.' Andrew Parsons, boss of Ticketmaster's UK business, told MPs that Live Nation had 'clear divides between how we operate on a daily basis', and that the UK is 'an incredibly competitive [ticketing] market'. Ticket prices were set by event organisers, he said, not Ticketmaster. In the US, the DoJ case has bipartisan backing – but rivals and antitrust campaigners are concerned that it may not have the same support from the new administration. What happens with Live Nation may set the tone for how the Trump White House approaches competition policy over the next four years. 'This has the potential to be the largest and most important antitrust case in the US for a long time,' says Diana Moss, vice-president and director of competition policy at the Progressive Policy Institute. 'We have a very traditional monopoly, but also a very modern digital monopoly.' Live Nation has rejected the DoJ allegations. It accused the previous government of ignoring 'everything that is actually responsible for higher ticket prices, from increasing production costs to artist popularity, to 24/7 online ticket scalping that reveals the public's willingness to pay far more than primary tickets cost'. Liam Gallagher (left) and Noel Gallagher of Oasis. it was use of flexible pricing for their reunion gigs that provoked controversy and fresh regulatory scrutiny in the UK. The company said that it disagreed with the DoJ's take on the 2017 incident with the US concert venue, but 'the more important point is that there have been no credible allegations of anything like that happening in recent years'. Dan Wall, executive vice-president of corporate and regulatory affairs for Live Nation, describes the DoJ case as 'a hodgepodge of things' that does not amount to a violation of the merger agreement. 'There isn't any one thing that they can hang their hat on,' he says. Since its takeover of Ticketmaster, Live Nation has built an enormous entertainment machine straddling large parts of the live events ecosystem, according to the DoJ and rivals, some of whom declined to be identified given their concerns over the power that the company has in the industry. Across the world, Live Nation had exclusive booking rights for or has an equity interest in 394 venues and 137 festivals in 2024, according to company filings. It promoted more than 54,000 live music and other events involving 11,000 artists. In North America, the DoJ says Live Nation controls more than 265 concert venues, including more than 60 of the top 100 US amphitheatres, and directly manages more than 400 musical artists. Its scale in the US has been replicated in markets such as the UK, where it has built up a network of subsidiaries, either wholly or partially owned, spanning venues and festivals (from Latitude to the Isle of Wight) and ticketing. The company is involved in the management of bands and promotion of events, driving revenues from advertising, sponsorship and upselling to VIP seats at its venues, parking, food and beverage and merchandise sales. The DoJ describes it as a 'live entertainment ecosystem' that works as 'a feedback loop that inflates its fees and revenue, all at the expense of fans'. Live Nation supplies services to venues such as security via Showsec in the UK, whose accounts show it is majority owned by the US group. Food and drink often means a payday for Live Nation: it owns stakes in suppliers such as US water brand Liquid Death, CVT Soft Serve ice cream and Owen's Craft Mixers, sold through its venues. One rival festival executive says that 'they go for it all'. Live Nation boss Michael Rapino has himself described the company strategy to investors as a 'flywheel', with the concerts at the core, aiming 'to get into ... high margin businesses and be competitive'. The term has been taken up by the DoJ in its allegations over a self-reinforcing model while rivals complain of a flywheel that spins ever faster to throw out money. Ticketmaster is owned by Live Nation. Revenues have increased fourfold from the combined sales generated by the separate businesses pre-merger in 2010, and are double that from before the pandemic, as demand for events bounced back strongly from lockdowns in the US and UK. Shares hit an all-time high in February. Live Nation's supporters in the industry say it is taking the financial risk for events that are often not sold out and run at a loss to the benefit of artists, who typically receive the majority of all ticketing revenue. It is doing better because the market is doing better, they add. Others argue that this is part of the business model: its power in the music industry results in higher margin operations that allow it to cross-subsidise lower margin businesses elsewhere. So through less profitable venue control, Live Nation can win deals to promote artist tours and generate high margin sponsorship and advertising revenues. The DoJ argues that control of the venue and the promotion of the artists can then help secure the ticket sales mandate. Given Live Nation-Ticketmaster's power in concert promotions, 'every live concert venue knows choosing another promoter or ticketer comes with a risk of ... losing concerts, revenue, and fans', it said. 'Live Nation's monopoly power in primary ticketing for major concert venues in the US is demonstrated by its ability to control prices and/or exclude competition.' In the US, Ticketmaster's exclusive agreements cover more than 75 per cent of concert ticket sales at major venues, the DoJ said. Wall says any accusation of dominance in venue ownership is 'totally fictitious'. The model of combining ticketing and venue operation is also used by rivals such as AEG and CTS Eventim, he points out, with the latter leading in European event promotions and ticket sales. Live Nation operates just 4 per cent of music venues in the US, it said, and the majority of shows it promotes take place in venues owned by other companies. Every amphitheatre in the Live Nation portfolio 'competes with a local arena or a local stadium, or maybe a festival', Wall adds. In 2023, The Cure's Robert Smith said that he was 'as sickened as you all are' after tickets for a US tour that the band had tried to make affordable were laden with fees. When Oasis announced reunion gigs last year, few in the industry were surprised to see Live Nation listed as a co-promoter and Ticketmaster among the companies handling the sales. But it was the use of flexible pricing that provoked controversy and fresh regulatory scrutiny in the UK. Although Ticketmaster says it does not set the ticket price, the UK competition regulator last month warned that it may have breached consumer protection laws by labelling some seated tickets for Oasis as 'platinum' and selling them for near 2.5 times the price of equivalent standard tickets. These tickets did not offer any additional benefits and were often located in the same area of the stadium, the Competition and Markets Authority found, with other tickets hiked without warning as soon as lower priced ones had sold out. Ticketmaster said in response that it strived 'to provide the best ticketing platform through a simple, transparent and consumer-friendly experience'. For the DoJ, so-called dynamic ticketing practices where prices change depending on demand are part of the matrix of additional fees that charge profits for Live Nation 'often with little visibility offered to the fan buying the ticket'. While the company's venues and promotion business, which makes up the majority of revenues, generates margins in the low single digits, those in its ticketing business are in the high 30s and sponsorship in the 60s. Artists and executives also complain about them. In 2023, The Cure's Robert Smith said that he was 'as sickened as you all are' after tickets for a US tour that the band had tried to make affordable were laden with fees that in some cases doubled the price. Wall describes this now as 'a mistake ... an oversight now being used by people to suggest that it was somehow the norm'. Ticketmaster refunded some of its fees. In Ireland, the so-called inside fee has become a common practice by Ticketmaster to generate more revenues, according to an executive from a booking agent, who declined to be named. The company had a market share of up to 90 per cent in the country, according to an investigation by the Irish Competition and Consumer Protection Commission in 2020. The cost of a ticket for the booking agent's acts in a Dublin venue – used as the source of the artist's cut – was €22.00, but the ticket price displayed on Ticketmaster was €25.00, on top of which €3.10 service fee was applied. This meant €6.10 of charges on a €22.00 ticket, or a 28 per cent increase, the booking agent says. 'In some markets, the service fee may be an inside commission and an above face value,' says Tim Chambers, a former Ticketmaster and Live Nation senior executive who now works as an M&A consultant in the ticketing industry. Live Nation said that it and Ticketmaster 'have large market shares because artists and venues prefer [our] services over others. There is nothing nefarious about that.' It also said Ticketmaster's market share and profit margins have declined since the US merger. Wall reiterates that artists and their management, not Ticketmaster, are responsible for setting ticket prices and deciding whether to use dynamic pricing and that Ticketmaster only retained 'a modest portion' of fees and service charge – which are no higher than rivals. 'The 'flywheel' is creating 8 per cent [overall] margins. That's not a monopoly profit,' he says. 'The defining feature of a monopolist is monopoly profits derived from monopoly pricing ... Live Nation in no way fits the profile.' The question now is not just whether the DoJ can make its case, but whether the new administration has the same appetite to challenge the country's most successful events operator as the last. In March this year, a New York court refused Live Nation's attempt to exclude the DoJ's claim that it coerces artists into using its concert promotion services if they want to perform at its large amphitheatres. Live Nation had argued that it is rival concert promoters who rent the venues, not the artists themselves. The judge did not agree. Live Nation has declared itself a victim of the Biden administration and its 'populist urge that simply rejects how antitrust law works. Some call this 'anti-monopoly', but in reality it is just anti-business.' Its lobbying efforts have increased in recent years, with more than $2 million (€1.7 million) spent in 2023 and 2024 by the parent company – almost twice as much as the years previously. Live Nation said that it was 'not lobbying to protect margins – in fact, many of the reforms we support, like giving artists the ability to cap resale, could actually reduce profits'. Donald Trump and musician Kid Rock. Photograph: Jeff Bottari/Zuffa LLC But Joe Biden's presidential successor also clearly believes high ticket prices are a concern. Earlier this year, Donald Trump signed an executive order to crack down on touts buying up tickets and selling at higher prices on the secondary market. 'I didn't know too much about it, but I checked it out, and this is a big problem,' said the president, revealing the order alongside musician Kid Rock in the Oval Office. Live Nation says it supports the order. The DoJ found that Ticketmaster accounted for nearly a third of ticket resales in 2022, although critics of the company are concerned that the focus on resales could detract from the focus on the primary sale of tickets. Analysts are also not convinced that the DoJ will have enough, not just to prove a dominant position, but to also demonstrate that this has been used for anticompetitive practices. A note from JPMorgan last year said that there was 'a real possibility that [Live Nation] comes out of this a winner'. Live Nation CFO Joe Berchtold said on a recent earnings call the company was 'hopeful that we'll see a return to the more traditional antitrust approach, where the agencies have generally tried to find ways to solve problems with targeted remedies that minimise government intervention in the marketplace'. He added that 'at least some parts of the case reflect a much more interventionist philosophy than you'd expect from a Republican administration'. But many in the industry remain confident that the DoJ's case will continue, given its bipartisan support in Congress and from dozens of US states. Brian Hess, of the US non-profit group the Sports Fans Coalition, which advocates for consumer rights, notes that Kanter's replacement at the agency, Slater, 'is a pretty strong advocate of antitrust enforcement'. He points to an assertive stance against Big Tech, and argues that Ticketmaster too 'is just a very big tech company that happens to sell tickets. There is no way to be a fan of anything in this country and not have to deal with the company.' – Copyright The Financial Times Limited 2025

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