Tracking the Middlemen – The New York Times

As the presidential election approaches, many CEOs are staring intently at the countdown to Election Day, wondering which companies and industries Biden’s appointed regulators — potentially the most aggressive in a generation — will try to target before reaching ground zero.

Business leaders have been poring over comments and records, trying to understand the pending priorities of regulators like Federal Trade Commission Chairwoman Lina Khan and Assistant Attorney General Jonathan Kanter, who heads the Justice Department’s antitrust division.

They’ve zeroed in on a legal theory that sounds nerdy but could have huge consequences: the tyranny of the intermediary, where intermediaries abuse their roles to squeeze out competition or create artificially expensive moats. The Justice Department has already taken a high-profile action in this regard, suing Splitting Ticketmaster and Live Nation.

The agency is reportedly investigating at least two other companies. One of them is RealPage, a property management company that uses artificial BroadCast Unitedligence to suggest prices and has been sued by tenants. Accused of facilitating new forms of collusionThe second one is UnitedHealth Groupis a healthcare conglomerate with numerous businesses, including an insurance company and another unit that employs about 10,000 doctors in the United States.

Real page explain “We are proud of the important role our customers play in providing safe and affordable housing for millions of people,” the company said in a statement this week. roll out A website about its software.

Guessing which other names are on the list has become a parlor game among traders. A travel booking service that raises its fees? A brokerage firm that apartment complexes require tenants to use? A shareholder advisory firm that can decide if a deal goes through? A marketplace that takes a cut every time an NFT changes hands?

To find out more about the possible ongoing case, DealBook’s Lauren Hirsch spoke with Kanter about cracking down on middlemen, the challenges of regulating AI, and how to navigate the melting ice for business.

This interview has been edited and condensed for clarity.

era Recent Surveys PBMs, the middlemen in the health care industry, have found themselves driving up drug costs. The largest PBMs are owned by conglomerates: Optum, for example, is owned by UnitedHealth Group. CVS Caremark is owned by CVS Health.

What do you think of middlemen in healthcare?

Intermediaries are now common in our healthcare economy, whether they are insurers or payers, PBMs or any other part of the healthcare system, these intermediaries are often faceless and they not only consume a lot of money — or extract a lot of money from the system — but they also make decisions about the course of treatment.

I’m sure they’ll say it’s more efficient if everything is done in-house.Pharmacy benefit managers say their scale is critical to fighting off the companies that make brand-name drugs.

We’ve heard a lot over the last few decades about what I sometimes call “benevolent monopolists.” But the fact is that our system is built on the idea that competition leads to better outcomes.

The U.S. Department of Justice is reportedly investigating RealPage, a real estate management software company, for using algorithmic pricing. Do you think AI tools communicate pricing in the same way that humans collude?

Facts are important. But I always say that if your dog bites someone, you are responsible for your dog biting someone. If your AI manipulates prices, you are also responsible.

Regardless, the use of AI or algorithm-based technology should get more of our attention because pricing is much easier when you outsource it to an algorithm than sharing a manila envelope in a smoke-filled room.

In the age of AI, without manila envelopes, is it easier or harder to prove collusion?

We’ve been through these evolutions. This is another evolution, and it’s a major step forward, and it changes the game. I think our job is to keep pace with these technological developments.

Well, Wendy’s recently introduced dynamic pricing Indicates planned test. Could this be a point of concern?

Companies are getting better and better at figuring out how to maximize profits. The more information they have about who you are and how much you’re willing to pay, the more they can charge you. I think the ability to do this at a personalized level will lead to greater exertions of monopoly power than at any time in history.

When it comes to artificial BroadCast Unitedligence, the Federal Trade Commission Learn about Microsoft’s investment in OpenAI. What do you think of OpenAI? Convert its corporate structure to for-profit Will it affect how antitrust enforcers handle it?

Sometimes corporate form matters. But most of the time, the law is about market realities. So if it looks like a duck and quacks like a duck, it’s not a chicken.

Some advisers say companies are hurt because antitrust enforcement is so aggressive that they can’t do deals. They’re like melting ice cubes, but they don’t quite qualify as a bankruptcy defense.

There is a reason why bankruptcy defense has very strict standards. One of the most important of these standards is to answer this question: Is this the least anticompetitive purchaser? Many transactions fail this test. Just because it may be a slow-melting block of ice doesn’t mean you should sell it to the biggest competitor in the market.

If the alternative buyer is a private equity firm, then A problem during a regional banking crisis?

If it’s private equity, then the number of portfolio companies they have in the sector is important. Whether they continue to operate assets and compete at full capacity is also important.

This is an election year. Should media organizations be able to coordinate to suppress false information? In the past, we have seen platforms like Apple and Google’s app stores and Amazon’s web services Drop the conversation.

This is a difficult question. We believe that competition is good for our democracy and the free flow of information. Where appropriate, the law does not prohibit improving security. But this does not need to come at the expense of competition.

In case you missed it

Apple will not launch its artificial BroadCast Unitedligence technology in the European Union due to regulatory concerns. The company said it would not introduce Apple Intelligence and other technology companies joined the European Union this year in saying the bloc’s Digital Markets Act would weaken the security of their products. The European Commission said big tech companies are welcome to enter Europe as long as they play by the rules.

The new editor of The Washington Post withdrew his application. Will Lewis, the embattled CEO and publisher of The Washington Post, told employees: Robert Winnett Lewis and Winnett have come under scrutiny for their journalistic records in their native Britain, including accusations of using unethical means to obtain news.

Donald Trump has narrowed the fundraising gap with President Biden. Donors have Filling the War Chest The presumptive Republican nominee has been in the polls since he was convicted of 34 felonies in New York last month. Biden has been leading for months and is still raising money, receiving a huge donation from Michael Bloomberg and Melinda Frances Gates’s support — This is the first time she has publicly endorsed a presidential candidate.

Tip tax by the numbers

Donald Trump’s proposal to eliminate the tip tax is aimed at attracting the country’s large service industry workforce as he and President Biden both court working-class and young voters in key swing states. $250 billion federal deficit The U.S. economy has grown 10% over the past 10 years, according to a report released this week by the nonpartisan Committee for a Responsible Federal Budget. Here’s what the numbers say.

twenty two%: The proportion of labor force Employed in the hotel industry In the Nevada election Battleground states Trump first implemented the policy there.

At least two: How many banknotes are needed? Eliminate the tip tax And already Introduced in Congress This month. Although some Republicans Praise for tax cutsothers questioned why the tax cut was only given to tipped workers and not to low-wage workers who don’t make tips. Some also criticized the potential costs of the policy.

From $225 billion to $375 billion in 10 years: According to a report by the Committee for a Responsible Federal Budget, this policy would cost the federal government if employers and workers changed their behavior to reclassify more than 50% of their income as tips to avoid taxes.

$23 billion: According to the IRS, how much tip income was not reported to the IRS in 2006 2018 Report It is under the responsibility of the Director of Taxation Administration of the Ministry of Finance.

91%: increase Tips reported to the IRS between 2008 and 2018One reason for the surge in tipping? Tablet payment systems Customers tip more frequently and at a higher percentage.

40%: Survey shows percentage of Americans who oppose businesses giving tips on tip amounts Pew Research Center 2023 Survey.

Hot topic in the office: Wearing shorts to work

This week, nearly 100 million people spent High temperature warning From the Midwest to New England, sweltering temperatures have broken records. In many offices, the summer heat has reignited a long-standing debate: Is it OK to wear shorts to work?

The objection has long been conventional wisdom: “Shorts tend to convey a sporty, youthful vibe,” said Ellie-Jean Royden, author of the forthcoming book “How to Dress Your Best.” For that reason alone, she argues, shorts should be a no-no.

But office fashion has changed since the outbreak, with many people who used to wear suits feeling more comfortable working from home in sweatpants, and some stylists agreeing that shorts are now acceptable.

Jessica Sockel, a clothing stylist at personal styling service Stitch Fix, said she has noticed “greater flexibility in pairing styles that were previously considered inappropriate for office wear, such as shorts.”

All of the personal styling experts DealBook surveyed agreed that if you want to wear shorts to the office, there are a few rules to follow:

• Choose the right shorts. “Loose, long shorts that mimic the look and feel of trousers are more professional,” says Shelby Goldfaden, director of merchandising at women’s apparel brand MMLaFleur. “Often, shorts are pleated to add volume and interest.” Bermuda shorts, linen shorts, and chinos are all good options.

• Dress them up. For women, Sokel suggests pairing shorts with a classic long-sleeved button-down, a blazer, or a top that matches the color and fabric. For men, she suggests pairing them with a crisp button-down, a sport coat, or a knit polo. “A belt can make any bottom look more stylish,” Goldfaden notes.

• Reading room. “If you’re on the fence, the safest way to determine whether wearing shorts is acceptable is to assess what your coworkers wear in the office,” Sokel said.

Is it worth showing your knees? Dawnn Karen, assistant professor at the Fashion Institute of Technology and self-proclaimed “fashion psychologist,” told DealBook that if you’re the only person in the office wearing shorts, others might assume you’re less competent. But if you’re still producing quality work, she said, “you can actually break people’s perceptions and stereotypes.”

In which case, she added, “maybe everyone will start wearing shorts in the office.”

DealBook wants your opinion: Are shorts allowed in the office? Tell us here.

Thanks for reading! See you on Monday.

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