Technology giants face growing scrutiny from Congress and regulators over their dominance.
Amazon, Apple, Facebook, and Google have affected the way that billions of people live their lives—transforming the U.S. economy and society over the last decade. But various state and federal entities have recently opened as many as 16 investigations into the companies. A common question underlies many of these inquiries: Does big tech have too much power—and too little oversight and regulation?
“Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” said U.S. Assistant Attorney General Makan Delrahim, the head of the Antitrust Division of the U.S. Department of Justice, when the Justice Department announced that it will investigate certain large tech companies.
In light of the ongoing investigations, will policymakers and regulators use—or change—antitrust law to limit the power of big tech? The authors of the pieces featured in this week’s Saturday Seminar offer a variety of perspectives on this question.
How Big Tech Got Big
- In a 2019 Berkeley Business Law Journal article, Dina Srinivasan argues that Facebook is a monopolist and has engaged in anti-competitive conduct in violation of the Sherman Antitrust Act. Srinivasan argues that policymakers need “to understand the consumer valuing privacy while still ceding control over their personal data, the flawed market structure that allows for the perpetuation of present circumstances, and the remedy which can restore competition in communications markets.”
- In its 2018 decision in Ohio v. American Express Co., the U.S. Supreme Court ruled that American Express’s “anti-steering” policy stopping merchants from directing customers to other credit card companies—forcing higher transaction costs for merchants—did not violate antitrust law. Columbia Law School Professor Tim Wu argues that, although some scholars believe that American Express will have broad implications for large tech companies, the Court’s opinion is narrow and will have “limited long-term import.” Wu asserts that the case reaches a subset of two-sided platforms that are “transaction platforms,” but not the broader set of two-sided platforms such as Google, Facebook, and Twitter.
Current Regulatory and Investigatory Landscape
- In a recent article, Boston University School of Law Professor Keith Hylton assesses the anticompetitive conduct of digital platforms and concludes that “there is nothing so unusual about digital platforms that would require a reform of the antitrust laws.” He identifies behaviors such as the “acquisition of nascent rivals,” in which one digital platform merges with another, and the “denial of access to data,” where digital platforms use their data troves to create unlawful advantages. Hylton claims that digital platforms like Google and Facebook achieved their dominant positions due to economies of scale rather than such anticompetitive conduct.
- Big tech companies such as Google and Amazon are not concerned by antitrust investigations because there is “little evidence” that these companies violated antitrust regulations, according to Mark McCareins, a professor at Kellogg School of Management at Northwestern University. McCareins argues that the government should spend fewer resources trying to break up big tech companies and should instead “consider a more deliberate, wait-and-see approach to competition in highly fluid industries.”
- Writing for Forbes, David Doty describes another side of big tech, where innovation and competition in online advertising arguably benefit consumers and industry professionals alike. Doty asserts that consumers are benefiting from lower prices, that “more people than ever have been able to launch businesses because of the digital economy,” and that the current climate of online advertising is both competitive and innovative.
The Future of Big Tech
- Antitrust policy promises to be an important issue in the 2020 presidential election. U.S. Senator Elizabeth Warren (D-Mass.), for example, offered detailed proposals to break up large tech platforms. In an essay in The Regulatory Review, Herbert Hovenkamp, a professor at the University of Pennsylvania Law School, warns that Senator Warren’s proposals could lead to lower output, fewer jobs, and higher prices. Hovenkamp argues that Senator Warren’s proposals seek to protect older technologies at the expense of consumers and workers—the two constituencies whose protection, he believes, should be driving antitrust policy.
- Writing in a report for Business Insider Intelligence, Mariel Soto Reyes explores the variety of ongoing antitrust investigations into large technology companies. The report then analyzes several potential outcomes of these investigations, including a decision to break up big tech. Other potential outcomes include providing additional clarity in the U.S. government’s merger guidelines and granting smaller enterprises access to big tech’s data.
- Breaking up big tech companies is hard to do, argues Diana L. Moss, president of the American Antitrust Institute. Moss warns that “loosely defined breakup proposals could result in a failed experiment” with high costs. Among the concerns that Moss raises are the negative “consequences for antitrust if it is burdened with solving problems for which it is not designed.” Moss recommends a policy portfolio approach with clearly defined goals and a thorough understanding of the potential consequences.
- In an analysis issued by The Information, Ashley Gold and Christopher Stern predict that state investigations into Facebook and Google will increase the risk of litigation in federal court, in turn increasing the cost of fending off antitrust claims. Gold and Stern also assert that states attorneys general on both sides of the political aisle may gain a political advantage from taking investigatory action.