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Antitrust

American Antitrust Institute Experts Concur That Breaking Up Big Tech Is Hard to Do

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WASHINGTON, June 20, 2019 — Talking tough against Silicon Valley may be popular. But breaking up big tech will be hard to do.

That, at least, was one of the key messages coming from the American Antitrust Institute’s annual conference here on Thursday.

While progressives and populists are resurgent in the public eye, it isn’t going to be easy to take apart the tech giants, said Andrew Gavil, a noted antitrust law professor at Howard University.

The widespread calls for breakup ignore huge legal hurdles and dramatic societal implications from such a move.

Gavil expressed skepticism about the legal practicalities of plans to break up tech companies with antitrust laws, comparing such a move to the lawsuit brought against Microsoft in 1998.

The case against Microsoft wasn’t particularly driven by popular sentiment, although that might be a difference in any new cases against the tech giants two decades later.

Keynoting the event was House Judiciary Antitrust Subcommittee Chairman David Cicilline, D-R.I. Although Cicilline said he didn’t know what a recently announced bipartisan investigation into the tech sector would find, he did emphasize the urgency in confronting big tech.

Recalling the widespread anger and hostility to John D. Rockefeller’s Standard Oil and other so-called “trusts” in the early 1900s, Cicilline said, “Today, we are in a similar moment.”

The judges in the Microsoft case showed the limits of populist-driven antitrust

But that popular anger against big tech – if it even exists – might not be enough to break any of them up.

Gavil particularly emphasized how difficult it was to take down a giant and bully like Microsoft – even after a multi-year investigation and a months-long trial.

The late District Court Judge Thomas Penfield Jackson ruled in June 2000 that Microsoft should be broken into two separate companies, one producing the Windows operating system and one producing other software and web properties.

However, following the appeal, the D.C. Circuit Court of Appeals overturned divestiture in June 2001. They still held Microsoft liable for antitrust violations and subjected it to several behavior remedies. But Microsoft was ultimately allowed to stay together.

The fact that big tech companies have grown to their current success primarily because of consumer satisfaction and value makes it unlikely that a judge would rule in favor of such a sweeping antitrust action, Gavil said.

Antitrust cases might be more successful in some cases than others. New York University Law Professor Scott Hemphill emphasized the importance of proposing a remedy to match the harm, suggesting that in Microsoft’s case, a breakup did not make sense.

Out of all the big tech companies currently under scrutiny, lawmakers might have the most success in breaking up Facebook. According to Hemphill, unwinding the acquisition of Instagram and WhatsApp would be straightforward and standard, especially relative to what is being proposed for the other companies.

In such a case against Facebook, the remedy of a breakup would match the harm of a lack of competition, he said.

Going after Google would be much more complex that unwinding Facebook/Instagram

By contrast, tackling Google would be much more complex.

Georgetown Law Professor Howard Shelanski recommended proceeding with extraordinary caution before attempting to break up the big tech companies.

Why? He said that the cure could be much worse than the ill. Any divestiture—even one that seems like a natural undoing—could easily become complicated because the technology has evolved so rapidly.

Moreover, judging by the terms of traditional antitrust enforcement over the past 35 years, it’s hard to immediately see a detriment to consumers from these acquisitions.

Instagram and WhatsApp are both still free: Instagram has a 4.8-star average from more than 12 million ratings on Apple’s app store, and WhatsApp follows close behind with 4.7 stars and almost 5 million ratings.

Moreover, when Facebook purchased Instagram in 2012, the latter platform only had 30 million users. On June 20, 2018, Instagram announced that it had reached 1 billion users worldwide.

Although Facebook has come in for considerable fire over the issues of privacy, the tech giant also helped to elevate the stature of these platforms, said panelists. That has resulted in significant consumer satisfaction. Indeed, 72 percent of Americans actively use social media, the majority of them on a daily basis.

There is simply no way of knowing how the market will respond to undoing the acquisition and all the side effects that such an action may have, said Shelanski.

Politicians go after Silicon Valley as paradigms begin to shift

That hasn’t stopped politicians and presidential candidates – on the left and the right – from gunning for the biggest Silicon Valley giants.

Sen. Elizabeth Warren, D-Mass., has been especially vocal about her plan to break up big tech, which includes undoing previous mergers such as Google and YouTube, Facebook and Instagram, and Amazon and Whole Foods.

Republican senators have jumped on the anti-big-tech bandwagon as well. In April, Sen. Ted Cruz, R-Texas, suggested using antitrust enforcement to take down powerful tech companies. On Wednesday Sen. Josh Hawley, R-Mo., introduced a bill that would strip significant immunity protections from the biggest tech platforms.

But finding a solution to the potential harms of detriments of information technology players will require some paradigm shifting. Indeed, the country would need to completely redefine the way it thinks about monopolies, said Shelanski.

He referred to an informal threshold of seeing 65 to 70 percent of market share as being necessary to have exercise a presumption of monopoly power.

That, he said, is a “bizarre threshold to overcome,” Particularly where in certain markets, just 30 percent of market shares could act as a monopoly.

In  1961, the United States sued Brown Shoe Company for antitrust violations after the company purchased its competitor Kinney, ultimately ordering Brown to completely divest all new assets within 90 days based on the Clayton Act’s prohibition of any acquisition where the effect “may be substantially to lessen competition, or to tend to create a monopoly.”

In a unanimous decision, the Supreme Court emphasized the word “may,” pointing out that the concern was “with probabilities, not certainties” and therefore mergers with even just a “probable anticompetitive effect” could be prosecuted under the Act.

This decision is especially surprising today when considered in light of the fact that Brown Shoe and Kinney only owned about 7 percent of U.S. retail shoe stores, combined.

Google has more than 90 percent of search; Facebook owns more than 70 percent of social

By contrast, said Cicilline, Google controls more than 90 percent of search engines and Facebook accounts for over 70 percent of social networking sites.

Cicilline, whose official title is chairman of the House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law, earlier this month announced that his subcommittee would conduct a bipartisan investigation “to document whether dominant market participants are exercising their market power in anticompetitive ways and to assess whether our existing laws and current enforcement levels are adequate to address these problems.”

Over the next several months, he said, the investigation will complete a thorough review of online markets through a hearings, information requests, and discussions with key stakeholders and policy experts.

Cicilline said that he didn’t have preconceived ideas about what the investigation could find or what the ultimate answer to big tech should be.

(Photo of House Judiciary Antitrust Subcommittee David Cicilline, D-R.I., by Emily McPhie.)

Reporter Em McPhie studied communication design and writing at Washington University in St. Louis, where she was a managing editor for the student newspaper. In addition to agency and freelance marketing experience, she has reported extensively on Section 230, big tech, and rural broadband access. She is a founding board member of Code Open Sesame, an organization that teaches computer programming skills to underprivileged children.

Antitrust

Panel Disagrees on Antitrust Bills’ Promotion of Competition

Panelists disagree on the effects of two antitrust bills intended to promote competition.

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Photo of Adam Kovacevich of Chamber of Progress, Berin Szoka of TechFreedom, Cheyenne Hunt-Majer of Public Citizen, Sacha Haworth of Tech Oversight Project, Christine Bannan of Proton (left to right)

WASHINGTON, March 10, 2023 – In a fiery debate Thursday, panelists at Broadband Breakfast’s Big Tech and Speech Summit disagreed on the effect of bills intended to promote competition and innovation in the Big Tech platform space, particularly for search engines.  

One such innovation is new artificial intelligence technology being designed to pull everything a user searches for into a single page, said Cheyenne Hunt-Majer, big tech accountability advocate with Public Citizen. It is built to keep users on the site and will drastically change competition in the search engine space, she said, touting the advancement of two bills currently awaiting Senate vote.  

Photo of Adam Kovacevich of Chamber of Progress, Berin Szoka of TechFreedom, Cheyenne Hunt-Majer of Public Citizen, Sacha Haworth of Tech Oversight Project, Christine Bannan of Proton (left to right)

The first, the American Innovation and Choice Online Act, would prohibit tech companies from self-preferencing their own products on their platforms over third-party competition. The second, the Open App Markets Act, would prevent app stores from requiring private app developers to use the app stores’ in-app payment system. 

Hunt-Majer said she believes that the bills would benefit consumers by kindling more innovation in big tech. “Perfect should not be the enemy of change,” she said, claiming that Congress must start somewhere, even if the bills are not perfect. 

“We are seeing a jump ahead in a woefully unprepared system to face these issues and the issues it is going to pose for a healthy market of competition and innovation,” said Hunt-Majer. 

It is good for consumers to be able to find other ways to search that Google isn’t currently providing, agreed Christine Bannan, U.S. public policy manager at privacy-focused email service Proton. The fundamental goal of these bills is directly at odds with big companies, which suggests its importance to curb anti-competitive behavior, she said. 

No need to rewrite or draft new laws for competition

But while Berin Szoka, president of non-profit technology organization TechFreedom, said competition concerns are valid, the Federal Trade Commission is best equipped to deal with disputes without the need to rewrite or draft new laws. Congress must legislate carefully to avoid unintended consequences that fundamentally harm businesses and no legislation has done so to date, he said. 

Both bills have broad anti-discrimination provisions which will affect Big Tech partnerships, Szoka continued. 

Not all experts believe that AI will replace search engines, however. Google has already adopted specialized search results that directly answer search queries, such as math problems, instead of resulting in several links to related webpages, said Adam Kovacevich, CEO of Chamber of Progress, a center-left tech policy coalition.  

Kovacevich said he believes that some search queries demand direct answers while others demand a wide range of sources, answers, and opinions. He predicts that there will be a market for both AI and traditional search engines like Google. 

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Antitrust

Key Republican: Anticompetitive Practices of Big Tech Present a Threat to Innovation

Rep. Ken Buck said tech companies’ practices are anticompetitive and threaten innovation, free speech and national security.

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Screenshot of Rep. Ken Buck from the Heritage Foundation webcast

WASHINGTON, January 13, 2023 — Rep. Ken Buck, R-Colo., argued on Wednesday that the anticompetitive practices of large tech companies present a threat to innovation, free speech and national security — and that even Republicans who are traditionally wary of antitrust legislation should view it as a key tool for curbing Big Tech’s power.

“I’m a free market person — I apply that principle to just about everywhere — but if you don’t have a market, you can’t have a free market,” Buck said at a Heritage Foundation event. “And when Google controls 94 percent of the online searches in this country, you don’t have a free market.”

Buck said that it was the responsibility of Congress to actively shape antitrust law, rather than “leaving it up to the courts to create something over the next 30 years.”

Among the several anti-Big Tech bills that have been proposed, Buck highlighted as his priority legislation that would prevent certain companies from acting as both buyers and sellers in digital advertising markets.

The bill applies to companies that generate more than $20 billion in digital ad revenues — specifically targeting Google and Facebook — and has so far received bipartisan support in both the House and the Senate.

Tech companies have spent millions of dollars lobbying against proposed antitrust bills, making it politically precarious for some members of Congress to support them, Buck said. Still, he urged his colleagues to consider the harms allegedly caused by social media platforms.

“We know that Instagram recognized that there was body shaming going on, there was depression among teenage girls, there was a higher suicide rate among teenage girls, and they doubled down,” Buck said. “They didn’t just say, ‘We’ve got to deal with this issue’ — they decided they were going to start marketing to a younger group.”

More competition in the market could give teens and parents access to better alternatives, Buck said, but the power held by the largest platforms makes it nearly impossible for competitors to emerge.

Rep. Buck linked free speech issues for tech industry to antitrust

“How do you have free speech, how do you have competition in the marketplace when you’ve got four companies that are so big that they can wipe out any kind of competitor?” he asked.

Buck has long been a critic of Big Tech, and introduced legislation to ban the TikTok app from U.S. government devices more than a year before similar legislation was passed as part of the bipartisan spending bill in December. This decision had nothing to do with fear of TikTok as a competitor to U.S. companies, he said.

“TikTok is dangerous, not because of its competition in the marketplace — I think it’s healthy in that sense; if Microsoft or some company had bought it, I’d be all in favor of that kind of competition for Facebook — but the bottom line is [that] how it’s being used by an adversary is dangerous and concerning.”

Although the TikTok ban won broad Republican support, alongside a variety of proposals to target tech companies’ privacy or content moderation practices, many antitrust bills have been less popular.

Buck has been open about his struggles in convincing other Republicans to pursue antitrust action, telling The Washington Post in March that “the antitrust bills that we are currently considering will not move forward under Republican leadership, and that’s been a very clear signal that has been sent.”

And now that the House is under Republican control, several experts have predicted that antitrust legislation is unlikely to move forward any time soon.

In an op-ed published Wednesday, President Joe Biden called on members of Congress to overcome partisan disagreements and keep tech companies in check by passing digital privacy, antitrust and content moderation legislation.

Rep. Cathy McMorris Rodgers, R-Wash., who chairs the House Energy and Commerce Committee, responded to Biden’s comments in a statement that agreed with the need for privacy and content moderation action but did not mention antitrust.

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Antitrust

‘Time is Now’ for Separate Big Tech Regulatory Agency, Public Interest Group Says

‘We need to recognize that absolutely the time is now. It is neither too soon nor too late.’

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Photo of Harold Feld, senior vice president at Public Knowledge

WASHINGTON, June 21, 2022 – Public Knowledge, non-profit public interest group, further advocated Thursday support for the Digital Platform Commission Act introduced in the Senate in May that would create a new federal agency designed to regulate digital platforms on an ongoing basis.

“We need to recognize that absolutely the time is now. It is neither too soon nor too late,” said Harold Feld, senior vice president at Public Knowledge.

The DPCA, introduced by Senator Michael Bennet, D-CO., and Representative Peter Welch, D-VT., would, if adopted, create a new federal agency designed to “provide comprehensive, sector-specific regulation of digital platforms to protect consumers, promote competition, and defend the public interest.”

The independent body would conduct hearings, research and investigations all while promoting competition and establishing rules with appropriate penalties.

Public Knowledge primarily focuses on competition in the digital marketplace. It champions for open internet and has openly advocated for antitrust legislation that would limit Big Tech action in favor of fair competition in the digital marketspace.

Feld published a book in 2019 titled, “The Case for the Digital Platform Act: Breakups, Starfish Problems and Tech Regulation.” In it, Feld explains the need for a separate government agency to regulate digital platforms.

Digital regulation is new but has rapidly become critical to the economy, continued Feld. As such, it is necessary for the government to create a completely new agency in order to provide the proper oversight.

In the past, Congress empowered independent bodies with effective tools and expert teams when it lacked expertise to oversee complex sectors of the economy but there is no such body for digital platforms, said Feld.

“The reality is that [Congress] can’t keep up,” said Welch. This comes at a time when antitrust action continues to pile up in Congress, sparking debate across all sides of the issue.

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