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Antitrust

Democrats and Some Republicans at House Judiciary Antitrust Subcommittee Take on Big Tech’s ‘GAFA’ Squad

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WASHINGTON, July 16, 2019 – In the House Judiciary Committee’s second hearing putting tech giants under the microscope, both the Democratic majority and some members of the Republican minority attempted to squeeze the companies into greater political compliance.

At a Tuesday hearing featured witnesses from the widely-feared “GAFA” companies — Google, Amazon, Facebook and Apple — Antitrust, Commercial and Administrative Law Subcommittee Chairman David Cicilline, D-R.I., raged against their level of market control with minimal regulatory oversight.

The internet has become more hostile and less open to entrepreneurs trying to enter the online market, he said, because these major firms are shielded from competition and smaller businesses face rising entry barriers.

Moreover, the prominence of big tech is not the inevitable result of innovation, but the result of choices made by policymakers, he said.

And while subcommittee Ranking Member James Sensenbrenner, R-Wis., doubted Democratic calls to break up big tech companies, a statement by the ranking member of the full committee, Doug Collins, R-Ga., put a bipartisan sheen on the tech-bashing.

“Almost all online engagement by individuals and businesses today runs through a few large platforms. When it comes to online communication, therefore, the platforms must be careful in how their businesses affect free expression,” Collins said in a statement.

“When it comes to online commerce, these platforms must be careful they don’t put consumers at increased risk of harm or facilitate illicit conduct. These expression and conduct issues raise different challenges that should not be conflated, but both issues can and should be discussed.”

Collins suggested that the platform companies’ business models shield them from market and other forces that leads them to lower levels of social accountability.

The ‘GAFA’ squad of companies respond to a hostile Congress

Witnesses at the hearing consisted of policy executives from the four major companies.

Google’s Director of Economic Policy Adam Cohen said that their work supports and accelerates innovation within other firms and open sources.

It’s a broad market because many Americans start their online searches for dedicated specialist competitors, he said.

Matt Perault, head of global policy development at Facebook, said that Facebook has “democratized” advertising by enabling small and medium-sized businesses to grow. Because there are low barriers of entry, new applications and technologies are constantly emerging.

Consumers benefit from all competition regardless of their business models, said Amazon’s Associate General Counsel Nate Sutton. Amazon’s mission is to be a customer-centric company and its success depends on its partnerships with third parties, he said.

We work hard to grow and retain consumer trust, said Kyle Andeer, vice president of corporate law at Apple. Every developer in the App Store abides by the same guidelines so that everyone has an “equal opportunity.” Apple continues to invest in resources and tools for developers, he said.

The panelists were asked about how their companies specifically devoted resources into promoting smaller, competitive firms. Perault said that Facebook looks to acquire “all services” that would be beneficial and bring value to their services.

Amazon is not the only way for merchants to advertise, said Sutton. Ebay, WalMart and Target are all examples of emerging online marketplaces. Moreover, the fastest growing market has a mixture of online and offline transactions, he said.

Critics in Congress were not amused by the Silicon Valley giants’ arguments

Rep. Lucy McBath, D-Ga., said that Amazon has been known to arbitrarily shut down merchant accounts “without explanation.” Sutton stated that Amazon has a “dedicated customer team” to which merchants can address their concerns. However, there are occasions where the firm takes “swift and immediate action” towards those whom it considers are “bad actors” selling on Amazon.

Google controls 90 percent of the search engine market in the U.S., said Rep. Jamie Raskin, D-Md., yet the company somehow claims that competition is “just a click away.”

Rep. Joe Neguse, D-Colo., asked Perault if Facebook identifies itself as a monopoly, referring to the social media platform’s past policy statement that said, “don’t replicate core functionality that Facebook already provides.”

The company evaluates Facebook’s terms and conditions on a regular basis, said Perault. He stated that Facebook has 2.7 billion users and that it is the parent company of WhatsApp, Messenger and Instagram.

Each of these four companies has a unique position in the market, said Rep. Hank Johnson, D-Ga., but Facebook is the “only one” with an edge in the social media market.

Because consumers have no other options, they have no choice but to accept these conditions, said Johnson.

(Photo of House Judiciary subcommittee Chairman David Cicilline, D-R.I., and Ranking Member James Sensenbrenner, R-Wisconsin, by Masha Abarinova.)

Antitrust

Public Interest Groups Urge Passage of Six Antitrust Bills Targeting Big Tech

Nearly 60 public interest groups signed a letter to House leaders to call a vote on six antitrust bills.

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WASHINGTON, September 2, 2021 – Nearly 60 public interest groups signed a letter Thursday urging the House party leaders to push for a vote on six antirust bills that cleared the House judiciary committee in June.

The goal of the six bills is to rein in the power of Big Tech through new antirust liability provisions, including new merger and acquisition review, measures to prevent anticompetitive activity, and providing government enforcers more power to break-up or separate big businesses. They include American Choice and Innovation Online Act, H.R. 3816, Platform Competition and Opportunity Act, H.R. 3826, Ending Platform Monopolies Act, H.R. 3825, Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act, H.R. 3849, Merger Filing Fee Modernization Act, H.R. 3843, and State Antitrust Enforcement Venue Act, H.R. 3460.

The letter, which was directed at House Speaker Nancy Pelosi, D-California, and House Minority Leader Kevin McCarthy, R-California, were promoting a package of six bills that were the result of a two-year bipartisan investigation that included 10 hearings, featuring the testimony of the CEOs of the major tech companies, 240 interviews, 1.3 million documents and a 450-page report, the letter notes.

“We believe that these bills will bring urgently needed change and accountability to these companies and an industry that most Americans agree is already doing great harm to our democracy,” the letter said. Public Citizen was the first of the 58 groups on the letter.

America has a monopoly problem. Monopoly power lowers wages, reduces innovation and entrepreneurship, exacerbates income and regional inequality, undermines the free press and access to information, and perpetuates toxic systems of racial, gender, and class dominance,” the letter alleged.

“Big Tech monopolies are at the center of many of these problems,” it continued. “Reining in these companies is an essential first step to reverse the damage of concentrated corporate power throughout our economy. The bills that passed out of the House Judiciary Committee, with bipartisan support, do just that and it is imperative that they move forward in the House.”

List of signatories:

  • Public Citizen
  • Accountable Tech
  • Action Center on Race & the Economy
  • ALIGN: The Alliance for a Greater New York
  • Alliance for Pharmacy Compounding
  • American Booksellers Association
  • American Family Voices
  • American Independent Business Alliance
  • American Specialty Toy Retailing Association
  • Artist Rights Alliance
  • Athena
  • Cambridge Local First
  • Center for American Progress
  • Center for Digital Democracy
  • Center for Popular Democracy
  • Committee to Support the Antitrust Laws
  • Decode Democracy
  • Demos
  • Electronic Frontier Foundation
  • Friends of the Earth
  • Future of Music Coalition
  • Gig Workers Rising
  • Global Exchange
  • Indivisible Georgia Coalition
  • Indivisible Hawaii
  • Indivisible Ulster/NY19
  • Institute for Local Self-Reliance
  • International Brotherhood of Teamsters
  • Jobs With Justice
  • Kairos Action
  • Local First Arizona
  • Louisville Independent Business Alliance
  • Main Street Alliance
  • Mainers for Accountable Leadership
  • Media Alliance
  • Metropolitan Washington Council, AFL-CIO
  • National Employment Law Project
  • New York Communities For Change
  • New York Communities for Change
  • North American Hardware and Paint Association
  • Open Markets Institute
  • Our Revolution
  • PowerSwitch Action
  • Public Knowledge
  • Running Industry Association
  • Secure Elections Network
  • Service Employees International Union
  • Shop Local Raleigh/Greater Raleigh Merchants Association
  • SIMBA (Spokane Independent Metro Business Alliance)
  • Small Business Rising
  • Stand Up Nashville
  • StayLocal, an initiative of Urban Conservancy
  • Strategic Organizing Center
  • SumOfUs
  • The Democratic Coalition
  • UltraViolet
  • Venice Resistance
  • Warehouse workers for justice

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Antitrust

FTC Commissioner Phillips Warns About Shifting Direction of Agency

Noah Phillips voiced concern about the scope and practices of the Biden administration’s FTC.

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FTC Commissioner Noah Phillips

WASHINGTON, September 2, 2021 — Federal Trade Commissioner Noah Phillips said at a Hudson Institute webinar on Monday that he’s concerned about the direction the competition watchdog is moving toward considering recent events.

Phillips said the left-leaning voices in Washington and the appointment of Lina Khan to chair the agency has left him wondering about the legacy of the last 40 years of competition regulation in America – which have been hallmarked by the Hart-Scott-Rodino Antitrust Improvements Act of 1976. That legislation effectively gave the FTC the ability to review mergers and acquisitions before they were finalized, rather than afterward, which governed pre-legislation.

Under Biden-appointee Lina Khan, Phillips described how the FTC has done away with the process of early termination. In the past, this process made it unnecessary for every single company to provide advanced notice and advanced approval for mergers. “Historically, parties have been able to come to the agencies and say, ‘You’re not interested in this, can we just go ahead and finish our deal,’ and the agencies have said ‘yes.’”

He said this is no longer the case, and that every single merger must provide advanced notice and approval. “What we’re introducing is an inefficiency in the market for transactions that we have no interest in pursuing, just for the sake of it. I think that’s a problem,” he continued. “My concern is that it is making merger enforcement less effective, less efficient, and less fair.”

Phillips pointed to left-of-center and leftist voices in Congress, such as Rep. David Cicilline, D-New York, Sen. Elizabeth Warren, D-Massachusetts, and Rep. Alexandria Ocasio-Cortez, D-New York, who, at the outset of the pandemic, wanted to ban all acquisitions and mergers—regardless of their merit. He described this view as falling outside of mainstream perspectives, but noteworthy nonetheless.

“I don’t think that is what most people believe,” Phillips remarked. “I don’t think that is what Hart-Scott-Rodino envisions.”

This webinar took place only a couple of weeks after Phillips spoke at the Technology Policy Institute’s 2021 Aspen Forum, where he voiced similar concerns, stating that he feared that this new direction would make it more difficult for the FTC to hear cases that it should, and defended the commission’s record against critics who said it was lax under the Trump Administration.

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Antitrust

Antitrust Experts Zero In on Big Tech and Consumer Welfare Standard at Aspen Forum

At Aspen forum, a red-hot focus on Big Tech, antitrust and consumer welfare.

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Photo of the antitrust panel at TPI's Aspen Forum by Ben Kahn

ASPEN, Colorado, August 17, 2021— The Biden administration is taking a much harder line against big technology companies than was done by previous presidents, and is doing so by looking beyond the traditional consumer welfare standard of antitrust economics.

But the antitrust and competition economists making these assessments at the Technology Policy Institute conference here on Monday disagreed sharply about whether antitrust law should move beyond that consumer welfare standard.

Some these experts – including sitting Federal Trade Commissioner Noah Phillips – disagreed with stances taken by Biden’s hand-picked FTC Chairwoman Lina Khan.

Others, including Harvard Business School Professor Shane Greenstein, said that it was absolutely necessary for the FTC and the Justice Department antitrust division to investigate the gargantuan sums of money exchanged between big tech titans Google and Apple.

Speaking on a spirited panel session in the morning, “How is the U.S. Reshaping Antitrust,” Greenstein said Google pays Apple approximately $8 billion a year to make the Google search engine the default internet browser on all Apple devices.

Though this may not have historically fallen under the purview of antitrust, Greenstein was accusatory in his evaluation of the situation: “I’m sorry, no.” As to whether the antitrust division should investigate the matter, he said, “Go for it, guys.”

For a session on “Antitrust, the Consumer Welfare Standard and Big Tech Platforms,” see Broadband Breakfast Live Online on Wednesday, February 24, 2021. 

‘Deconcentration’ is not the goal of antitrust policy

But Carl Shapiro, professor of business strategy emeritus at University of California at Berkeley, dissented from Greenstein’s broader antitrust perspective.

“The goals of antitrust should be to promote competition—full stop,” said Shapiro. Deconcentration is not the goal of the FTC. The agency will have to determine whether it would depart from this long-held view, he said, and decide whether it would opt instead to consider concentration itself as evil.

“That’s not a version of capitalism that I want,” said Shapiro.

The primary issue is how one chooses to define competition, said Howard Shelanski, professor of law at Georgetown University. The dominant perspective has viewed competition through the lens of price effects. Other schools of thought borrow a wider aperture, considering this like privacy, wealth distribution, political power, product quality, and product variety when determining whether something improves or diminishes competition.

The more metrics that are accounted for, the more issues present themselves.

To this, FTC Commissioner Phillips responded, “If you are trying to solve everything at once, you will solve nothing at all.”

While polite, Phillips disagreed with FTC Chairwoman Lina Khan

At the beginning of the panel discussion, TPI President Emeritus Tom Lenard opened the session by asking Phillips for his impression of Khan.

Phillips responded diplomatically, joking that this question had not been on the list he had been sent. Because Khan has only been on the job for two months, it is too early for him to give a fully fleshed out appraisal of her time as chairwoman. “It’s always exciting to get new blood,” he said.

While he said he was supportive of Khan’s efforts to improve transparency by holding public meetings, he was critical of the direction in which the FTC is heading.

Proposed rule changes would create “needless friction” by delaying mergers that do not present a danger to consumers. This will make the agency less effective and less efficient.

“I worry that we are needlessly impeding our ability” to hear cases, he said.

Successes by big tech firms are ‘not a failure of antitrust’

Shapiro added that, in his view, concentration within an industry should not be viewed as a negative thing and that it is merely indicative of the fact that bigger companies are often simply more efficient and can compete more effectively in their industry. “That is not a failure of antitrust,” he said.

Shelanski said that he harbored serious reservations about expanding the consideration of antitrust. He noted that as it stands now, it is basically left to the FTC to decide how to pursue antitrust cases.

If the agency were to include considerations of value judgments, public health, environmentalism and wealth distribution, the country would need stronger democratic institutions to pursue this approach.

Former FTC Acting Chairwoman Maureen Ohlhausen, now with Baker Botts’s Antitrust and Competition Law Practice Group, shared Shelanski’s concerns about the ability of the FTC to make big, sweeping considerations on its own.

The public should not view the careful and deliberate approach to FTC decisions as lax. Indeed, she said, the commission has “done a pretty good job.”

Phillips agreed, stating that under the Trump Administration, the FTC had blocked more than 20 mergers—the most since 2001.

When asked if he felt whether antitrust guidelines should be revisited, he responded with skepticism, “There is a lot of promise of revisitation without much discussion of where [the FTC] is going.”

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