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Antitrust

Is the Consumer Welfare Standard Sufficient to the Big Tech Antitrust Challenge?

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WASHINGTON, July 25, 2019 — The efficacy of antitrust enforcement against big tech companies was energetically debated at an Internet Governance Forum conference on Thursday.

The current consumer welfare standard sufficiently supports robust antitrust merger analysis, claimed Keith Klovers, an attorney advisor at the Federal Trade Commission. Although each new market and investigation has its own unique facts, the same law can still apply.

The Department of Justice and FTC are enforcement agencies, which limits their power to take action, said Public Knowledge President Chris Lewis. This creates a need for going beyond the limits of antitrust to protect the marketplace.

Another barrier to enforcement is the difficulty of discerning between efficiency-enhancing acquisitions and problematic acquisitions, said Orrick Partner Alex Okuliar.

We need some sort of nondiscrimination rule to promote competition, localism, and small independent voices in the marketplace, said Lewis, highlighting the need for a new metric to determine when a platform is dominant.

Current laws are very capable of addressing the issues at hand, argued Jeff Farrah, general counsel for the National Venture Capital Association. If the dominant operator is using its position to discriminate against companies that operate on the platform, that exclusionary content could be addressed under the existing law.

While the standard of “consumer welfare” could be more clearly defined, it’s a good standard, Farrah said, suggesting that antitrust laws should slowly evolve to reflect the market rather than being dramatically changed.

Replacing antitrust standards with prescriptive regulation would “effectively calcify the existing market dynamics,” cautioned Okuliar.

Things have changed since the days of Standard Oil, Lewis said. New mergers such as Facebook and WhatsApp are far less disruptive to the marketplace, due to the constant trend of rapidly changing technology.

The goal should not be to completely replace antitrust laws, Lewis said, but to implement “an appropriate complement based on analysis” that factors in technological developments like the rise of big data the Internet of Things.

Policymakers should consider using a cost of exclusion metric to measure the impact of network effects on digital platforms, Lewis continued. At some point, big social media platforms such as Facebook become so ubiquitous that there is a cost to individuals or businesses to not be on the network, potentially having a prohibitive effect on competition.

The discussion followed a tumultuous week for big tech, as Facebook disclosed on Wednesday that the Federal Trade Commission had opened an antitrust investigation into the company.

Antitrust action is also being considered against other tech giants such as Amazon, which Treasury Secretary Steve Mnuchin said on Wednesday has “destroyed the retail industry across the United States.”

(Picture of panel by Emily McPhie.)

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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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Antitrust

FTC Commissioner Concerned About Antitrust Impact on Already Rising Consumer Prices

Noah Phillips said Tuesday he wants the commission to think about the impact of antitrust rules on rising prices.

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Screenshot of Federal Trade Commissioner Noah Phillips

WASHINGTON, May 17, 2022 – Rising inflation should be a primary concern for the Federal Trade Commission when considering antitrust regulations on Big Tech, said Commissioner Noah Phillips Tuesday.

When considering laws, “the important thing is what impact it has on the consumer,” said Phillips. “We need to continue to guard like a hawk against conduct and against laws that have the effect of raising prices for consumers.”

Current record highs in the inflation rate, which means money is becoming less valuable as products become more expensive, has meant Washington must become sensitive to further price increases that could come out of such antitrust legislation, the commissioner said.

Phillips did not comment on how such movies would mean higher prices, but that signals, such as theHouse Judiciary Committee’s antitrust report two years ago, that reign in Big Tech companies and bring back enforcement of laws could mean higher prices. He raised concerns that recent policies are prohibiting competition rather than facilitating it.

This follows recent concerns that the American Innovation and Choice Online Act, currently awaiting Senate floor consideration, will inhibit America’s global competitiveness by weakening major American companies, thus impairing the American economy. That legislation would prohibit platform owners from giving preference to their products against third-party products.

This act is one of many currently under consideration at Congress, including Ending Platform Monopolies Act and Platform Competition and Opportunity Act.

Small businesses have worried that by enacting some legislation targeting Big Tech, they would be impacted because they rely on such platforms for success.

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Antitrust

Critics and Supporters Trade Views on American Innovation and Choice Online Act

American Innovation and Choice Online Act is intended to protect fair competition among businesses, but panelists differed on its impact.

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Photo of Amy Klobuchar from August 2019 by Gage Skidmore used with permission

WASHINGTON, May 10, 2022 – Experts differed on the effect that antitrust legislation targeting big tech companies allegedly engaging in discriminatory behavior would have on small businesses.

Small businesses “want Congress not to do anything that will screw up or weaken the services that they rely on for their business,” said Michael Petricone, senior vice present of the Consumer Technology Association, at a Protocol Live event on Thursday.

Petricone said that antitrust bill would encourage tech companies to relocate to other countries, harming the American economy. He said small businesses would be affected the most.

Instead, Petricone called for  a “smarter immigration policy” to allow foreign innovators access to American tech market, as well as the defeat of the antitrust legislation.

But other said that small businesses suffer from predatory behavior by big tech companies. “Companies can’t get their foot in the door when there is already self-preferencing,” said Awesta Sarkash, representative for Small Business Majority, an advocacy organization, adding that 80% of small businesses say they want antitrust laws to protect them.

Self-preferencing on online platforms is detrimental to the success of small businesses who rely on social media advertising for business, she said. The new antitrust proposals would ensure an level playing field and promote fair competition, she said.

The American Innovation and Choice Online Act would prohibit certain online platforms from unfairly preferencing products, limiting another business’ ability to operate on a platform, or discriminating against competing products and services.

The bill sponsored by Sen. Amy Klobuchar, D-Minn, was introduced to the Senate on May 2 and is awaiting Senate floor consideration.

The debate follows concerns raised by both democrats and republicans about America’s global competitiveness as the bill would weaken major American companies.

If passed, the bill will follow the European Union’s Digital Services Act which similarly sets accountability standards for online platforms, preventing potentially harmful content and behavior.

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