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Antitrust

Justice Department Collaborating with State Attorneys General’s Antitrust Investigation of Big Tech, Says Chief

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Photo of Makan Delrahim at Aspen Forum by Drew Clark

ASPEN, Colorado, August 20, 2019 – More than a dozen state attorneys general have launched an antitrust investigation of big tech giants, and they are working cooperatively with the Justice Department’s antitrust division, said Makan Delrahim, the division’s head.

“We come at this with no preconceived agenda,” said Delrahim in a Tuesday morning interview session at the Technology Policy Institute forum here.

As to the coordination between the state attorneys general and the Justice Department, “I would anticipate that it would be in a cooperative manner that benefits everyone.”

The state investigation was first reported late Monday by the Wall Street Journal. On July 22 the Justice Department announced a broad antitrust review of “whether and how market-leading online platforms have achieved market power are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers.”

Although the Justice Department’s review is not, in itself, an investigation of particular companies, a review can lead to or become an investigation, Delrahim said.

A smaller group of state representatives met last month with Justice Department officials.

In the interview session here with CNBC’s Senior National Correspondent Brian Sullivan, Delrahim declined to discuss the specifics of, or to confirm the existence of, a formal investigation of tech giants by the Justice Department.

And the tenor of his remarks was certainly not anti-technology.

“We are living at a time of incredible innovation and prosperity,” Delrahim said. “There are great efficiencies that have been brought to consumers” by these tech companies.

Still, it is “undeniable that people are asking questions about the market power of certain few companies.”

And while he said that it is not productive to lump all tech companies together, he mused: “Does Google compete with Facebook? You don’t go to Facebook to search, but from an advertising perspective, they might be [competing]. That is part of what an investigation would review.”

“Big, in and of itself, is not bad. It is big behaving badly,” he said. On that matter, he referenced the Justice Department’s antitrust case against Microsoft in the 1990s.

Delrahim also addressed the question that is increasingly discussed among antitrust experts: How can an antitrust action based on the consumer welfare standard proceed against companies, like Google and Facebook, whose consumer-facing products are free?

The answer is yes, he said. Just because the consumer doesn’t pay for the product doesn’t mean that you can’t look at antitrust effects based not just on price, but also on innovation and quality.

Referring to his speech at the University of Colorado law school at the Silicon Flatiron’s conference in February, Delrahim said that free-to-the-consumer industries like broadcast television have long been scrutinized by antirust regulators.

Delrahim also addressed two other recent telecom, media and technology industry antitrust matters: AT&T’s successful acquisition of Time Warner – over the objection of the Justice Department – and the agency’s recent approval of T-Mobile’s merger with Sprint, with conditions.

The Justice Department had been insisting upon the preservation of four national wireless carriers before approving the T-Mobile-Sprint merger, Delrahim said.

The merger was approved by the division after the two wireless companies agreed to spin off some spectrum assets to Dish Networks. The FCC issued its approval of the merger on Wednesday, although some state attorneys general plan to continue their suit to challenge.

Had the asset spinoff not been included, said Delrahim, “I would probably bring the same case against the merger.”

In the question-and-answer session in the interview, Delrahim addressed how the Justice Department enlisted Dish Network.

Divestiture would have solved “the competitive harm that we identified from the underlying merger,” but it wouldn’t have been able to “harness the very pro-competitive effects” that would have arisen with a fourth and new competitor in the marketplace, he said.

“We looked to see who could come in and step in and build the network,” an there were only real possibilities: Comcast, which he said had 10 megahertz of spectrum, and Dish Networks, with 95 megahertz.

“It has been sitting idle and not benefiting consumers. And Sprint had a good chunk [of that spectrum] that was not being used,” he said.

“The way this solution has come about will be not only very output enhancing,” but will, he said, hopefully lead to more quality and price effects.

“I was pleased that this was the solution that ultimately ensued, and hopefully that transaction will close sooner rather than later,” said Delrahim.

 

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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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