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Antitrust

Senators Continue to Grill Witnesses About Perceived Lack of Antitrust Enforcement Against Big Tech

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Photo of FTC Bureau of Competition Director Bruce Hoffman from the agency's Twitter feed

WASHINGTON, September 25, 2019 – A Senate Judiciary subcommittee devoted to antitrust on Tuesday grilled witnesses about what appeared to a dearth of startups, and also expressed concern about a lack of antitrust enforcement.

Determining which acquisitions are beneficial and which aren’t is not as easy as it seems, said Antitrust Subcommittee Chairman Mike Lee, R-Utah. He said it was important that competition is unharmed and that consumer choice maintains stability.

While a hearing on September 17 focused on divisions and conflicts between the nation’s two antitrust enforcers – the Justice Department and the Federal Trade Commission – Tuesday’s hearing focused on “Examining Acquisitions of Nascent or Potential Competitors by Digital Platforms.”

The U.S. economy has churned out the lowest number of startup companies in decades, said Ranking Member Amy Klobuchar, D-Minn. Threatened competition is the sign of monopoly’s ever-increasing dominance, she said. In order to build the next great American company, the economy must have lower entry barriers for new ideas to take seed.

Antitrust enforcement isn’t working, said Sen. Richard Blumenthal, D-Conn. This is the case within the pharmaceutical, aircraft and digital industries.

The FTC needs to be more aggressive in confronting anti-competitive issues, he said.

Sen. Josh Hawley, R-Mo., said that he was increasingly concerned about the FTC’s inability to protect the public interest and competition, particularly where big tech is concerned.

Specifically, he cited the FTC’s investigation into how Facebook may be using strategic tactics to stifle its competition. Facebook has allegedly been utilizing Instagram’s platform to block content and terms related to Snapchat’s owner Snap Inc.

The witnesses present at the hearing acknowledged the negative side-effects of company acquisitions, but also noted that mergers may possess pro-competitive aspects.

Bruce Hoffman, director of the FTC’s Bureau of Competition, said that the Commission is committed to examining the effectiveness of its antitrust enforcement efforts.  The Bureau of Competition’s Technology Task Force helps deepen the agency’s understanding of technology markets and strengthens its ability to protect consumers from anti-competitive conduct.

Concerns about eliminating future market participants, Hoffman said, can arise when evidence shows that independent entry would have pro-competitive effects that would be lost with the merger.

Digital players in the market may be pursuing deals that fly under the antitrust radar, said Diana Moss, president of the American Antitrust Institute. Given big tech’s significant record of serial acquisitions, it’s imperative that enforcers consider the longer-term implications of market concentrations and barriers to entry.

Antitrust enforcers have the adequate tools to evaluate the competitive effects in digital technology markets, she said. They just need to use them. It’s time to address the weak enforcement of tech mergers.

Distinguishing the difference between nascent and potential competitors is crucial, said John Yun, director of economic education at the Global Antitrust Institute. Potential competitors are defined as firms that are predicted to have a competing product in the future, but not currently. Whereas a nascent competitor refers to a current product that could already become a potential competitor.

The acquisition of a potential or nascent competitor, Yun said, can clearly result in an outcome that is harmful to consumers and innovation. However, a merger can also unlock a great deal of consumer value.

American economic growth is dependent on the economic activity that comes from young firms scaling into successful companies, said Patricia Nakache, general partner at Trinity Ventures. Policymakers, entrepreneurs and venture capitalists must work together to encourage innovation.

Public markets are not as welcoming to small companies as they once were, she added. However, startups often view larger companies as potential customers or distribution channels. For that reason, these companies can provide unique insight to the market.

The Commission works hard on its investigations, Hoffman said, however it has limits on the actions it can do. The elements that the agency focuses on are capability and likely effects of these mergers, rather than the intent.

The results of such mergers could go either way, said Yun. The problem is that enforcers are not exactly certain what they are looking for regarding anticompetitive conduct.

The biggest acquisitions, said Moss, are not within social media platforms but with artificial intelligence, data analytics and cloud computing. Those are the industries that enforcers need to analyze, rather than the ones discussed the most on mainstream media.

Antitrust

CES 2022: Patreon Policy Director Says Antitrust Regulators Need More Resources

To find the best way to regulate technology, antitrust regulators need more tools to maintain fairness in the digital economy.

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Larent Crenshaw (left), head of Patreon's global policy team

LAS VEGAS, January 7, 2021 – The head of Patreon’s global policy team said federal regulators need more resources to stay informed about technology trends.

Laurent Crenshaw told CES 2022 participants Friday that Congress should provide tools for agencies like the Federal Trade Commission to enforce consumer protection standards.

“I’m not going to say that big tech needs to be broken up, but there should be appropriate resources for federal regulators to understand the digital marketplace,” he said. “We’re are still living in a world that is dominated by big actors, and we’re debating about whether to even give federal regulators the power to understand how the marketplace is moving toward digital.”

Crenshaw of Patreon said that more resources were necessary at the FTC in order to understand the digital marketplace. Patreon is a membership platform that provides a subscription service for creators to offer their followers.

Such resources would empower the agency to place appropriate safeguards for smaller technology innovators. “So in 10 [or] 20 years, it’s not just the replacements of the current Google, Apple, or Facebook, but something entirely new,” he said.

Panelists echoed Crenshaw’s point that consumer welfare should guide competition policy. Tyler Grimm, chief counsel for policy and strategy in the House Judiciary Committee, said that antitrust should bend to the consumer welfare standard. “Antitrust should leave in its wake a better economy,” he said.

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Media Ownership

LeGeyt Appointed President and CEO of National Association of Broadcasters

LeGeyt was the organization’s executive vice president of government relations and COO.

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Curtis LeGeyt

WASHINGTON, January 4, 2022 – The National Association of Broadcasters has appointed Curtis LeGeyt to serve as president and CEO, replacing Gordon Smith.

“It is an honor to lead this great organization and advocate for the local television and radio broadcasters that inform, entertain and serve their communities every day,” said LeGeyt in a statement. “I am grateful to our Board of Directors for placing its trust in me and look forward to working alongside them, the entire NAB team and our members to ensure a vibrant future for broadcasting.”

LeGeyt was previously the executive vice president of government relations and chief operating officer of NAB. He holds a JD from Cornell Law School.

“We are excited to now have Curtis at the helm to guide the organization into its next chapter. He is a proven leader and skilled fighter on behalf of broadcasters, and we are thrilled to have him serve as our voice in Washington and around the world,” said David Santrella, NAB joint board of directors chairman and CEO of Salem Media Group.

The previous president and CEO, Gordon Smith, served in this role for 12 years. Smith will remain with the NAB, albeit in an “advisory and advocacy” capacity. During his tenure, NAB took a hardline on big technology companies, condemning them as a threat to small TV and radio stations that make up local media, and called for citizens to voice their concerns to legislators.

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Antitrust

Jason Boyce: Washington Cannot Let Amazon Water Down Consumer Protection Legislation

It is in Amazon’s interest to twist the arm of lawmakers and prevent protections against internet scams.

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Jason Boyce
The author of this Expert Opinion is Jason Boyce, founder of Avenue7Media

The holiday season is a reminder that with more Americans than ever heading online to do their shopping, lawmakers must continue taking action to prevent consumers from falling prey to internet scammers. That is why it was welcome news when Amazon recently reversed course on its longstanding opposition to bipartisan consumer protection legislation in Congress that would require third-party online marketplaces to verify independent sellers, with the goal of reducing counterfeits and stolen goods from these platforms.

But while Amazon’s public change of heart seemingly paves the way for the eventual passage of the bill, known as the INFORM Consumers Act, lawmakers must ensure that the retail giant and other tech companies do not work behind the scenes to water down the legislation and render it toothless. Counterfeits pose great harm to consumers and small third-party sellers, and Congress must pass strong, comprehensive enforcement mechanisms to adequately protect both groups.

Amazon’s decision to endorse INFORM was certainly a surprise. Just this summer, Amazon launched an aggressive lobbying campaign to kill a more robust version of the legislation. But while Amazon ostensibly supports the current bill, it has reportedly unleashed its lobbyists in the Beltway to weaken it. While lawmakers such as Sen. Dick Durbin, D-Ill., one of the bill’s co-sponsors, say they refuse to let this happen, they should remain on high alert.

This is because we have seen Amazon’s playbook for publicly supporting legislation while simultaneously working to weaken it behind the scenes. For instance, Amazon CEO Jeff Bezos won praise earlier this year when he embraced President Joe Biden’s plan to raise the corporate tax rate. But behind the scenes, the company enlisted an army of lobbyists to maintain the research and development tax credit, which has been estimated to save the company hundreds of millions of dollars a year. As I have said before, Bezos’s support for a corporate tax hike is meaningless if the company can continue to engage in egregious tax avoidance schemes.

And it is not just Amazon; other Big Tech companies have resorted to similar “two-faced” tactics to weaken legislation. In April, an investigation by The Markup uncovered how some of the country’s most powerful technology companies, including Facebook and Google, advocated for mostly toothless privacy protection legislation in statehouses across the country — all with the intention of preempting state lawmakers from taking stronger action in the future.

Now with the prospect of a comprehensive consumer protection measure being signed into law, Congress must resist Amazon’s arm twisting. Counterfeits are far too serious of a threat, and watered-down legislation will fall short of creating the bold transparency measures that are desperately needed. Online counterfeiters have been known to peddle toys and children’s products, putting those most vulnerable in grave danger. These products fail to go through robust safety testing, meaning there is potential for serious health consequences.

But what many may not realize is the impact that counterfeits have on third-party sellers. As someone who works with Amazon sellers every day, I know exactly how legitimate businesses suffer when criminals sell fakes at below the market value. Small businesses are doing everything they can to fight these criminals — even if it means spending hundreds of thousands of dollars to do so.

Many of those selling fakes from the comfort of their own homes and hurting American businesses are overseas. According to the Department of Homeland Security, a staggering 85 percent of contraband items seized by U.S. Customs and Border Protection came from Hong Kong and China. Nonetheless, Amazon’s marketplace has become a hub for China-based sellers.

Amazon has no problem touting all of the measures it has taken to clean up its third-party marketplace. But, as I have explained, it is a common tactic of Amazon’s PR department to just share the numerator — and not the denominator. Thus, the $700 million it invests to fight fraud is pennies in the bucket when you consider that Amazon’s worldwide gross merchandise volume is estimated to be $490 billion.

It is critical that Congress advances the INFORM Consumers Act as it stands today. While I welcome Amazon’s endorsement of the common-sense measure — along with the other third-party marketplaces that recognize the benefits it would bring to e-commerce shopping — I can only hope it is sincere. Working behind the scenes to weaken this bill will be devastating to the millions of shoppers and sellers who have come to depend on Amazon’s third-party marketplace.

Jason Boyce is the author of “The Amazon Jungle” and founder of Amazon managed services agency, Avenue7Media. Previously, Boyce was an 18-year Top-200 Amazon seller. This piece is exclusive to Broadband Breakfast.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views reflected in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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