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Antitrust

Justice Department Antitrust Division Sues Google, FCC Calls for Changes to Media Regulations, AT&T on Spectrum Sharing

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The Justice Department’s antitrust division plans to sue Google today for engaging in anticompetitive conduct to preserve monopolies in search and search advertising, senior Justice officials said today.

When officials began investigating Google last September, the case was focused on Google’s advertising. It has since expanded to include not only Google’s search capabilities, but also the extent to which Google is reinforcing their presence through the Android smartphone system, which often includes Google predownloaded on its devices, according to the Wall Street Journal.

The move has the makings of the most aggressive U.S. antitrust case against a big technology company in two decades. Almost all state attorneys general are also investigating Google separately. However, on Tuesday the Washington Post reported that only Republican state attorneys general are expected to sign on to the Justice Department lawsuit.

Last year, Makan Delrahim, the Justice Department’s current antitrust chief, negotiated with the FTC for jurisdiction to investigate Google, but later recused himself because of work with Google prior to joining the Justice Department.

According to news reports, Justice Department staff attorneys are skeptical of Attorney General William Barr’s efforts to rush the litigation, fearing that they might lose a hastily-constructed case.

“It cannot escape notice that this suit was hurried out on the eve of an election where the Administration has aggressively pressured tech companies to take actions in its favor,” said Computer and Communications Industry Association President Matt Schruers. “Antitrust law should be driven by consumers’ interests, not political imperatives.  We look forward to a court’s review of the facts and the evidence.”

The House Judiciary Antitrust Subcommittee recently released a report recommending all four tech giants, including Google, face congressional action. “It’s Google’s business model that is the problem,” said Chairman David Cicilline, D., R.I. “Google evolved from a turnstile to the rest of the web to a walled garden that increasingly keeps users within its sights.”

Commissioner Brendan Carr calls for changes in FCC media regulations

FCC media ownership regulations have been frustrating efforts to promote investment in local content, said Commissioner Brendan Carr at the Free Speech America Gala on Wednesday.

He cited Powell, Wyoming, where a single laptop pumping music from the nearest big city constituted their entire broadcasting system. The next town over had entertainment programming that was attuned he needs of their local listeners.

This town wanted to invest in Powell to originate live and local programming for their underserved community, but because of FCC regulations—that are supposed to promote competition, a diversity of viewpoints, and localism—Powell is stuck with their single laptop.

Carr also praised the upgrades happening in 5G and ATSC 3.0. The latter, which is a new standard

allowing broadcasters to transmit in Internet Protocol, or IP, will transform broadcast television, including transmitting Ultra HD video and allowing content to be personalized to a household, said Carr.

The broad coverage that ATSC 3.0 has many applications such as telemedicine applications, IoT, and smart ag, as well as giving households another option for high speed downloads using the same spectrum, they used for over-the-air TV.

AT&T criticizes 12 GigaHertz spectrum sharing

Dish Network and RS Access are trying to increase the value of their licenses at the expense of their fellow incumbents by arguing that 5G and incumbent direct broadcast satellite services can share the 12 GigaHertz (GHz) band, according to an AT&T filing.

There’s been a lot of effort going toward preventing interference in the C-Band from adjacent bands, and neither Dish nor RSA have explained how to combat those issues in the 12 GHz band, which has notably more earth stations occupying it than the C-Band, said AT&T.

Jeffrey Blum, Dish executive vice president of external and legislative affairs said Dish, along with other companies and many public interest groups, sees it in the public interest to have a neutral Federal Communications Commission rule-making on 12 GHz band. It would be a missed opportunity to overlook 500 megahertz of centimeter wave spectrum.

The 12 GHz petition would come “at a cost of severe interference to the latest generation of satellite broadband networks that are a year out or less from providing full service,” according to small government interest groups, unlike their support for expanded access to spectrum for 5G.

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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Antitrust

Watchdogs Cannot Allow Another T-Mobile/Sprint Merger Under New Consolidation Guidelines, Event Hears

A Yale economics professor called on the FTC and DoJ to make it easier for them to pursue harmful mergers.

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Screenshot of Yale economics professor Fiona Scott Morton

WASHINGTON, May 10, 2022 – A professor of economics said at an Information Technology and Innovation Foundation event late last month that the Justice Department and the Federal Trade Commission, during its recently announced review of mergers, should ‘plug those holes’ that previously allowed T-Mobile to acquire Sprint.

“I would say that one thing that we have accumulated a great deal of evidence on is that we are missing problematic mergers – that we are not [stopping] mergers that turn out to be harmful,” said Fiona Scott Morton, the Theodore Nierenberg Professor of Economics at Yale University School of Management, at the April 28 event, referring to the FTC’s failure to stop the Sprint/T Mobile merger and accused it of not appropriately protecting consumers.

“We are under enforcing as a general matter and we should therefore use this review of the merger guidelines to plug those holes,” she said, adding, “Are we catching nascent competitors that are going to prove to be important competitors in the future? It turns out we are not doing that,” she said.

She also responded to critics asserting that the FTC simply needs more money to effectively enforce their guidelines.

“Here is where I am going to play fiscal conservative,” she said. “How about we change the rules to make it easier for the government to bring these cases and then we do not need to spend $2 billion more, we could spend half a billion dollars more because there would be a significant deterrent effect and the government would have less work to do.”

Merger guidelines will give industry more certainty

In January, the FTC under Chair Lina Khan and the Justice Department’s antitrust division launched a public inquiry into modernizing merger guidelines established under previous leadership, on which Khan said was an attempt to “accurately reflect modern market realities and equip us to forcefully enforce the law against unlawful deals.” Public comments were due on April 21.

Howard Shelanski, a partner at law firm Davis Polk, said at the ITIF event that FTC guidelines serve several purposes.

“One thing is certainly, just to let parties considering mergers to have an idea of what kind of scrutiny they are in for at the agencies,” he said.

He explained that the guidelines serve to inform stakeholders at which levels of industry concentration presumptions of harm will be triggered and what theories of harm the FTC will pursue.

“I think [guidelines] also let parties know how agencies will consider different kinds of defenses that [will] likely be raised,” Shelanski added. “So, the guidelines certainly serve a public purpose, but they also signal to courts about what lies behind the [FTC’s] thinking when it chooses to investigate and ultimately challenge a merger.”

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