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Antitrust

Debaters Consider Whether a New Agency to Regulate Tech Platforms Would Do More Harm Than Good

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Screenshot from the virtual debate

November 9, 2020 – At a formal debate on whether technology platforms require a new regulatory regime, two well-established experts also clashed over how seriously policy-makers should take the recent House Judiciary Antitrust Subcommittee report on breaking up big tech companies.

In the Technology Policy Institute debate between Jason Furman of Harvard’s Kennedy School and Josh Wright of George Mason University’s Global Antitrust Institute on October 26, Wright prevailed in that he persuaded more people to flock to his point of view.

Polled before the debate on whether a new regulatory agency should be established, 60 percent said yes and 40 percent said no. After the debate between economic policy professor Furman and Wright, a law professor and executive director of the institute, 30 percent said yes and 70 percent said no.

Does the current antitrust system work with tech platforms?

“I support a pro-competition light touch regulator that focuses on an enforceable code of conduct, greater data mobility, and systems with open standards and more data openness,” said Furman, who was chair of the Council of Economic Advisors under President Barack Obama.

Such a system would make antitrust clearer and more predictable by curbing tech company abuses and allowing users to use different services, switch services, and enable more real and potential competition from new entrants, Furman said.

But Wright, a Republican-appointed commissioner at the Federal Trade Commission from 2013 to 2015, said the real question was how well the existing antitrust infrastructure and consumer protection laws were performing.

Wright said current institutions were performing well because they were “very effective” at addressing anticompetitive conduct when it arose and were capable of being applied in a manner that distinguishes anticompetitive conduct, identifies market failure, and provides remedies where needed.

Good antitrust regulation identifies and carefully distinguishes between anticompetitive conduct without deterring procompetitive conduct, he said. Wright did not feel that a new regulatory regime would do as good a job at achieving these goals under consumer welfare standards.

Can bright line rules stop hundreds of acquisitions by Big Tech?

Furman said that the current system was not effective at handling mergers. Some of the big tech companies have grown organically  and through hundreds of mergers. Because we cannot “put the toothpaste back in the tube” and undo these mergers, the country needs a new agency to regulate them. He also proposed a “bright line” rule against new mergers for tech companies.

Wright retorted that there was no empirical evidence that the merger system wasn’t working. He compared the idea of a bright line rule to the law under guidelines issued pursuant to Section 7 of the Clayton Act. These guidelines consider mergers presumptively unlawful only when they lead to a market share greater than 30 percent.

In the past decade, the number of successful defensive mergers challenges by the government was three, according to Wright.

But Furman argued that both Democratic and Republican administration have failed to blocked any important mergers in the tech space.

Banning vertical integration by tech companies?

To Furman, so much consolidation has already happened that the country needs a code of conduct for tech platforms going forward. Such an agency needs to combat problems that arise from a platform preferencing their own search results or creating standards that made it difficult to move between platforms.

One of the agency’s chief goals should be to promote data portability, meaning that a person could use any platform to engage with any other platform, just like email.

The two disagreed about whether a ban on mergers by tech companies could lead to a ban on vertical integration by technology companies. A half-century ago, such vertical combinations were suspect under antitrust law, but are now generally permitted. Wright took issue with Furman’s suggestion that such a ban was a “strawman,” or an absurd hypothetical suggestion.

“I wish banning vertical integration were a strawman,” said Wright. “I’m not saying it’s your strawman, but it’s not a strawman and it exists in the House report, it exists in [Democratic Sen. Elizabeth] Warren’s proposals, it exists in banning particular forms of vertical integration in allowing Walmart to sell private label products or Apple to have apps in its app store, or Google to have Google Maps.”

Such vertical integration is a pervasive function of a modern technology economy, and suggestions for banning such integration “are getting a lot of attention and have been proposed inside new regulatory regimes.”

Besides which, Wright said, creating a new regulatory agency would simply exacerbate the two-way antitrust fight between the Justice Department antitrust division and the FTC and turn it into a three-way fight.

A pathway toward regulating a maturing tech industry?

Furman replied that there were obviously good and bad ways to regulate and that he was against the bad ones and in favor of the good ones.

He pointed to mature industries that have been successful with regulated networks like energy, telecom and transportation. Interestingly, both debaters agreed that there were competition problems in the healthcare industry that should have been better addressed by regulatory agencies and by the courts.

Senior Fellow and Emeritus TPI President Tom Lenard moderated the debate.

Reporter Liana Sowa grew up in Simsbury, Connecticut. She studied editing and publishing as a writing fellow at Brigham Young University, where she mentored upperclassmen on neuroscience research papers. She enjoys reading and journaling, and marathon-runnning and stilt-walking.

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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