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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.

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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