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Antitrust

America Facing Consequences From Years of Inaction on Antitrust, Says Former FCC Chairman

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Photo of Former FCC Chairman Tom Wheeler, in June 2014, by Diego M. Radzinschi used with permission

January 28, 2021—America is now facing consequences resulting from years of inaction on antitrust, said former Federal Communications Commission Chairman Tom Wheeler during Wednesday’s antitrust session at the State of the Net Conference.

America has waited too long to act on antitrust and regulation in the big tech industry, he said, posing the question “We’ve been in the digital age for decades, and America is just now starting to intervene in the tech industry?”

Google and Facebook, two of the biggest players in the U.S. tech sector, which both reached monopoly-status primarily through digital advertising and acquisitions, have gained significant market power, shoving out competition, said Mike Walker, chief economic advisor for the United Kingdom’s Competition and Market Authority.

Antitrust laws are not enough to curb big tech’s massive market power, said Cristina Caffara, head of European Competition at Charles River Associates. Antitrust remedies may fade over time, and do not address how companies gather and use data from their users, she said, suggesting that regulatory frameworks are needed.

Professor Fiona Scott Morton of Yale University’s School of Management agreed, saying that some companies gain market power through luck and good products with no antitrust violations.  At that point antitrust laws are not applicable, said Morton, so other regulations are needed.

For Wheeler, the big tech monopoly problem goes beyond antitrust, it also includes competition, data privacy and transparency. The antitrust laws and lawsuits happened during the industrial age, which is very different from the digital age, Wheeler said, suggesting new methods for tackling these issues, including the need for a new digital platform agency that can regulate tech companies operating digitally.

Wheeler also suggested more cooperation with foreign allies in Europe and elsewhere, using as one example the International Telecommunication Union that began in 1865 to unify telegraph systems throughout Europe.

Kicking off the panel was Sen.  Amy Klobuchar, D-Minnesota, who said that antitrust legislation was not anti-business.

See “Sen. Amy Klobuchar Calls For More Aggressive Competition Policy Action,” Broadband Breakfast, January 28, 2021

In her opening remarks, she said America must take the lead in fostering competitive and capitalist tech markets by fighting technology monopolies.

Free market competition is at the core of America and can be traced back to the Boston Tea Party in 1773. They weren’t just protesting taxation without representation, she  said, they were also protesting the exclusive sale of tea by the East India Company.

Senator Klobuchar suggested several avenues Congress could take to create a competitive tech market, including increasing the merger standards that allow companies to acquire competing businesses, conducting more oversight hearings in the Senate, and shifting the burden of proof to companies to prove their mergers do not harm competition.

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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