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Antitrust

Experts Disagree Over Effectiveness of Amy Klobuchar’s Antitrust Bill

Legal and policy experts are split over how effective Klobuchar’s proposed antitrust legislation could be.

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Amy Klobuchar, D-Minnesota

June 15, 2021 — Legal experts and policy makers were split in opinion over an expansive antitrust bill introduced in February by Sen. Amy Klobuchar, D-Minnesota, at an online seminar hosted by the Federal Communications Bar Association.

Klobuchar’s proposed bill would modify the laws regulating mergers and acquisitions to block certain anticompetitive conduct by larger firms, shift the burden of proof from investigators to the businesses themselves to prove anticompetitive practices have not been undertaken, and authorizes an increase in funding for federal antitrust enforcement.

Some of the panelists called Klobuchar’s bill an “all out mistake.” Others endorsed it, while also arguing that antitrust legislation would not be the only tool necessary to check Big Tech’s power.

Charlotte Slaiman, the competition policy director at Public Knowledge, believes that the danger of Big Tech is not just in the power they can accumulate through unregulated business practices, but in the power tech firms hold by virtue of the industry’s ability. She endorses Klobuchar’s bill, but believes that antitrust legislation is not the only tool that should be employed to reign in Big Tech’s power.

Bilal Sayyed, director of the Office of Policy Planning at the Federal Trade Commission under the Trump Administration, says that Klobuchar’s bill targets specific companies, and primarily takes issue merely at the companies’ size, without focusing on the harmful practices they may or may not be employing.

Big Tech’s uniqueness calls for unique regulation

Slaiman says consumers usually help keep business practices in check because businesses are dependent on keeping their consumers happy in order to attract their business. She says that technology firms are similar in this way at their genesis, but this changes as the firms become more powerful. Eventually, “the customers need you [the tech firm] more than you need the customers,” she says. “The calculus completely changes.”

She said she believes the unique relationship of firms to customers in the big technology industry allows firms to employ practices that harm consumers, but in ways that antitrust laws won’t necessarily address.

In an interview with Harvard Kennedy School, Jason Furman, former chairman of the Council of Economic Advisers under the Obama administration, said “pro-competition regulation is not, however, the way to solve all of the social problems of Big Tech, of which the biggest is the contribution many believe they are making to spreading fake news and reinforcing politization. Additional approaches are needed to address those issues.”

Slaiman said, “We’re really concerned about the power itself. These companies should not be this powerful. And so it’s not just about relying on antitrust to address our problem. We need additional laws and rules on top of antitrust for Bit Tech.”

Big Tech’s size not the problem

Adam Kovacevich, founder and CEO of the Chamber of Progress, notes that while many take issue with the size of Big Tech, a company’s size is not enough to file antitrust complaints against them. He says that there can also be virtues associated with Big Tech’s size.

“There’s also an argument that their bigness allows them to do things that are pro-social, that are beneficial to consumers,” he says. “What you see is that everyone can agree—‘I have anxiety about their bigness’—but I think there’s not as much agreement as to whether they’re using their bigness to disadvantage people.”

Kovacevich says that while many people are concerned with the size of Amazon, many people relied on it as a “lifeline” for their groceries and other essential living utilities during the pandemic.

Kovacevich counters the argument that the massive quantity of data Big Tech has collected makes them a monopoly power by saying that innovation on the side of smaller firms would lead a collection of higher quality data, which would allow them to compete with Big Tech in new ways.

The future of antitrust

On Friday, a package of five new bills were introduced in Congress that aim to limit the power of Big Tech. The bills come as a response to the completion of a 16-month long investigation by the Antitrust Subcommittee completed last year, which scrutinized the business practices of Amazon, Apple, Google, and Facebook, which led to a report that accused the tech giants of harming consumer welfare and employing anti-competitive practices.

In October, the Department of Justice sued Google over anticompetitive practices used to preserve their alleged monopoly power, and in December, the Federal Trade Commission sued Facebook for similar reasons.

Reporter Tyler Perkins studied rhetoric and English literature, and also economics and mathematics, at the University of Utah. Although he grew up in and never left the West (both Oregon and Utah) until recently, he intends to study law and build a career on the East Coast. In his free time, he enjoys reading excellent literature and playing poor golf.

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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