President Joe Biden issued an executive order in July “promoting competition” in the U.S. economy. The order calls out Big Tech specifically, stating that “today a small number of dominant Internet platforms use their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage.”
In November, the U.S. Senate introduced a bill targeting anti-competitive acquisitions among tech companies. There has not been a meaningful monopolization case in the United States for 20 years, but this recent momentum suggests that the current administration would like to make one stick.
To date, there is still too much gray area in the rules and ambivalence among citizens to enforce antitrust law, but with a few changes to the approach, good intentions may lead to new policy, penalties and even prosecution.
Over the last century, antitrust regulation lost its teeth and its broader goals have been abandoned for a nebulous standard around “consumer welfare.” The acid test for antitrust established during the 1980s reduced everything to whether alleged antitrust actions resulted in higher consumer prices.
This attempt to distill antitrust into a single test of economic consequence has proven to be overly simplistic. Defenders of this singular consumer-price-based approach to antitrust evaluation cite falling prices in technology as indisputable evidence of prevailing fair competition.
Breaking up tech monopolies will not be easy, but it can be done with a three-pronged approach: blocking anti-competitive mergers and acquisitions, constituting data as market power to rewrite policy and driving public interest in the topic so that citizens can elect concerned antitrust policymakers.
Killer M&As
In an era of easy money, with protracted periods of very loose monetary policy and highly inflated stock prices, buying off future competitors at inflated values is now part of the business playbook.
Examples abound in the tech world, and Facebook’s acquisitions of Instagram and WhatsApp are incontrovertible examples. Excessive regulation does kill innovation, but free markets depend on regulation to remain fair and free.
Current law stipulates that any deal valued at or above $92 million must be reported to the Federal Trade Commission and the Department of Justice for review, with few exceptions.
Given one of the stated intents of the Biden order is increased scrutiny of mergers and acquisitions, consumers may see more legal action taken by the government to block deals that “substantially lessen competition.”
The proposed bill that would block certain acquisitions is a good sign of recognition by both sides of the aisle that there is abuse, but the bar for offenders remains high, especially when the monopolization of data isn’t widely considered anti-competitive. The FTC and the DOJ will need to exercise their ability to enforce antitrust law against Big Tech, which it can better do with this new legislation.
Data = money = market power
Offering free products has turned out to be a surreptitious strategy for some tech giants to accumulate other assets — notably, personal information on their unwitting “free” customers — that has not just fed them inordinate profit streams in the multiple billions but also made these companies monopolists of exactly those assets. Search engine marketing and social media advertising were built exactly this way. Such digital assets are now rented out to all other companies as a tax on their marketing budgets — an overt example of market power.
We have unprecedented concentration in most industries, and companies in industries with rising concentration are actually investing less because they can more readily exercise their market power.
However, when the weather turns inclement, the fair-weather friends of self-correcting markets will readily change teams and support extraordinary market interventions, like the multiple actions taken by the Federal Reserve amid the pandemic to unabashedly prop up markets.
Welcomed in the Biden executive order is the encouragement to the FTC to establish new rules on online surveillance and the accumulation of users’ data. Our monopolist tech giants have framed the rules of this game for far too long already, indulging gullible legislators in laughable oaths of self-regulation.
Until mass collection and control of data are properly categorized as market power, the levers of justice will continue to favor Big Tech, not the consumer. New policy and law, in this case, will materialize only when public outcry forces legislators’ hands.
Changing the public narrative
Consumers and citizens are largely those most affected by lax antitrust enforcement and loose policy. Whether by forfeiting personal data, overpaying for services or not being able to choose among products, monopolies violate consumers’ welfare in one way or another. But is there anything they can do?
Biden’s executive order is the direct result of increased public pressure around antitrust in this country. The same is true of the new Senate bill. Increasingly, private businesses are filing their suits against monopolies in state courts, filled with elected officials.
It may sound ridiculous now, but antitrust could become a leading topic on which politicians must stump. Meaningful antitrust policy reform will come from reformers, elected by the body politic, which is why voting for candidates based on their views of antitrust enforcement will be critical to changing the status quo.
We need stronger antitrust and privacy regulation now. The privacy and well-being of our citizens are at stake. Antitrust, like charity, must begin at home.