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The gigantism of big tech forces a fresh look at antitrust

Facebook, Google and Amazon are catching flak from both parties in Congress

Facebook spent the most in its history on lobbying in this year’s second quarter. Above, CEO Mark Zuckerberg testifies at a House hearing in April of last year. (Tom Williams/CQ Roll Call file photo)
Facebook spent the most in its history on lobbying in this year’s second quarter. Above, CEO Mark Zuckerberg testifies at a House hearing in April of last year. (Tom Williams/CQ Roll Call file photo)

Increased public concern over the reach of large technology companies, bipartisan support for thinking anew about how to regulate big business, and ambitious policy proposals ahead of the 2020 presidential election are driving a new conversation over antitrust enforcement in the United States.

In less than two decades, three of America’s most ubiquitous technology platforms — Facebook, Google and Amazon — have grown rapidly in size and clout from small, single-market companies into industry conglomerates, thanks in part to a mostly hands-off approach to antitrust by the U.S. government.

Big Tech’s critics say the companies have thrived under the government’s passive enforcement of antitrust laws, which were written at the turn of the 20th century to break up monopolies in the steel and railroad industries.

But a shift in the way the government viewed antitrust, led in the 1970s by conservative judge Robert Bork, resulted in the belief that a company establishing market dominance by acquiring smaller companies was good for consumers as long as prices stayed low.

Such was the thinking that allowed Google, in 2007, to purchase the online advertising agency DoubleClick for $3.1 billion, Facebook to buy Instagram for $1 billion in 2012, and Amazon to acquire Whole Foods Market for $13.4 billion in 2017.

“Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy,” said Sen. Elizabeth Warren of Massachusetts, a White House hopeful who last Friday proposed breaking up the companies in a post on Medium. “They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else.”

Conservatives such as Sen. Josh Hawley, a Missouri Republican who investigated Google for anticompetitive practices when he was state attorney general in the Show-Me State, have also criticized Big Tech’s growth. And Rep. David Cicilline, the Rhode Island Democrat who chairs the House Judiciary antitrust subcommittee, last week announced that he hired Lina Khan, a budding legal rock star of sorts whose 2017 article in the Yale Law Journal, “Amazon’s Antitrust Paradox,” marked a new epoch in thinking on the issue.

“I hope it sends a message that we’re serious about this work,” Cicilline said of Khan’s hiring. “These aren’t easy issues but this is a moment in which I think you’ll see a rebirth of aggressive antitrust.”

The companies have argued that monopoly status doesn’t apply to them; Amazon, for instance, is fond of pegging its share of the retail market at around 4 percent in the United States and 1 percent globally.

Break ’em up?

The argument behind Warren’s plan to force the companies to divest from their prior acquisitions boils down to this: In their current form, the firms are almost unrecognizable from their original iterations.

Amazon, for instance, began as a book seller and now is a giant retail marketplace, but it also produces its own line of products, owns Whole Foods and runs Amazon Web Services, the subscription-based cloud computing service that, according to CNBC, last month became the fifth-biggest software company in the world.

The first piece of Warren’s two-part manifesto envisions legislation to ban the companies from owning other companies that operate on their platforms.

“Amazon Marketplace, Google’s ad exchange, and Google Search would be platform utilities under this law,” she wrote. “Therefore, Amazon Marketplace and Basics, and Google’s ad exchange and businesses on the exchange would be split apart. Google Search would have to be spun off as well.”

Warren also promised to appoint regulators “committed” to breaking up past mergers. (Facebook and Amazon declined to comment on Warren’s plan. Google did not return a request for comment.)

But experts who favor the current posture toward antitrust say Warren lacks evidence to support the notion that Big Tech companies have achieved true monopoly status.

“There’s simply no persuasive evidence, in my mind, that market concentration, or market power, is systematically on the rise in antitrust-relevant markets, much less that they are on the rise because of lax antitrust enforcement,” Joshua Wright, a law professor at George Mason University and former commissioner on the Federal Trade Commission, the agency tasked with enforcing antitrust laws, told the Senate Judiciary antitrust subcommittee last week.

Sen. Mike Lee, the subcommittee chairman, said calls to break up tech companies are “abstract” and too quick to accept as “self-evident” the belief that America is controlled by monopolies.

“Weaponizing antitrust enforcement to police subjective concerns rather than the objective concern for consumers would have very broad and serious repercussions,” the Utah Republican said.

But Lee is contending with strong forces within his own party. Under President Donald Trump, who was critical of technology companies during the 2016 campaign, the FTC has signaled a more robust approach to antitrust. Last month, Joe Simons, the commission’s chairman, announced a 17-attorney task force to scrutinize future tech mergers as well as those previously approved.

“In antitrust, you want to focus on areas where there is likely to be market power or monopoly power,” Simons told the New York Times last week. “So it is not unreasonable to look at big digital platforms and say, well, that might be a ripe area to look at.”

Longtime critics of the agency’s antitrust track record are skeptical that the task force, which does not add new powers to the agency’s arsenal, will prove to be anything other than ornamental.

“I’m not sure why it matters,” said Matt Stoller, a fellow at the Open Markets Institute, which favors breaking up large technology companies. “I’m not going to give [Simons] credit for redoing the seating arrangement in the building.”

But Simons is on the cusp of proving himself a thorn in the side of Big Tech. In the coming weeks, the FTC will decide whether Facebook violated a 2011 consent decree in which it swore to protect its users’ data. At issues is Facebook’s sharing with the British political data firm Cambridge Analytica access to information on 87 million Americans later used by the Trump campaign in the run-up to the 2016 presidential campaign.

The agency’s eventual ruling could be doubly consequential; it will signal just how serious Simons is about reining in Big Tech, but it could also indicate how closely related the FTC views its separate mandates on antitrust and privacy, areas experiencing increased overlap in the digital age.

Tied to privacy

In a surprise announcement last week, Facebook chief executive Mark Zuckerberg said he planned to reorient Facebook as a privacy-based service. The company’s flagship apps, including Instagram and the messenger service WhatsApp, would be combined and equipped with end-to-end encryption designed to stop both hackers and the company itself from reading communications between users.

The move was met with derision by Facebook’s critics, including Hawley, who said “it takes a certain amount of cheek to try and rebrand Facebook as a company that’s built around data privacy.”

And though Zuckerberg didn’t mention antitrust, those troubled by Facebook’s growth were equally concerned. If the company is allowed to merge its brands, wouldn’t that make it less susceptible to antitrust enforcers?

“He’s virtually taunting antitrust authorities to say enough is enough,” said Sen. Richard Blumenthal, a Connecticut Democrat and member of the Senate Commerce Committee.

Cicilline said Zuckerberg’s announcement was a good thing “on its face,” but he isn’t holding his breath.

“I’ve said repeatedly that these large technology platforms have proven they cannot be trusted to regulate themselves, so it doesn’t diminish our work,” he said.

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