In July, President Joe Biden issued an executive order promoting competition. The order states that Big Tech uses their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage.
A bill was introduced in the US Senate in November. The United States has not had a meaningful monopolization case in 20 years, but the current administration may want to make one stick.
With a few changes to the approach, good intentions may lead to new policy, penalties and even prosecution, as there is still too much gray area in the rules to enforce antitrust law.
Over the last century, antitrust regulation has lost its focus and its goals have been abandoned for a vague standard around consumer welfare. The acid test for antitrust was put in place in the 1980s to see if antitrust actions resulted in higher consumer prices.
The attempt to distill antitrust into a single test of economic consequence has proven to be too simplistic. Proponents of this approach to antitrust evaluation cite falling prices in technology as proof of fair competition.
It will be difficult to break up tech monopolies, 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 choose antitrust policymakers.
M&As are killers.
Buying off future competitors at inflated values is a part of the business culture in an era of easy money.
There are many examples in the tech world, and Facebook's acquisitions of the two photo sharing websites are incontrovertible examples. Free markets depend on regulation to remain fair and free.
Current law states that any deal valued at or above $92 million must be reported to the Federal Trade Commission and the Department of Justice.
Consumers may see more legal action taken by the government to block deals that substantially diminish competition, given the intent of the Biden order.
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 enforce antitrust law against Big Tech, which they can do with this new legislation.
Market power is determined by data and money.
Offering free products has turned out to be a surreptitious strategy for some tech giants to accumulate other assets, including personal information of their customers, that has not only fed them inordinate profit streams in the multiple billions, but also made these companies monopolists of exactly This is how search engine marketing and social media advertising were built. Digital assets are being rented out to other companies as a tax on their marketing budgets.
We have unprecedented concentration in most industries, and companies in industries with rising concentration are investing less because they can more easily exercise their market power.
The fair-weather friends of self-correcting markets will change teams and support extraordinary market interventions when the weather turns bad.
The Biden executive order encourages the FTC to establish new rules on online surveillance and the collection of users' data. The rules of this game have been framed by the tech giants for a long time.
The levers of justice will favor Big Tech until they are categorized as market power. New policy and law will only come about when public outcry forces legislators to act.
The public narrative is changing.
Consumers and citizens are the most affected by antitrust enforcement. Whether by giving up personal data, overpaying for services, or not being able to choose among products, monopolies violate consumers' welfare in one way or another. Is there anything they can do?
Increased public pressure around antitrust is what led to Biden's executive order. The new Senate bill is the same. Private businesses are filing suits against monopolies in state courts.
It may sound ridiculous, but antitrust could become a leading topic for politicians. Voting for candidates with views of antitrust enforcement will be critical to changing the status quo, because it will come from reformers who are elected by the body politic.
We need stronger antitrust and privacy regulation. The well-being of our citizens is at stake. Like charity, antitrust must begin at home.
