November 27, 2021
Dallas and Washington, DC
TO YOU UNDERSTAND how the reputations of technology giants in Washington, DC have changed in the past four years, ask Barry Lynn, founder of the Open Markets Institute, an anti-monopoly group. In 2017, he was reportedly kicked out of the New America Foundation, a think tank that housed his team, for being too critical of big tech. At the time, Mr. Lynn’s work, denouncing “platform monopoly” and advocating the dismantling of tech giants, was provocative but niche. He was like a protester with a megaphone, loud but mostly faded out.
When Joe Biden talks about “corporate focus” today he sounds a lot like Mr. Lynn, and he made Mr. Lynn’s friends top positions. Lina Khan, who worked at the Open Markets Institute for seven years, is now chair of the Federal Trade Commission (FTC), an agency responsible for protecting consumer privacy and enforcing antitrust law. Tim Wu, formerly on Mr. Lynn’s advisory board, advises the White House on competition and technology policy issues. From a WeWork area just a short walk from the White House, Mr. Lynn is on the scene. “For a small think tank, we have a lot of our people in the administration,” he says.
Aside from Mr Lynn’s colleagues, there are more tech bashers who hold passports in power. Jonathan Kanter, who has been confirmed to lead the Justice Department’s antitrust efforts, is a staunch opponent of Google and is expected to take enforcement action against tech companies. Rohit Chopra, head of the Consumer Financial Protection Bureau, has asked tech titans to release a record of their payment systems.
How did Mr Biden decide to make big tech big? Unlike opponents of the Democratic primary, like Elizabeth Warren, a Democratic senator who called for the dissolution of technology monopolies, Mr Biden didn’t spend much time beating up technology. However, by the time Mr Biden was in office, Ms. Warren had the most advanced technology plan, pushing for key positions for people like Ms. Khan, Mr. Wu, and Bharat Ramamurti, who led economic policy for their campaign and now serves on the White House National Economic Council. “Biden’s technology policy is its nominee,” says Ms. Warren. “He has put people in positions of power, who understand technology at a whole new level, and are deeply skeptical of many of the current practices,” she adds.
Many believe that Barack Obama’s administration, which included Mr Biden, was too madly in love with big tech companies and failed to scrutinize mergers like Facebook’s purchase of Instagram. This is Mr Biden’s chance for a revision. The mood in Washington is “180 degrees different,” said Luther Lowe, who heads public policy for Yelp, an Internet company that has long complained about Google’s bullying of smaller rivals. “It’s a really exciting time when you’re a complainant hoping for government enforcement,” he says. Congressional officials from both parties now rarely accept meetings with large tech companies, especially Meta (nee Facebook), which are seen as the most toxic.
In July, Mr. Biden bared his trustworthy teeth when he issued a stringent order from Mr. Wu complaining about corporate concentration. No previous president has enacted such detailed competition regulations, says Paul Gallant of Cowen Washington Research, which follows technology policy. Big Tech wasn’t an exclusive focus, it was a prominent one. Alphabet (the parent company of Google), Amazon, Apple, and Meta are some of the most valuable companies in the country.
With Mr. Biden’s troops now assembled, the focus will be on what battles his government can win against big tech companies. Breakups and antitrust enforcement could hit the headlines, but given the business-friendly nature of the courts, these are longer-term games with an uncertain outcome. New laws targeting tech companies could have faster effects. If that fails, the administration could reformulate the business rules through newly empowered government agencies.
Take action by Congress first. In addition to China, Republicans and Democrats in Washington almost only agree that tech companies have become too powerful. At least 14 technology-oriented bills were tabled in Congress at that session. Many are non-partisan. One, jointly sponsored by Amy Klobuchar, a Democratic Senator, and Tom Cotton, a Republican, targets tech companies with a market value of 600 billion “We’re not talking about destroying these companies; We’re talking about making sensible rules when they say ‘Trust us’ and nobody does, ”says Ms. Klobuchar.
Mr Biden hasn’t made passing technology laws a priority, but he is expected to do so after the Senate ruled on the fate of his Build Back Better social spending package. (It has built in $ 500 million in funding for the FTC to set up a new privacy breach investigation office.) “Be on the lookout for greater White House involvement,” said Ms. Warren.
The most obvious place for a bipartisan settlement is in a bill that further restricts online data collection on children. But Mr Biden is probably more ambitious. He could press for the giants to be banned from preferential treatment for their own services. During the election campaign, he advocated the abolition of Section 230, which provides platforms for hosting offensive content with legal immunity. He could also push for a national data protection law that would introduce more consumer control over data.
The action of Congress is far from guaranteed: Partial politics can still stand in the way. There is “disagreement” among Republicans over how much to intervene in the markets, says Ken Buck, a Republican congressman from Colorado. The president’s critics could also oppose laws they would otherwise support, just to bring him to his knees. “I disagree with Joe Biden,” said Mr. Buck, who co-sponsored six bipartisan technology-oriented bills that Mr. Biden was alleged to approve. Democrats could also prevent the legislation. Tech managers are big donors to the Democrats. Some California Democrats in Congress have already spoken out against multiple technology laws.
Even if Congress doesn’t act soon, Mr Biden’s tech agenda will not be stopped. Under the 107-year-old FTC law, Ms. Khan has a lot of leeway in setting rules to address “unfair or misleading behavior.” Mr Biden’s Competition Enforcement Order encouraged the FTC to establish rules for “monitoring and accumulation of data”, rules for “unfair competitive practices in internet marketplaces” and rules against “anti-competitive restrictions on the use of independent repair shops” for cell phone repair and other devices.
For example, the FTC could seek to prohibit certain behaviors, such as platforms that favor their own services over others. The commission could also move to minimizing data collection and sharing between apps, which would limit the firepower of tech companies to track users on the internet and combine sources of consumer information, as Meta does through Facebook, Instagram and WhatsApp.
“Regulations pose a greater risk to tech companies than traditional antitrust lawsuits, which get all the attention,” says Gallant. Tech firms would certainly strike back, suing both the FTC and the legality of certain actions.
Gulliver’s labors
Antitrust enforcement is the last front line of Mr. Biden’s campaign. This includes the destruction of planned mergers and attacks on companies for anti-competitive behavior. Those who pursue competition policy for Mr Biden are of the opinion that the scope of application of antitrust law has been artificially narrowed over the past 40 years. They argue that a focus on consumer welfare popularized by Robert Bork, a Conservative judge from the late 1970s, does not account for other harms from increased concentration.
Mr. Biden “grew up under extremely aggressive antimonopoly enforcement regimes” and is old enough to remember the world before Bork, says Mr. Lynn. In 1987, as chairman of the Senate Judiciary Committee, he oversaw the refusal to elevate Mr. Bork to the Supreme Court.
Antitrust lawsuits have two disadvantages: They are always lengthy and unpredictable. Mr Biden’s administration inherited lawsuits from Donald Trump: one from the Justice Department against Google, another from the FTC against Facebook. Such cases last longer than a single presidential term. A process in the Google case is scheduled for 2023, and a decision and appeal will take at least another year. Most expect Ms. Khan and Mr. Kanter to try and set up an additional lawsuit against a tech giant, perhaps Amazon or Apple.
The first major test of Ms. Khan’s agenda will be whether the FTC will approve Amazon’s proposed $ 8.5 billion acquisition of MGM, a Hollywood studio with rights to James Bond. Some of Ms. Khan’s supporters hope she blocks the deal, but doing so could be risky in court because the media market in America is so diverse. The best-known deal so far blocked during the Biden administration is an old media deal: the Justice Department sued the merger of two book companies, Penguin Random House and Simon & Schuster, on the grounds that it would affect the writers’ ability to advance to achieve.
Whether or not Mr. Biden liquidates a large tech company, the threat of trustbusting “is already changing the world,” said Ms. Warren. Mr. Biden’s impact is “partly in unannounced stores, and it’s also because the tech giants are reviewing their own internal practices,” she says. Recently, Apple announced it would make it easier to repair devices in what appears to be a direct response to Mr Biden’s competition regulation.
There is more optimism in Silicon Valley than there was a few years ago that startups can reach bigger proportions without being ousted by giants. Some believe that without the Biden government’s antitrust revival, sectors that are increasingly competitive, such as social media, would already be further consolidated. Knowing that they could be investigated or sued, companies do their best, as Mr. Wu describes in his book “The Curse of Bigness,” in which he calls for a revival of the great cartel tradition.
Several states are targeting big tech with new laws and lawsuits. Mr. Lynn is enjoying this swarm attack. “We may be midgets,” he says, “but we’re enough to pull these people down.” ■
To learn more about Joe Biden’s presidency, visit our dedicated hub and follow the changes in his approval rating. For exclusive insights and reading recommendations from our correspondents in America, sign up for Checks and Balance, our weekly newsletter.
This article appeared in the USA section of the print version under the heading “In Tech we don’t trust”
Comments are closed.