Excessive Stakes Testing on the FTC: The Challenges of Large Tech
Progressives (and in some cases conservatives) are calling for more aggressive action by the FTC against big tech over a variety of failures – from Google’s exploitation of the advertising business to Amazon’s exploitation of warehouse workers, to Facebook’s determined collection of private data. A full docket and a lot more. The result: a field test that will determine whether a new aggressive FTC is up to the varied challenges of Big Tech. The odds are against it.
Enter Lina Kahn. In a famous article During her time at Yale Law School, she wrote a different and much more aggressive approach to antitrust law, calling for a return to the principles that Louis Brandeis had before Robert Borks Cartel revolution that antitrust law has been based on a single simple standard: is harm done to consumers, and is that harm measurable? This standard now dominates in court and has largely underpinned the FTC’s actions over the past few decades.
Kahn argued that this standard was far too limited, especially in the complex world of multi-sided platforms. It is not even clear there who counts as a customer. After all, Facebook’s revenue comes from advertisers, so it is she The customer? But Facebook connects doers with consumers, just like them Content creator his customers? And then of course there are the billions of users – Facebook certainly says that she are the customer.
The FTC must also show that a particular market is dominated by a monopoly. Defining the market alone is a major challenge. Is Amazon just part of the total US retail market? Then it would be just one small player among many. Is the “market” selling online in the US? Then Amazon is very big, but probably doesn’t control more than half. Is the Amazon platform itself a “market”? Possibly. Barely.
But even after defining a market, the FTC still has to have a monopoly at work there. That is why the case brought against Facebook by the Trump Justice Department became thrown by a judge who concluded that the FTC had failed to demonstrate that Facebook was a monopoly. In a world where Twitter and Ticktock have billions of users and other services like Spotify are quickly adding social media capabilities, is Facebook really a monopoly?
In addition, it is not illegal to be a monopoly. According to the FTC, “Note that it is not illegal for a company to have a monopoly, to charge“ high prices ”, or to try to gain monopoly through aggressive methods. A company will only break the law if it tries inappropriately to obtain or acquire a monopoly. ”So the FTC will have to prove that companies acted to foreclose competitors or prevent new entrants. That’s another high bar.
After all, many complaints about big tech are not about abuse of monopoly power at all. Both progressives and conservatives hate FB’s algorithms (depending on your point of view, to tolerate hate speech or to oppose free speech). But the decision of who to speak on Facebook is way beyond the control of the FTC.
Faced with these challenges, Lina Kahns has a new FTC three dimensions: First, it has called for much more aggressive enforcement within the FTC’s traditional mission – for example, monitoring mergers. This new aggression will translate into a faster trigger and lower bar for action, tougher negotiations, and much tougher penalties, likely including much higher fines or even jails for executives. Where possible, the FTC may seek to liquidate large companies, especially where acquisitions have been key to growth (here you see Facebook). But that’s all the easier part; it is all within the existing scope of work for the FTC (although fast movements and breaking things also add an internal cost to the FTC).
Second, the new FTC aims to turn back the time before Bork. It will raise cases based on concerns beyond direct harm to the consumer and seek principles that can address the systemic effects of these giant corporations. Specifically, Kahn has argued that
“Antitrust law and competition policy should not promote” [consumer] Welfare but competitive markets. By redirecting attention to process and structure, this approach would stay true to the legislative history of major antitrust laws. It would also encourage real competition – in contrast to the current framework, which monitors concentrations of power that could preclude real competition. “
Third, a more aggressive and expansive FTC will likely still not be enough. Kahn previously worked for Congress, helping David Cicilline’s House Committee create a wide range report the big tech company has been devastated by a massive flurry of complaints over the past two decades. Current law does not allow the FTC to address many of these concerns. For example, Apple has decided that the complete privacy of the devices is a good selling point. In a world where law enforcement and national security arguments have been strong, should that decision be Apple’s own decision? If not, who decides? As? Most of the major technical problems currently fall into the out-of-scope category.
Thus, the shape of Kahn’s FTC is emerging: much more aggressive enforcement of existing rules, efforts to expand the regulatory framework by turning back the clock, and requests for more powers from Congress to tackle big tech activities that are currently beyond the scope.
Will all of that energy and effort actually undermine the relentless rise of big tech? In short, no. It will not.
The new aggressiveness will make a difference on the margins, especially with future acquisitions by Big Tech. But enforcement is taking too long. In addition, it goes into past behavior – which Big Tech quickly rejects: The antitrust enforcement against Microsoft because of the binding of its browser to its Windows operating system took a decade and was ultimately irrelevant with the rise of Chrome. And aggressiveness alone only gets the FTC so far: Are we really interested in whether Amazon can buy MGM? Does Amazon have?
Turning back the clock might work, but that depends directly on receptive courts and therefore judges. These just don’t exist; Bork’s approach has been increasingly guiding antitrust law for 40 years – for the entire professional life of every judge. Will they really agree to ditch this simple and transparent standard in favor of much more vague alternatives? And will judges, who are generally more conservative, accept the progressive perspective that companies, by and large, need a lot more regulation? The current Supreme Court certainly won’t.
If Congress stays, it is more than optimistic to hope that Congress will successfully tackle difficult issues like reform of Section 230 (which restricts Facebook’s accountability for posts) or whether Amazon can compete with sellers on its platform. It is almost uniquely unsuitable for dealing with complex issues of digital rights and digital markets.
Will the FTC field test be successful? The markets have already spoken: Big tech stocks are booming. The markets are not afraid of the FTC, and neither are companies. The chances are getting longer every day. The need for successful regulation will not go away, however, and if the FTC fails its field test, it will at the same time show that antitrust law is not the right way to control our digital overlords and find better alternatives. You are out there.
Posted by Dr. Robin Gaster.
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