There’s a contradiction in the Trump, and by extension Republican, deregulatory agenda that could inadvertently threaten the recovery of an already wavering economy.
That aberration is the continued reflexive embrace of antitrust regulation, an original sin of the administrative state with vast, potentially destructive societal costs.
With antitrust intervention, politicians and bureaucrats do not merely push companies around; they also directly or indirectly dictate business models and can even inappropriately influence the trajectory of entire economic sectors in non-market directions.
The big tech news this week is a hearing in the House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law.
Called “Online Platforms and Market Power: Examining the Dominance of Amazon AMZN +0.8%, Apple AAPL -3.2%, Facebook, and Google, GOOGL -2.2%” the hearing will feature the CEOs of each, appearing remotely: Jeff Bezos, Tim Cook, Sundar Pichai, and Mark Zuckerberg, respectively. This hearing is the committee’s sixth in a series.
Its bad news when both parties favor economic regulatory intervention and that’s the state we’re in now with antitrust. While international regulators and state attorneys general have their sights on these companies, all are targets of federal antitrust investigation by the Justice Department and the Federal Trade Commission in the Trump administration. (Attorney General Bob Barr, separately testifying in Judiciary this week, is taking a lead role.)
In a joint statement, House Judiciary Committee Chairman Jerrold Nadler (D-N.Y.) and Antitrust Subcommittee Chairman David Cicilline (D-R.I.) said:
“Since last June, the Subcommittee has been investigating the dominance of a small number of digital platforms and the adequacy of existing antitrust laws and enforcement. Given the central role these corporations play in the lives of the American people, it is critical that their CEOs are forthcoming. “
The subcommittee will ultimately issue a report based on more than a year of information gathering, but will likely downplay letters for the record and inconvenient testimony from antitrust skeptics. How do we know that? A headline on Drudge referred to an “APPLEFACEBOOKAMAZONGOOGLE Reckoning.” Other articles refer to the CEOs facing a “grilling.”
The very notion of monopoly power in intangible code, in ones and zeros, seems perverse, though. And here we observe not one “monopoly” but four companies (other giants could have also been invited to testify) vigorously competing against one another in various ways. That would seem to exemplify competition rather than the stifling of it with which big tech stands accused.
The chief internal contradiction of antitrust is that it decries bigness and excess power but then urges that the biggest and most powerful entity of all — the government wielding the life or death power over all the CEOs’ domains — impose a subjective remedy.
And government enjoys that power not just in the present case, but enjoyed it in all those that came before, and will in all those interventions to come after. That is a truly awesome power.
So we go through this theater with the dominant firms of the day every so often (AT&T, IBM IBM +1.6%, Microsof MSFT -3%t). Google is accused of favoring its own content in search results, Apple of downlisting rival apps, Facebook (and non-invitee Twitter, too) of suppressing conservative speech. Other gripes will be aired.
If the companies are so bad and the claimed consumer harm — the only condition that could justify intervention — is real, the more honest approach of the grandstanders would simply be to directly forbid consumers from using any of these companies’ services. Consumers would surely thank Congress for its protection, right?
An antitrust subcommittee doing antitrust stuff is one thing; what’s more striking is the degree to which Trump himself has energized and legitimized tech attacks, especially regarding issues like content moderation that will ride along at what is ostensibly an antitrust-centric hearing. (One GOP member wants the aforementioned Barr to investigate Facebook’s Zuckerberg for allegedly lying about to Congress about anti-conservative bias in prior hearings.)
On the one hand, and consistent with the Trump administration’s well-known and broad deregulatory agenda to energize business, the administration took early steps to cut merger review times overall, and to speed up bank merger approvals via internal streamlining at the Federal Reserve and at the Comptroller of the Currency.
But often, President Trump has threatened antitrust action against tech and telecom firms, a stance conflicting with that deregulatory agenda and an especially dangerous tinkering with the marketplace and people’s portfolios and 401(k)s in today’s crisis-rocked world.
We could see it coming, though. As a candidate, Trump proclaimed, “AT&T T -0.2% is buying Time Warner, a deal that we will not approve in my administration … because it is too much concentration of power in the hands of too few. … We will look at breaking that deal up and other deals like it.” The Justice Department’s attempt to block the merger ultimately failed.
Similarly, Trump tweeted in 2018 that Comcast +0.6%CMCSA may be violating antitrust laws. However, after mulling it over (such delays of business transactions themselves impose heavy regulatory costs, something Trump recognized with respect to infrastructure approvals during his July 2020 White House South Lawn deregulation celebration), the Justice Department ultimately did not investigate the Comcast-NBCUniversal alliance.
With respect to the big tech players in the hotseat now, the president said in 2018 that Google, Facebook, and Amazon may be in a “very antitrust situation,” and said he was “in charge” and “looking at it.” Even then, politicians and pundits across the political spectrum were calling for the breakup of these companies. Forcible breakup calls for an even bigger entity to wield the axe, as noted; but one will not likely find that contradiction expressed in “grillings.”
Some Republicans wanted Twitter at the Judiciary hearing also. Trump fought bitterly earlier this year with that company and has on numerous occasions threatened to regulate social media. In May, he followed though by issuing an executive order targeting their alleged “censorship.”
The online speech debate and the antitrust debate are highly intertwined, and in addition to cutting big tech down to size, both the right and left want to change underlying rules that protect platforms from liability for user postings. This battle too will doubtlessly emerge at the hearing and continue thereafter.
While the Judiciary committee was conducting the months of investigations culminating in this week’s “Super Bowl” hearing, the administration was doing similarly. Back in early 2019, the Federal Trade Commission announced a “technology task force” to assess tech sector antitrust violations and to go beyond current practice in scrutinizing transactions. In the wake of that, and in contrast to the administration’s recognition of agency misuse of regulatory guidance documents elsewhere, the FTC is now in the process of drafting guidance on how the antitrust laws apply to the technology sector and defending its own role in policing it.
In other antitrust developments, this year, the FTC requested data from top tech companies on their business acquisitions over the last 10 years. The commission is also pondering an injunction against Facebook’s procedures for interoperability across platforms, and is in the early stages of investigating Amazon, having started interviews in 2019 with businesses that sell on the site.
Still other signals point to a potentially expanding Trump administration antitrust agenda by the Department of Justice and FTC beyond big Internet tech firms. The FTC, for example, has been challenging an aquisition transaction in DNA sequencing.
While the DoJ and FTC did issue a “Joint Antitrust Statement” with respect to collaborative activities among firms during the pandemic, expedited advisory opinions still constitute playing Mother-May-I.
America may have some real troubles right now, but so-called monopoly power among competing firms in media and online sales and services are not threats to the country calling for coercive intervention from this unfortunate alliance of Democrats and Republicans.
The reality is that the infrastructure needed in tomorrow’s world of smart cities, autonomous vehicles, robotics and artificial intelligence, and space travel and more will require firms of far larger scale than any that we today call big tech and fret over.
These giants of the future will likewise be competitive non-monopolies, unless government grants them monopoly power or license.
Having just celebrated years of regulatory cuts at the White House, now would be a good time for President Trump back off his counterproductive flirtations with one of the worst forms of economic intervention, antitrust regulation. Congress? That’s not so simple.