After years of lagging behind the international community, will the US begin to rein in ‘big tech’?
By Clara Hendrickson
While Europe has become the de facto regulator of American tech companies, U.S. enforcers may be ready to join their peers across the Atlantic. Following negotiations between the federal agencies charged with antitrust enforcement, reports this week reveal the Department of Justice may soon investigate Apple and Google while the Federal Trade Commission may open a probe into Amazon and Facebook. On June 3, Rep. David Cicilline (D-RI), the Chairman of the House Judiciary’s Subcommittee on Antitrust, Commercial and Administrative Law, announced its own investigation into large tech companies. Over the next year and a half, the subcommittee plans to hold hearings, demand testimony from tech executives, and seek internal documents from companies with an intention to issue recommendations to modernize antitrust enforcement and pressure the Department of Justice and the FTC to investigate any discovered wrongdoing.
Lessons from home
For the time being, very little is known about the specific anticompetitive conduct the investigations might examine. The last major antitrust case brought against a tech company was the Department of Justice’s investigation of Microsoft in 1992. It wasn’t until 1998 when the suit finally went to trial, and a settlement came three years later. If that case is any indication, it could be a decade or more until any investigation into the four largest American tech companies is complete.
While some worry that antitrust laws enacted over a century ago cannot keep up with the pace or nature of today’s technological change, Bruce Hoffman, the Director of the Bureau of Competition at the Federal Trade Commission, argued in an interview on NPR’s Morning Edition that antitrust laws can be effective in the digital age. “If you go back through the history of antitrust, all the way back to the early 20th century, you find this constant issue where every 10 years or every 15 years, some new technology arises, the public gets all overwrought about it, saying antitrust can’t possibly keep up with this.” Ultimately, Hoffman said, “antitrust has proven able to adapt.”
But while the public conversation lingers on the size of these tech companies, “[size] in and of itself is not inherently an antitrust problem,” Hoffman said. “You could be a big, successful company because you’re really good at what you do.” Antitrust enforcement, instead, is concerned with companies that deliberately undermine competition to entrench their dominance in ways that harm consumers. But the consumer welfare framework that currently guides antitrust enforcement could present an obstacle to the agencies’ efforts to investigate tech companies that either offer their services for free or at a low cost. The framework focuses on ensuring low prices for consumers rather than competition, which has allowed tech companies to evade greater scrutiny from federal antitrust enforcers.
However, the federal agencies charged with antitrust enforcement may soon change their approach. In remarks made during the FTC hearings focused on reviewing antitrust enforcement in light of changing economic conditions, FTC Chairman Joseph Simons declared, “it makes sense for the antitrust authorities to look in places where there might be significant market power, to ensure that such firms compete on the merits – and that might include some of the significant high-tech platforms.” The FTC has also set up a task force to examine enforcement against technology companies, which will consider reversing previously approved mergers such as Facebook’s acquisition of WhatsApp and Instagram. Meanwhile, Makan Delrahim, the Assistant Attorney General at the Department of Justice’s Antitrust Division, plans to roll-back the use behavioral remedies applied in recent years in enforcement against tech companies.
Lessons from abroad
America’s largest technology companies have encountered tougher competition enforcement abroad than at home. As American antitrust enforcers and lawmakers play catch-up with their international counterparts, they can learn from the actions and thinking pursued across the Atlantic.
A European Commission investigation is underway into whether Amazon uses data on third-party merchants to compete against them in its own marketplace. Meanwhile, the European Commission has already levied $9 billion worth of fines against Google for prioritizing its own shopping service in search results, using its mobile operating system to entrench the dominance of its other services like Search and Chrome, and blocking advertising rivals. In February, Germany’s competition authority ruled that Facebook’s efforts to combine users’ data across its social platforms without their consent violates competition law.
In addition to these specific actions, international lawmakers have put forward a number of recommendations to modernize competition enforcement.
The Canadian House of Commons’ Standing Committee on Access to Information, Privacy and Ethics sees data as a new, under-examined source of market power in the tech sector. The committee recommends moving competition enforcement “away from price-centric tools” and toward evaluating the value of data at stake between merging companies. The committee also recommends establishing data portability and system interoperability to empower individual users to more easily move between rival platforms.
In the United Kingdom, a government-appointed Digital Competition Expert Panel has called for merger assessments in digital markets to evaluate harm to innovation and potential effects on competition and to perform retrospective evaluations on previously approved mergers. The panel also recommends identifying certain companies as having “strategic market status” and prohibiting them from prioritizing their own products and services on their platform.
Finally, a recently released European Commission report on competition policy warns that under-enforcement could threaten consumer welfare, arguing that “even where consumer harm cannot be precisely measured, strategies employed by dominant platforms aimed at reducing the competitive pressure they face should be forbidden in the absence of clearly documented consumer welfare gains.”
For years, the predominant view held that intervening in the tech sector would make it less dynamic. The planned investigations into the four largest tech companies by the Department of Justice, the Federal Trade Commission, and the House Judiciary Committee represent a shift away from the largely hands-off approach enforcers and lawmakers have taken in the 21st century. The probes come in the wake of mounting political pressure against tech companies: from concerns that tech giants have failed to prevent the misuse of users’ personal data to ways in which social media platforms have empowered bad actors and steered users toward harmful content such as violent posts and fake news.
I explore these issues with Brookings’s Senior Fellow Bill Galston in a new report examining the actions and ideas pursued by a growing, international tech-skeptic chorus. Domestically, America’s most successful technology companies have drawn the ire of Democratic and Republican lawmakers, President Trump, presidential hopefuls, and even Silicon Valley insiders such as Facebook co-founder Chris Hughes and investor Roger McNamee. A majority of American adults also support greater scrutiny of major tech companies.
Whether the plans to investigate the largest players in the digital economy will align with international enforcement efforts to rein in “big tech” remains unknown. However, the move may be an initial sign of a remarkable shift towards greater scrutiny of tech giants.
The author appreciates the research and editorial support provided by research interns Ketaki Gujar and Zach Koslowski.
Google, Facebook, Apple, and Amazon are unrestricted donors to the Brookings Institution. The findings, interpretations, and conclusions posted in this piece are solely those of the author and not influenced by any donation.