Can Biden really crack down on tech monopolies? – TechCrunch
President Joe Biden issued an executive order “promoting competition” in the US economy in July. The ordinance specifically calls out Big Tech, stating that “today a small number of dominant internet platforms are using their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that ‘they can exploit to their own advantage’.
In November, the US Senate introduced a bill targeting anti-competitive acquisitions among tech companies. There hasn’t been a significant monopolization case in the United States for 20 years, but this recent momentum suggests that the current administration would like to make one.
To this day, there are still too many gray areas in the rules and ambivalence among citizens to apply antitrust law, but with a few changes in approach, good intentions can lead to new policy, sanctions and even prosecution.
Over the past century, antitrust regulation has lost its bite and its broader objectives have been abandoned in favor of a nebulous standard around “consumer welfare”. The decisive antitrust test established in the 1980s reduced everything to whether the alleged antitrust actions resulted in higher consumer prices.
This attempt to distill antitrust into a single criterion of economic consequence has turned out to be too simplistic. Advocates of this unique approach to antitrust valuation based on consumer prices cite falling technology prices as compelling evidence of the prevailing fair competition.
Breaking tech monopolies won’t be easy, but it can be done with a three-pronged approach: blocking anti-competitive mergers and acquisitions, building up data as market power to rewrite policy, and generate public interest in it. topic so that citizens can elect those affected antitrust policymakers.
Murderous mergers and acquisitions
In an age of easy money, with extended periods of very loose monetary policy and heavily inflated stock prices, buying future competitors at inflated values is now part of the strategy manual for companies.
Examples abound in the tech world, and Facebook’s acquisitions of Instagram and WhatsApp are compelling examples. Excessive regulation kills innovation, but free markets depend on regulation to stay fair and free.
Current law states that any transaction valued at $ 92 million or more must be reported to the Federal Trade Commission and the Department of Justice for review, with a few exceptions.
Since one of the stated goals of the Biden Order is increased scrutiny of mergers and acquisitions, consumers may see more legal action taken by the government to block deals that “dramatically reduce competition.”
The bill that would block certain acquisitions is a good sign of recognition on both sides that there is abuse, but the bar for violators remains high, especially when data monopolization is not widely seen as anti-competitive. . The FTC and DOJ will need to exercise their ability to enforce antitrust law against Big Techs, which it can do better with this new legislation.
Data = money = market power
Giving away free products has proven to be a clandestine strategy for some tech giants to accumulate other assets – including personal information about their unintentional “free” customers – which has not only fueled them inflated profit streams. of several billion, but also made these companies. monopolists of these assets. Search engine marketing and social media advertising were built exactly that way. These digital assets are now leased to all other businesses as a tax on their marketing budgets – a clear example of market power.
We have an unprecedented concentration in most industries, and companies in industries of increasing concentration are actually investing less because they can more easily exercise their market power.
However, when the weather turns inclement, the sunny-weather friends of auto-correcting markets will easily switch teams and support extraordinary market interventions, like the multiple steps the Federal Reserve has taken amid the pandemic to shamelessly back the markets. markets.
Biden’s executive order encourages the FTC to establish new rules on online monitoring and the accumulation of user data. Our monopoly tech giants have already framed the rules of this game for far too long, indulging gullible lawmakers in laughable oaths of self-regulation.
Until mass collection and control of data is properly categorized as market power, the levers of justice will continue to favor Big Tech, not the consumer. New policies and laws, in this case, will only materialize when public outcry forces the hand of lawmakers.
Changing the public discourse
Consumers and citizens alike are largely affected by lax antitrust enforcement and lax policy. Whether it’s by confiscating personal data, overpaying for services, or not being able to choose among products, monopolies violate the welfare of consumers in one way or another. But is there something they can do?
Biden’s decree is a direct result of increased public pressure around antitrust laws in this country. The same is true of the new Senate bill. More and more, private companies are filing complaints against monopolies in state courts, filled with elected officials.
It might sound silly now, but antitrust could become a hot topic for politicians to dwell on. Meaningful reform in antitrust policy will come from reformers, elected by the body politic, so voting for candidates based on their views on antitrust law enforcement will be key to changing the status quo.
We need stronger antitrust and privacy regulations now. The privacy and well-being of our citizens are at stake. Antitrust, like charity, must begin at home.