Big Tech’s Coming Battle With Antitrust

By: Erik Perez 

The Federal Trade Commission (FTC) and Department of Justice (DOJ) Antitrust Division announced a major investigation into Amazon, Google, Facebook and Apple in July for anti-competitive, monopolistic behavior. 

The FTC and DOJ use antitrust laws to ensure fair competition by regulating big companies when they engage in predatory business practices. Antitrust lawsuits are mostly based in the Sherman Act, which outlaws "every contract, combination, or conspiracy in restraint of trade," and any "monopolization, attempted monopolization, or conspiracy or combination to monopolize." 

The initial question in the traditional approach to antitrust investigations is whether consumers have a competitive product they can switch to if the firm increases price and decreases quality.  

This traditional approach will be challenging, as many Big Tech companies offer free services. An antitrust lawsuit is “going to be hard for the government,” said Donald Polden, Professor of antitrust law at the Santa Clara University School of Law. "Not many people complain about their free Google and Facebook.”

“There are harms, [like] the collection of data, that the government is worried about,” said Polden. The government is worried about the “tremendous amount of data being acquired for free and manipulated and sold. Cambridge Analytica, for example, was a wakeup call for a lot of people,” he said. 

Cambridge Analytica was a British political consulting firm that obtained third-party data without the explicit consent of millions of Facebook users. The company acquired data from an external researcher who told Facebook it was collected for academic purposes. However, the data was also being used for political marketing campaigns. 

“A lot of the problems that you see with the social network market resemble the problems we saw in the telephone market,” said Dina Srinivasan, author of a Berkeley Business Law Journal article, “The Antitrust Case Against Facebook.”

In the 1980s, AT&T was mandated to relinquish control of the Bell Company. This split up AT&T’s dominance of the local and long distance phone market. “The way people communicated in the 20th century was on the phone and the way that people communicate in the 21st century is by social media,” Srinivasan said.

Previously, “with AT&T you were only allowed to text people who were AT&T customers. It would make it so people would funnel into one network so they could dominate the entire market,” Srinivasan said.  “Facebook used to be open. You could send messages across platforms, but after they gained power in the market, they closed it down.”

Antitrust analysis will likely shift focus to competitors because consumers are using their services essentially for free. “Pressure coming from competitors is a major contributor” to the investigation, said Polden. “Google has acquired about 200 companies since its creation.” This has amounted to about one acquisition per month. 

“The antitrust concern [is] that if they had been permitted to grow to fruition, as a functioning profitable company, they would have been a competitor to Google,” said Polden. “These early stage acquisitions will need new theories and new thinking about the potential competition doctrine in antitrust cases.” 

“Government enforcement is probably what is most troubling for these major tech companies because the government has the resources” to take on a large antitrust lawsuit, Polden said. 

Berin Szoka, President of TechFreedom, a non-profit think tank, says we are in need of new standards to address the antitrust concerns surrounding these companies. 

“More rules and regulations are not needed” and the court system is fully equipped to deal with the coming issues, Szoka said. “A case-by-case analysis should be done” so harms to the industry do not occur, and the “courts are equipped to do that case-by-case analysis.” 

Rules and regulations do not have the same flexibility as new standards. Standards are uniform guidelines established by consensus that provide common and repeated practices for companies to follow. “Narrow regulations are a lot harder to capture problems because you have to apply the same law across multiple industries,” said Szoka. 

With technology moving so fast, rules and regulations can be insufficient for solving certain issues, says Szoka. “It was hard enough to think about these issues when we were talking about new versions of Internet Explorer every few years, but we are now talking about companies and services that are constantly being changed,” said Szoka. 

But the idea of breaking up Big Tech wouldn't solve the problem, says Szoka. “You will just wind up with the same problem no matter how you try to break up the company.” Szoka explains that we “are always going to have these large networks because that’s the whole point of a social network. We want to use [social media] that other people are using.” 

(Editor's Note: This article was originally published in the October 2019 [Volume 50, Issue 1] version of The Advocate.)