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Upcoming Hearings an Opportunity to Reject Using Antitrust as a Political Weapon

The House and Senate Judiciary committees’  antitrust subcommittees are holding major hearings this week on antitrust enforcement. The Senate hearing will feature the top two antitrust officials in the federal government, Federal Trade Commission (FTC) Chairman Joe Simons and Department of Justice (DOJ) Assistant Attorney General (AG) Makan Delrahim. The House hearing will focus on “Proposals to Strengthen the Antitrust Laws and Restore Competition Online.” These hearings come on the heels of a separate Sept. 15 antitrust hearing regarding Google’s online advertising business. Such events should be an opportunity for lawmakers and regulators to reject efforts from across the ideological spectrum to wield antitrust more like an indiscriminate weapon than a finely honed tool. Unfortunately, recent history has not proven encouraging -- and unless more thoughtful policy prevails, consumers, taxpayers, and our economy are all in danger of suffering the collateral damage.

As major technology companies like Facebook, Apple, Google, and Amazon have grown over the past several years, lawmakers have paid greater attention to the companies’ practices and their responses to public events. There are numerous policy considerations as these products and platforms continue to be used by millions of Americans, including data privacy, election security, legal liability, and even tax policy. Debates, not only between Republicans and Democrats but between public- and private-sector leaders, will be fierce and frequent.

Most concerning, though, is that some policymakers, conservative and liberal, are driven to attack “Big Tech” using the nation’s antitrust laws, which should be limited to determining whether mergers, acquisitions, or private sector activity harms consumers (the long-standing “consumer welfare standard”). Antitrust enforcers at the FTC and DOJ have a massive arsenal at their disposal, and lawmakers and regulators should resist growing calls to use this awesome power for aims that are more political than economic.

This is part of why NTU recently joined the Alliance on Antitrust, a coalition dedicated to ensuring the consumer welfare standard - and not political adventurism - remains the North Star of antitrust enforcement. NTU President Pete Sepp said at the time of the coalition’s introduction:

Instead of pursuing a light-touch approach to antitrust enforcement, some policymakers from across the ideological spectrum are increasingly agitating to use antitrust law as a political weapon against perceived foes. The Alliance on Antitrust can play an important role in persuading lawmakers and regulators to avoid pursuits that would harm American economic growth and recovery…

Indeed, never has the need for robust economic growth been more important, and never have the calls for the politicization of antitrust ever been so high.

A trio of progressive lawmakers - Sen. Elizabeth Warren (D-MA), Rep. Alexandria Ocasio-Cortez (D-NY), and Rep. David Cicilline (D-RI) - recently issued proposals to halt all mergers and acquisitions during the ongoing public health emergency. The proposals are built on the assumption that large companies and private equity firms are seeking to rampantly consolidate, despite evidence to the contrary. Besides the extraordinarily arbitrary and economically destructive nature of the proposal, NTU recently pointed out that the legislative text of the Warren/Ocasio-Cortez proposal indicates that the merger ban, if enacted, might not end for years. It appears the proposal has more to do with political assumptions about large companies and private equity firms than it does about sound antitrust enforcement.

Rep. Cicilline, who is hosting the House hearing Thursday as the Chairman of the House Judiciary Subcommittee on Antitrust, also recently suggested Congress should consider legislation effectively banning online marketplaces from selling their own products. In an interview with Brookings Institution’s TechTank podcast, Cicilline suggested that:

America needs Glass-Steagall legislation for the internet because large internet platforms have unfair advantages and harm small and medium-sized businesses. He says it is time for Congress to develop new rules of the road for the digital economy and stop firms from selling goods while also determining the shape of the marketplace.

As Netchoice’s Carl Szabo recently pointed out, this is a dangerous proposal that could eliminate the likes of Kirkland brand products at Costco, Up & Up or Market Pantry brands at Target, and Great Value or Equate brands at Walmart. In other words, physical and digital marketplaces sell their own versions of common products in those marketplaces all the time, and often at costs lower than the competition. That Cicilline would go after digital marketplaces but not the physical marketplaces that have been doing this for decades suggests this Glass-Steagall proposal is both ill-considered and quite ill-suited for any real or imagined issues Cicilline raises.

Some conservative lawmakers, on the other hand, have aggressively pursued certain tech companies over allegations of bias on their platforms against conservative voices and viewpoints. Policymakers and tech leaders will continue to debate these allegations, but one thing should be abundantly clear: aggressive antitrust action from unelected federal regulators is not a conservative solution to any real or alleged problems with bias.

Elsewhere, the Trump DOJ is planning an imminent antitrust case against Google, and the rushed timeline for the case in particular suggests that the motivations for the case could be more political than economic. Indeed, the case has become a political football of sorts, with “Democrats perceived by Republicans as slow-walking the work so that cases can be brought under a potential Biden administration, and Democrats accusing Republicans of rushing it out under Mr. Trump.” This is just one danger of overzealous antitrust enforcement that NTU has warned about for years.

Aggressive antitrust policy (and with it allegations by some of political overtones at work) were even recent themes in a major case brought by the FTC against Qualcomm, a leading U.S. firm in 3G, 4G, and now 5G communications technology and a manufacturer of modem chips in cell phones. The case was filed by a 2-1 FTC vote in the final hours of the Obama administration, with two Democratic appointed commissioners supporting the lawsuit and one Republican appointed commissioner opposing it. That latter commissioner, Maureen Ohlhausen, wrote on the day of her dissent:

...in the Commission’s 2-1 decision to sue Qualcomm, I face an extraordinary situation: an enforcement action based on a flawed legal theory (including a standalone Section 5 count) that lacks economic and evidentiary support, that was brought on the eve of a new presidential administration, and that, by its mere issuance, will undermine U.S. intellectual property rights in Asia and worldwide. These extreme circumstances compel me to voice my objections.

The U.S. Court of Appeals for the Ninth Circuit recently ruled against the FTC and in favor of Qualcomm in this case, reversing a District Court decision that would have prohibited “several of Qualcomm Incorporated’s core business practices” on a “worldwide” basis. Despite the ongoing political and legal battles over the case, some of which involve substantive differences within U.S. industry over legal doctrine and precedent, the Ninth Circuit ruling made clear that the court saw value in a light-touch antitrust policy. While lawmakers could still issue harmful proposals that greatly expand U.S. antitrust law, the Ninth Circuit ruling should give them some pause.

Everyone, regardless of their opinion on the court’s decision, can appreciate the danger of a rash or ill-considered reaction from either the legislative or the executive branch. The history of antitrust is littered with unforeseen consequences - eventually, the beneficiary of an FTC or DOJ action in one setting will become the target in another. That is why carefully defined, universally applied limits on antitrust power are vital.

NTU hopes that these themes and more are raised at the upcoming subcommittee hearing on Sept. 30. While some lawmakers may push merger bans, or proposals to expand adventurism and political behavior for the antitrust enforcers at FTC and DOJ, leaders who support free markets should make clear that a light-touch antitrust policy for all is the surest path to economic growth and prosperity.