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Why is it dangerous to NOT enforce existing antitrust laws?

Antitrust laws: The image shows a gavel with the words "antitrust law" written on the sound block

Republican Congressman Ken Buck believes in enforcing antitrust laws, to the point of creating new ones when the existing ones do not address nuances of modern high tech monopolies.

Who is Representative Ken Buck?

Ken Buck represents Colorado’s 4th congressional district in the House of Representatives and serves on the House Judiciary Committee and the House Foreign Affairs Committee.

He serves as the ranking member on the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law.

This blog post is a summary of an interview about antitrust laws

The interview of Representative Buck was conducted by Kara Swisher, who hosts the New York Times podcast Sway.

You can listen to the full episode here: Why Republican Ken Buck Believes in Antitrust and Doesn’t Believe in the ‘Big Lie’.

If you want to listen to just the antitrust portion of the episode, it’s below.

The target is big tech, not corporate consolidation per se

For what it’s worth, the bills they introduced, which are co-sponsored by Democrat Representative David Cicilline are targeting big tech companies, and are not targeting the general extreme corporate consolation that exists today in the American economy.

It’s about four monopolies

As you can guess, he’s concerned about Amazon, Apple, Facebook, and Google.

It started with hearings, where startup founders aired grievances

The testimony of the startup founders described what sounded to him like white-collar crime.

The startups were selling products on Amazon and via Google, and the platforms used their dominance to steer consumers away from the products of the smaller companies, and towards products that more directly benefitted Amazon and Google.

Some startups allege that Amazon offered to invest in their companies, and through that obtained proprietary information which allowed Amazon to duplicate products, which they then steered consumers to.

If that allegation is true, Amazon committed fraud.

Google is alleged to have done the same thing with a company that produces music lyrics, as well as with Yelp.

While there are bad actors outside of monopolies, Representative Buck believes these four companies get away with what they get away with because they’re monopolies.

Are they truly monopolies?

First, Representative Buck does not believe big is bad.

He believes big can allow for innovations that small companies can’t afford to fund.

But, when a company has a competitive advantage because of its market share, it can run things with the intention to block competition.

For example, with only two firms dominating smartphones (Apple and Google), they can place restrictions on what applications can and can not appear in their app stores which stifle competition.

Is big necessarily bad?

To Representative Buck, the issue is not big, but market concentration.

He states that if you had 10 big oil and gas companies, they would all be big, but each would control only 10% (or so) of the market and that would allow competition.

What’s the status of House bills Representative Buck introducted?

In the interview, Representative Buck mentions six bills, but I found only five of them mentioned on his website.

Examples

Representative Buck said…

The nondiscrimination bill (maybe that’s the one I couldn’t find) would prohibit Amazon from preferencing Amazon products within the Amazon online market.

The merger bill would require Facebook to have shown that their acquisitions of Instagram and Whatsapp are pro-competitive, which was not done when those companies were acquired.

The compatibility and competition act would allow someone to “take” their digital files from Google to Bing (as an example).

He implied the last one is modeled on the 1990s legislation which allowed people to take their phone numbers and other data with them when they switched telephone providers.

One of the bills (platform monopolies?) would create “structural separation” where one company could not be both a marketplace and a seller of services in that marketplace. It would separate the businesses out into smaller businesses.

Which ones are most likely to pass?

Per Representative Buck…

The nondiscrimination bill, and the merger bill that would require companies to show a merger is pro-competitive.

Will the impact be significant?

Some of the significance is that the mere fact of their focus on these firms and on these issues is drawing attention to them.

More journalists are taking an interest.

The public is taking a greater interest.

He also expects state legislatures and courts to start taking a greater interest.

Biden has made some aggressive antitrust appointments

Biden has appointed three strong antitrust crusaders into positions of authority.

Lina Kahn is the chair of the Federal Trade Commission (FTC)

Tim Wu is now an advisor to the FTC on consumer protection and competition.

Jonathan Kanter has been approved by the Senate Judiciary Committee to become the next Assistant Attorney General for the US Department of Justice Antitrust Division (a job once brilliantly performed by Thurman Arnold from 1938 to 1943), thereby sending his nomination to the full Senate for a final vote.

Representative Buck stated his views are aligned with theirs and of the importance of the executive branch appointing people who will in fact pursue antitrust action against companies with monopoly power.

If the GOP takes the House in the 2022 midterms, will they pursue antitrust?

“It’s tough to say”

Not quite the answer I was hoping to hear.

Let’s talk about these four companies

Amazon

Did Jeff Bezos and other Amazon executives mislead the congressional committee during their investigation into Amazon’s business practices?

The Amazon self preferencing was found to be prevalent in India and somewhat in the United States.

Jeff Bezos stated that Amazon does have a policy against it, which doesn’t mean they never do it, but that they’re doing their best to enforce their policy.

Representative Buck stated there is evidence that Amazon isn’t doing their best, and on occasion turns a blind eye to such practices.

The evidence is a lot of Amazon employees have stated Amazon rewards profits over ethics and self preferencing is part of their business practices.

Apple

While Apple did just survive an antitrust action brought by Epic Games, Representative Buck feels all is not right in the Apple app store.

Apple charges Spotify a 30% surcharge but charges no such surcharge to Apple Music.

The bill to address this says music providers must be treated the same, notwithstanding that the company that owns the platform (the app store) also owns one of the music services.

Google

Google essential “steals” (his word, not mine) information from Yelp and created a Yelp alternative that immediately captured a 90% share on handheld devices (and a similar percentage on desktop devices) due to Google’s dominance in search.

Representative Buck acknowledged this was enabled because Google does have a better search engine.

Having said that, creating a better search engine and using it in ways that discriminate against non-search competitors, are two different things.

Facebook

Facebook is accused of prioritizing growth over user safety, and internal documents at Facebook have been uncovered that demonstrate this is something Facebook executives have known about for years.

This problem has become so pervasive (Instagram having a negative impact on teen girls’ mental health, Facebook swaying the UK Brexit vote, Facebook being used to facilitate human trafficking), it begs the question: Is Facebook coming up against their big tobacco moment?

Per Representative Buck, this is different from big tobacco in various ways, and in some ways, it’s worse as the effects are more immediate.

Does the FTC have teeth here?

So far, the punishments for antitrust actions handed out in the US, in Europe, and in Asia, are like parking tickets to these companies. A $5B penalty sounds like a lot of money, but these companies make so much money, a fine of that size does not incent them to change their practices and behaviors.

Some mergers have led to more toxic outcomes

Specifically the Facebook acquisition of Instagram and Wattsapp.

The founders of those two companies had visions of what their apps would do, would enable, etc.

While both of them initially went to Facebook after the acquisitions, both subsequently left as Facebook took their apps in directions they disapproved of.

Their visions are now no longer relevant or meaningful.

Should Whatsapp and Instagram be split off?

The structural separation bill would do just that.

Content moderation and “section 230”

The rest of the interview is about content moderation and the possibility of reforming section 230 of the Communications Decency Act.

Which, while relevant, veers away from antitrust and into content moderation which, in my mind, is a separate topic.

In the full episode link above, this discussion starts at 19:12.

In the shorter audio clip, it starts at 18:57.

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