Forget antitrust, to limit big tech, some say a new regulator is needed
For decades, America’s antitrust laws — originally designed to curb the power of 19th- century corporate giants in railroads, oil and steel — have been hailed as “the Magna Carta of free enterprise” and have proved remarkably durable and adaptable.
But even as the Justice Department filed an antitrust suit against Google on Tuesday for unlawfully maintaining a monopoly in search and search advertising, a growing number of legal experts and economists have started questioning whether traditional antitrust is up to the task of addressing the competitive concerns raised by today’s digital behemoths. Further help, they said, is needed.
Antitrust cases typically proceed at the stately pace of the courts, with trials and appeals that can drag on for years. Those delays, the legal experts and economists said, would give Google, Facebook, Amazon and Apple a free hand to become even more entrenched in the markets they dominate.
A more rapid- response approach is required, they said.
One solution: a specialist regulator that would focus on the major tech companies. It would establish and enforce a set of basic rules of conduct, which would include not allowing the companies to favor their own services, exclude competitors or acquire emerging rivals and require them to permit competitors access to their platforms and data on reasonable terms.
The British government has already said it would create a digital markets unit, with calls for a Big Tech regulator to also be introduced in the European Union and in Australia. In the United
States, recommendations for a digital markets regulator have also been made in expert reports and in congressional testimony. It could be a separate agency or perhaps a digital division inside the Federal Trade Commission.
Significantly, the leading proponents of this path in the United States are mainstream antitrust experts and economists rather than break-’ em- up firebrands. Jason Furman, a professor at Harvard University and chair of the Council of Economic Advisers in the Obama administration, led an advisory group to the British
government that recommended the creation of a digital markets unit in 2019.
Breaking up the Big Tech companies, Furman said, is a bad idea because that would risk losing some of the consumer benefits these digital utilities undeniably deliver. A regulator is necessary to police digital markets and the behavior of the tech giants, he said.
“I’m a small ‘ C’ conservative, and I’m not a fan of regulation generally,” Furman said. “But it’s needed in this space.”
Regulators that focus on specific sectors of the economy are common in the United States. For financial markets, there is the Securities and Exchange Commission; for airlines, the Federal Aviation Administration; for pharmaceuticals, the Food and Drug Administration; for telecommunications, the Federal Communications Commission; and so on.
There is also precedent for picking out a handful of big companies for special treatment. In banking, the biggest banks with the most customers and loans are classified as “systemically important financial institutions” and subject to more stringent scrutiny.
Several supporters of a new tech regulator were officials in the Obama administration. But the advocates said that experience — as well as the conservative, pro- big- business drift of court rulings in recent years — left them frustrated with antitrust law as the only way to restrain the growing market power and conduct of the Big Tech companies.
“The mechanism of antitrust is not working to protect competition,” said Fiona Scott Morton, an official in the Justice Department’s antitrust division in the Obama administration, who is an economist at the Yale University School of Management. “So let’s do something else — use a different tool.”
Scott Morton led an expert panel on antitrust in a report last year on digital platforms by the Stigler Center at the University of Chicago’s Booth School of Business. The report recommended the creation of a regulatory authority. ( Scott Morton has been a forceful critic of Google but also a consultant to Apple and Amazon.)
Such a regulatory approach carries the risk of government’s meddling in a fast- moving industry that could hobble innovation, some antitrust experts warned.
While antitrust law reacts to alleged anti- competitive behavior and can thus be slow, that shortcoming is preferable to prescriptive government rules and regulations, they said.
“I’m very uncomfortable with the regulatory path, especially if it means things like getting government approval for product changes,” said Herbert Hovenkamp, a professor at the University of Pennsylvania Law School. “The history of regulation shows that it is an innovation killer.”
The last major antitrust action against a big technology company was the landmark Microsoft case in the 1990s. The case began with a suit filed in 1994 and ended in a settlement in 2002.
“Antitrust is not a fully adequate tool to deal with the companies that dominate these markets,” said Gene Kimmelman, who was on the Stigler Center panel and a co- author of a recent report by the Shorenstein Center at Harvard that called for the creation of a “digital platform agency” in America.
Another argument for the regulatory option is that competition concerns now span four companies, not just one. Apple, Amazon, Facebook and Google are in different markets, including search, online advertising, e- commerce and social networks.
Bringing separate antitrust cases against them would most likely be beyond the resources of the government.
“When the competition issues are larger than a single firm, regulation might be the better tool to use,” said Andrew Gavil, a law professor at Howard University.