National Post (National Edition)
The battle to bust up Big Tech has just begun
In just a few years, “break up Big Tech” has gone from a radical slogan to a multipronged, mainstream policy movement with bipartisan support. Two of the progressive legal minds who sparked it, Lina Khan and Tim Wu, are now highly placed in the Biden administration. Dramatic antitrust reform legislation is wending through Congress. The federal government has sued Google and Facebook for monopolization and has been scrutinizing Amazon and Apple.
Of course, Big Tech was never going to go down without a fight. The past week, capped by a stinging court rebuke Monday of the government's case against Facebook, has revealed just how far the nascent antitrust-reform movement has to go to achieve its most ambitious goals. But it has also clarified the path forward for today's trustbusters, with District Judge James E. Boasberg's dismissive ruling handing them both a road map and a fresh tank of fuel.
If the goal is to split up the tech giants, “I think the Facebook ruling actually helps,” said Hal Singer, an antitrust economist who is managing director of the litigation consulting firm Econ One. “It will generate more votes and enthusiasm” for rewriting the laws to constrain dominant Internet platforms.
More votes and enthusiasm is exactly what will be needed, after a package of six antitrust bills barely survived a gruelling 29-hour markup in the U.S. House of Representatives last week. The most aggressive of the six — the so-called “breakup bill” — advanced by just one vote, 21-20, presaging an uphill battle to become law. This despite hard-won bipartisan support, forged over the course of a 16-month investigation into tech platforms' power by the House Judiciary Committee's antitrust subcommittee.
It's that bill, the Ending Platform Monopolies Act, that antitrust crusaders see as the linchpin of the package. Sponsored by Rep. Pramila Jayapal, D-Wash., the measure would make it illegal for the largest Internet firms to compete on their own dominant platforms — as when Apple sells apps on the App Store, or Amazon sells goods on its e-commerce site — if that competition is deemed to create a conflict of interest. Rep. Matt Gaetz, R-Fla., one of two Republicans who joined Democrats in supporting it, called it “the big enchilada” of Big Tech reform. As of last Friday, its future was looking bleak, supporters acknowledged, even as other elements of the package appeared to have the momentum needed to move forward.
Then came a court ruling that underscored everything the bill's advocates have been arguing. On Monday, Boasberg dismissed the government's two main antitrust complaints against Facebook, which had sought to reverse the social network's acquisitions of Instagram in 2012 and WhatsApp in 2014. The judge ruled out a challenge by state attorneys general on the grounds that they had waited too long. And he tossed out a complaint from the Federal Trade Commission, partly on the grounds that it failed to support the fundamental claim that Facebook holds monopoly power over the market for social networking. Boasberg's opinion rested on just the sort of conventional antitrust logic that Khan made her name criticizing.
Facebook cheered the news as validation that it competes fairly, ahead of its Tuesday launch of a newsletter product that once again copies key features from smaller rivals (while undercutting them on price). Investors sent its stock soaring past a market capitalization of US$1 trillion. Headlines described it as a major blow to attempts to rein in Big Tech. Has the hot antitrust summer fizzled prematurely?
Not exactly. Antitrust experts have warned from the start that cutting the tech industry's Goliaths down to size would take more than one slingshot — and likely, many years. The first wave of trustbusting in the United States took the better part of two decades, from the early 1900s to the First World War. The federal antitrust case against Microsoft lasted nine years from the inquiry's opening in 1992 to settlement in 2001. Anyone expecting a quick end to the battle over Big Tech was misguided.
The same goes for anyone who now thinks Facebook is in the clear. For one thing, the judge dismissed the FTC's complaint without prejudice, offering a blueprint for it to address his objections and a 30-day window to refile. It will do so under the leadership of Khan, who was sworn in June 15 as FTC chair. It's a chance for Khan to put her stamp on a suit that was initially filed under a Republican-led FTC last year in what some critics felt was a rushed process.
In the meantime, the judge's swift dismissal helps the breakup bill's backers to illustrate their point: that the existing antitrust regime is ill-equipped to reckon with the market power of dominant Internet platforms. Built for industries in which defining the market is straightforward, and informed by decades of laissez-faire court precedent dating to the late 1970s, the status quo in American antitrust law is what has allowed Apple, Microsoft, Amazon, Alphabet and Facebook to become the country's five largest companies by market capitalization. The FTC's complaint against Facebook documented ample evidence that the company has wielded its size as a cudgel against competitors for years, yet was thrown out by a judge who was more interested in how the company meets the conventional definition of monopoly in a single, specific market.
“It's a little ridiculous,” said Singer. “If Facebook doesn't have monopoly power, nobody does.”
For Singer, the takeaway is that the proper vehicle for tech breakups is legislation, not antitrust court battles. Tech's leading critics on Capitol Hill, including Rep. Ken Buck, R-Colo., and Sen. Amy Klobuchar, D-Minn., rallied around similar arguments Monday. “Advocates for legislative reforms are going to say this shows why we need new statutes,” former Republican FTC Chair William Kovacic told The Post. “This will be their chief example.” David Segal, executive director of the left-leaning digital rights group Demand Progress, said the ruling suggests legislation should “leave the courts with as little discretion as possible.”
It's noteworthy from a political standpoint that an antitrust suit filed by Donald Trump's FTC was dismissed by a federal judge appointed by Barack Obama. Republican lawmakers who had supported the lawsuits but balked at a legislative overhaul might now be more inclined to support the latter. Over the weekend, House GOP leader Kevin McCarthy, R-Calif., had sought to counter the antitrust package by laying out a plan that focused instead on expediting antitrust court processes while holding platforms liable for content moderation. The Facebook ruling should make it clear that if the goal is reining in online platforms, expedited court rulings aren't the answer.
That's not to say change will come easy. The antitrust bills with the best chance to become law in the short term are still those that reform the system around the edges, such as one that would raise merger filing fees to increase federal antitrust enforcement funding. Jayapal's breakup bill doesn't even have a Senate equivalent at this point. And tech lobbyists going all-out to oppose such a measure are finding sympathetic ears on both sides of the aisle. On Tuesday, Majority Leader Steny Hoyer said the package isn't ready for a full House vote, adding that Congress's approach should be “constructive, not destructive.”
What's clear at this point is that the political terrain has shifted. Even the business-friendly politicians now at least pay lip service to the notion that Big Tech has grown too powerful, and the reformers' ranks are gradually growing. The obstacles to breakups via the courts remain formidable. But the long, rocky road toward reworking the country's competition laws may have just gotten a bit more navigable.