House Antitrust Staff Recommends Legislation to Curb Big Tech

Congress should consider legislation including structural separation and line of business restrictions to address abuse of market power in the digital economy, House Antitrust Subcommittee Democratic staff recommended in a long-awaited report Tuesday. Republicans didn’t sign on but released their own report. Recommendations include prohibition of self-preferencing, portability requirements, mandating that platforms provide due process before taking action against market participants, and amendments to the Clayton, Sherman and FTC acts.

Structural separations block dominant companies from operating in markets that place those companies in competition with firms dependent on the company’s infrastructure. Line of business restrictions limit markets in which a dominant firm can participate. Staff also recommended Congress consider legislation “to provide news publishers and broadcasters with a narrowly tailored and temporary safe harbor to collectively negotiate with dominant online platforms.”

Rep. Ken Buck, R-Colo., helped lead the release of the Republican report. House Judiciary Committee ranking member Jim Jordan, R-Ohio, criticized the Democrats' report for not considering political bias against conservatives: "Big tech is out to get conservatives. Unfortunately, the Democrats’ partisan report ignores this fundamental problem and potential solutions and instead advances radical proposals that would refashion antitrust law in the vision of the far left.”

Amazon also criticized the study, saying some recommendations would harm independent sellers and result in less choice and higher prices for consumers: “All large organizations attract the attention of regulators, and we welcome that scrutiny. But large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong. And yet, despite overwhelming evidence to the contrary, those fallacies are at the core of this regulatory spit-balling on antitrust.”

Staff was supportive of remedies outside legislation. It said that could include unwinding past acquisitions and divestiture of business lines “to fully restore competition that was harmed as a result of these acquisitions and to prevent future violations of the antitrust laws.”

Staff recommended implementation of rules to prohibit “discrimination, favoritism and self-preferencing.” The subcommittee “identified numerous instances in which dominant platforms engaged in preferential or discriminatory treatment,” the report said. One self-preferencing example was Google allegedly ranking its “own content above third-party content, even when its content was inferior or less relevant for users.” Google didn't comment.

Staff urged promoting innovation “through interoperability and open access.” The report contended Facebook is no longer contested by new entrants partly because of network effects: “Because Facebook is not interoperable with other social networks, its users have high costs to switch to other platforms, locking them into Facebook’s platform.” The company didn't comment.

The report noted several Big Tech acquisitions, among several hundred in 2000-19, enabled dominant platforms to “block emerging rivals and undermine competition.” Staff recommended reducing market power through acquisition presumptions: “Any acquisition by a dominant platform would be presumed anticompetitive unless the merging parties could show that the transaction was necessary for serving the public interest and that similar benefits could not be achieved through internal growth and expansion.”

The report recommended increasing the budget for the FTC and for DOJ’s Antitrust Division. It suggested Congress consider civil penalties and other relief for violations of unfair methods of competition rules, which would be in line with unfair or deceptive act rules. It suggested the FTC “regularly collect data and report on economic concentration and competition in sectors across the economy.” It recommended the agency publish “available merger retrospectives on significant transactions consummated over the last three decades.” Apple rounded out the four companies with recommendations sections; it didn't comment.

"If the goal is simply to knock down successful U.S. businesses, then perhaps this plan would score a hit," said Computer & Communications Industry Association President Matt Schruers. Otherwise, it's "hard to see how this would do anything but invite regulators to micromanage business models.” Adding "rules specific to a handful of prominent U.S. digital services won’t necessarily create an industry of equally dynamic small companies," Schruers said. CCIA members include several big tech companies the report studied.

The Internet Association doesn’t engage on competition policy, a spokesperson emailed: “Internet companies of all sizes create immense benefits for all Americans. The internet industry is vibrant and creates jobs and economic opportunity in every community. IA operates on consensus, which enables us to speak in a unified voice on a wide range of policies that are critical to the future of the internet, such as [Communications Decency Act] Section 230, privacy, among others, and, because of this, IA does not engage on competition policy.”