Acting FTC Chair Warns Lawmakers About Antitrust Underenforcement

The FTC needs to review past agency antitrust analysis to determine where tools have been misused and what predictions have been incorrect, acting Chair Rebecca Kelly Slaughter told the House Antitrust Subcommittee Thursday. She responded to Chairman David Cicilline, D-R.I., and ranking member Ken Buck, R-Colo. Those lawmakers' opening remarks questioned FTC's reported reluctance in 2013 to pursue an antitrust lawsuit against Google, despite a recommendation from agency investigators.

There’s an “arrogance” about the way these companies operate, said Buck, calling Apple, Google, Amazon and Facebook monopolies. He described Big Tech companies as “whales swallowing up the startup plankton.” Cicilline noted Google reportedly paid billions of dollars to Apple so it could lock up the search market in the U.S. on smartphones.

Buck listed one key item from the report: A Google executive reportedly bragged the platform could own the U.S. market through smartphone contracts. It worked, said Buck: Google is now the default search engine on more than 85% of smartphones.

Some worry about overenforcement, said Slaughter. She said there's more risk of underenforcement. Market conditions caused nearly everyone to question whether laws and enforcement approaches are adequate, she said. She recommended the FTC activate its unfair methods of competition rulemaking authority to prohibit anticompetitive conduct that’s difficult to litigate case by case. She supported efforts to make it easier to bring lawsuits against anticompetitive transactions or actions. The FTC should consider withdrawing vertical guidelines issued under then-Chairman Joe Simons, Slaughter told the subcommittee.

Commissioner Noah Phillips urged caution, testifying that the ability to sell a company encourages innovation in tech and elsewhere. “Sand in the gears prevents the market from working," he said. "As you think about reform, please think about those facts.”

Courts often focused on the price effects in antitrust cases and the protection of consumers, said 7th U.S. Circuit Court of Appeals Judge Diane Wood. Activity pushing competitors out of the market has often been blessed due to interpretation of antitrust statutes, she said: "The antitrust laws protect competition, not competitors, but you can't have competition without competitors." The consumer welfare standard isn’t limited only to price, as dictated by the Supreme Court, said Phillips: There are innovation harms to consider.

Rep. Cliff Bentz, R-Ore., asked about the impact of dramatic changes to antitrust law. The FTC looks to protect the competitive process, said Phillips: Consumers should benefit from the fruits of competition; rivals shouldn’t come to the agency and complain about the market, asking the government to intervene.

Rep. Hakeem Jeffries, D-N.Y., asked why antitrust laws are insufficient in allowing enforcers to see the harm of allowing Facebook to purchase Instagram. Antitrust laws provide incentive for dominant companies to seek nascent rivals and buy them before they become significant threats, said Colorado Attorney General Phil Weiser (D). Facebook has been able to avoid rivalries that free markets depend on, he added.

State AGs are discussing how state enforcers can more closely follow platform practices and potential consumer protection violations, Nebraska's Doug Peterson (R) told Rep. Greg Steube. The Florida Republican asked about Communications Decency Act Section 230 and repeated his claims of anti-conservative censorship from Silicon Valley platforms. There’s discussion about how states can be more diligent in following platform practices and how they might be violating consumer protection laws, said Peterson.

House Judiciary Committee ranking member Jim Jordan, R-Ohio, also raised censorship issues about Section 230 liability protections, asking Phillips what the answer is if antitrust law isn’t. “It’s a terrifically problematic issue” that doesn’t fall into antitrust and consumer protection categories, Phillips said. The commissioner raised concerns about lawsuits having a chilling effect on speech and content.

Phillips addressed legislation for giving news outlets power to negotiate with Big Tech, which was introduced by Buck and Cicilline (see 2103120066). If competition is the goal, exemptions to antitrust law that allow companies to not compete and to collude together “wouldn’t help the dynamic,” said Phillips. Buck asked if there’s anything unconstitutional about targeting Big Tech with an antitrust exemption for media companies. It doesn’t appear unconstitutional, given Congress’ power over interstate commerce, said Phillips.