Tech Slams Progressive Antitrust Approach, in FTC, DOJ Comments

The FTC and DOJ are relying on faulty antitrust theories to single out digital platforms, tech industry groups told the agencies in comments on enforcers’ review of merger guidelines (see 2204080056). Sector-specific antitrust laws are appropriate due to the unprecedented control companies like Amazon, Facebook and Google have over digital markets, consumer groups told the agencies.

The agencies set the deadline for comments for Thursday, the same day DOJ Antitrust Division Chief Jonathan Kanter laid out a five-point plan for antitrust law enforcement in the face of a “competition crisis.” He told an audience at the University of Chicago that the purpose of antitrust law is to “protect competition,” which goes against tech industry and Republican support for the consumer welfare standard.

Antitrust enforcers have been limited to the “impossible challenge of quantifying often unquantifiable welfare effects and speculative efficiencies down to the last decimal point,” Kanter said: Measuring welfare tradeoffs turns antitrust into a “narrow technical exercise that overlooks the realities of our economy.” The merger guideline review will prioritize writing the guidelines in plain “language that reflects how people understand harm to competition,” he said, a comment in line with consumer advocate hopes for the review.

The current merger guidelines “provide clear practical guidance on when a transaction is likely to raise competition concerns,” and “creating sector specific rules” will lead to “more confusion for companies and courts,” commented the Computer & Communications Industry Association. The association noted National Bureau of Economic Research statistics showing concentration of transactions in digital markets isn’t higher than transactions in other industries, despite claims to the contrary.

A January NBER study, which analyzed transactions from 2010 to 2020, showed acquisitions by Amazon, Apple, Facebook, Google and Microsoft were “significantly less concentrated across categories than any of the top acquirer groups we considered,” said CCIA. The guidelines should “apply across the board to all industries,” said CCIA President Matt Schruers. “Trying to create a different set of guidelines or rules for specific companies or sectors doesn’t make good legal or economic sense.”

Sector-specific competition laws are “appropriate in key sectors,” including those dominated by digital platforms, commented Public Knowledge. Enforcers should pay close attention to platforms operating in two-sided markets, PK said, citing Amazon’s control over buyers and sellers, and Google’s control over advertisers and users. “These companies are so large and powerful, it can be too much to ask for a competitor to simultaneously enter every vertical a digital platform has a presence in,” PK wrote.

NetChoice accused progressives at DOJ and the FTC of trying to use a backdoor into merger enforcement to “radically transform the economy.” The agencies are attempting to micromanage the economy with unelected bureaucrats, rather than allow merger enforcement to protect consumers, said Counsel Chris Marchese: “In an act of pure hubris, the government plans to shred decades of bipartisan agreement and accumulated wisdom because it thinks the Biden administration can outperform the free markets -- consumers be damned.” NetChoice asked the agencies to slow the review process down and allow more time for public input.

Antitrust agencies are starting to rely on arbitrary speculation and ignore the importance of the consumer welfare standard, commented the International Center for Law & Economics. The FTC in its Facebook complaint (see 2110040050) makes assumptions about network effects without any effort to quantify the magnitude, and the agency’s two-page assessment of consumer harm “includes superficial conclusions that appear plucked from thin air,” ICLE said. Its assertions about innovation, quality and consumer choice aren’t based on anything that could be “remotely construed as empirical or even anecdotal evidence,” ICLE said.

The revised guidelines should recognize trends toward concentration, commented the American Antitrust Institute. For example, leading digital platforms have purchased hundreds of small rivals over the past 25 years, leading to digital platform dominance, increased cloud infrastructure holdings and tech’s expanded systems of connected services, AAI said: Of all reportable merger transactions 2001-2019, Google-ITA was the only deal challenged. The rate of merger challenges in the digital sector is far below the average across all sectors, AAI said. The organization argued the guidelines “should be limited to broad principles that have widespread application across sectors and industries.”

The American Economic Liberties Project highlighted various economic harms brought on by the dominance of platforms like Google and Facebook. Those platforms have monopolized digital advertising, getting nearly 60% of U.S. ad revenue, which decimated the newspaper industry, the organization said: About 1,800 local newspapers shuttered 2004-2018. Platforms also have an “inordinate amount of power” over public speech, the organization said, citing their ability to shape public discourse using algorithms.

FTC and DOJ should update the guidelines with a focus on increasing diversity, commented the National Hispanic Media Coalition. The guidelines originate from dated antitrust laws written during a time of white supremacy and civil rights abuse, said CEO Brenda Castillo: “By realizing the discriminatory neglect of historically and intentionally marginalized people, like the Latino community, the agencies can make reforms to merger enforcement guidelines and achieve diverse leadership, products and content, and a diverse labor market that promotes true competition.”