Technology

The Justice Department's 'Big Tech' Antitrust Investigation Is Unnecessary Political Theater

Both Democrats and Republicans are cheerleading for government action against Facebook, Google, Amazon, and the rest, but Americans should be skeptical.

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The conservative-led media backlash against Google, Facebook, and other big technology firms has crossed the threshold from punditry to actual government action.

The Justice Department announced on Monday evening announced that it has launched an anti-trust investigation into those companies and others. Officially, the department wants to determine "whether and how market-leading online platforms have achieved market power and are engaging in practices that have reduced competition, stifled innovation, or otherwise harmed consumers," the Justice Department said in a statement. The review will seek "to ensure Americans have access to free markets in which companies compete on the merits to provide services that users want."

That all sounds pretty reasonable, but it's probably right to view the Justice Department's action with skepticism—for several reasons.

First, because it's duplicative. The Federal Trade Commission, which shares antitrust enforcement authority with the Justice Department, has already launched a task force to investigate many of the same issues with America's largest tech platforms. In February, the FTC said the new task force would "closely examine technology markets to ensure consumers benefit from free and fair competition."

Tech firms are also under pressure from Congress, which has repeatedly hauled the CEOs of Facebook and other top tech firms into hearings to answer for their alleged role in helping Trump get elected or for supposedly stifling Trump supporters' online speech—depending on which day of the week it is. It's unclear what the Justice Department thinks it can add to the show.

Second, the lack of a clear rationale for the Justice Department's investigation makes this look like a politically motivated operation. Earlier this month, President Donald Trump hosted a so-called "social media summit" at the White House—and used the occasion chiefly to complain about not having enough Twitter followers. During a lengthy speech, Trump also promised to explore "all regulatory and legislative solutions to protect free speech" online, though he also indicated that his definition of "free speech" does not include speech he deems "bad" or "dangerous."

As Reason's Robby Soave wrote at the time, "it's true that objectively false and disparaging speech can in some cases be deemed libelous. But speech that merely strikes Trump as 'bad' does not lose its First Amendment protection."

The Justice Department is not clarifying whether its investigation will include platforms' policing of online speech, but the timing and the seemingly open-ended nature of the review create the opportunity for the Justice Department's antitrust enforcement powers to be used for obviously political purposes.

Finally, even if the investigation sticks to traditional anti-trust legal ground, there's little indication that government action is necessary to "break up" or regulate tech firms. But that hasn't stopped both Republicans and Democrats from cheerleading for the use of government force against Apple, Google, and Facebook.

"Antitrust enforcers must now be bold and fearless in stopping Big Tech's misuse of its monopolistic power," Sen. Richard Blumenthal (D–Conn.) said in a statement after the Justice Department's announcement on Monday.

But does Big Tech have "monopolistic power"? Not at all. Those big firms are in constant competition with one another and with smaller competitors. Critics of Facebook, for example, like to point out that 70 percent of Americans who say they use social media have a Facebook account. But that proves exactly the opposite point. Facebook isn't the only social media platform, just like Google isn't the only search engine, and Amazon isn't the only online marketplace. Merely being "big" is not enough to justify government action.

"The DOJ must resist the siren song of populism and only investigate actual evidence of consumer harm," says Carl Szabo, vice president and general counsel for NetChoice, a nonprofit that advocates for free markets online. "These businesses cannot be considered monopolies when they compete against one another. Competition in tech is fierce."

History bears that out. In 2007, there were fears that MySpace would never "lose its monopoly" over social media. In the late 90s and early 2000s, Yahoo! and GeoCities had a seemingly dominant grip on searching and web traffic. Remember Netscape? Gen Z readers may know a few of these companies by name, but no one under the age of 25 likely ever used the Netscape browser, built a GeoCities homepage, or friended Tom on Myspace. And that's the point.

Facebook would join that list tomorrow if all its users deleted their accounts. The fact that it endures is not proof that it holds monopolistic power over Americans' online activities, but—contra the Justice Department's announcement on Monday—it is evidence that users see something of value in having a Facebook account.

Part of the problem is that government antitrust actions often misunderstand the dynamics of tech markets. In March, when the specter of antitrust action was first raised by Congress, venture capitalist Benedict Evans wrote a useful Twitter thread outlining the difference between how tech firms compete for a new market and an established one. Even when there is a "winner," he noted, that outcome can be subject to change with new developments that make old technology irrelevant—think of how Apple's iPhone displaced the BlackBerry, or how Google overtook Microsoft (a one-time target of government action because it was supposedly a monopoly).

"Tech anti-trust too often wants to insert a competitor to the winning monopolist, when it's too late," Evans wrote. "Meanwhile, the monopolist is made irrelevant by something that that comes from totally outside the entire conversation and owes nothing to any anti-trust interventions."

It's not the Justice Department or the FTC that will take down Facebook or Google. It's something you haven't heard about yet.

NEXT: Trump Says Mueller Report Found No Evidence of Obstruction of Justice. Robert Mueller Tells Congress Otherwise.

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  1. ENB informs everyone this morning that only people who have something to hide object to investigations. So what is the harm here?

    1. If you have nothing to hide, you probably have nothing worth showing.

    2. Well, she was wrong.

  2. INVESTIGATION IMPLODING!!!!

  3. “Antitrust enforcers must now be bold and fearless in stopping Big Tech’s misuse of its monopolistic power,” Sen. Richard Blumenthal (D–Conn.) said

    Only congress should misuse its monopolistic power!
    – Sen. Richard Blumenthal (D–CT)

  4. Is it OK for Warren does it?

  5. “Part of the problem is that government antitrust actions often misunderstand the dynamics of tech markets.”

    Yup. Like all sectors of the economy, meddling will make it worse.

    1. Not to mention that there is no sensible, not absurd way to break up a pure .com company.

  6. Anti trust investigations include investigating anti market principles. One of the standard investigations is into things such as buy and kill or consumer abuse of contracts and such. Google and Facebook have both done these things and have been for over a decade.

    I dont know how reason calls this investigation theater and then writes an article saying the Mueller conference proves trump is not exonerated.

  7. Only unfair competition is when the agent with a monopoly on violence gets involved. Stay out of this.

  8. The writer of this story has “lost the plot”.

    The reason congress is investigating and needs to do so is because, as we’ve learned, painfully, over the years, “the swamp” is incapable of investigating anything. This lesson should have been learned when the banks, also monitored by “the swamp” was allowed to orchestrate the largest swindle in american history, the Housing collapse of 2008. Any who do not understand this should see the movie, The Big Short, watch it several times till you follow every nuance.

    No, The FTC cannot be allowed to just “do their jobs”. They wont. They’ll get bought.

    This is not merely a free speech issue. This is a true tipping point. We are at the point where big tech will soon be able completely dominate both political and cultural sphere. We have tech moving in a direction where they are able to “un-person” a human being. They can take away their ability to have a job, date, have a bank account, own a home, etc, etc, etc.

    If Congress does not take away big tech’s 230 exemption, we will truely enter a “post free-speech” era.

    1. You should be a politician.

      1. Not sure if thats a compliment or an insult. 🙂

        1. It’s not:
          “This is not merely a free speech issue. This is a true tipping point.”
          Political bullshit.

    2. What is it about getting rid of Section 230 that you think would address the problems that you feel you’ve identified?

      1. It would force the tech companies to assume responsibility for what goes on their platform if they want to engage in viewpoint discrimination.

        I think the better solution is to put teeth in suits to enforce terms of service. Really what is going on here is fraud. These companies put out terms of service which say that only dangerous, illegal, or threatening content will be banned. Implicit in all of these documents is the promise to enforce the rules evenhandedly and reasonably. So people have signed up for these platforms and grown to rely on them for their business or personal brand only to see the companies breech the TOS through selective and arbitrary enforcement.

        They get away with this because there isn’t enough provable damages to any one person to make it economical to sue. That needs to be changed. Make a violation of a TOS by a tech company subject to attorney’s fees and statutory damages of say $250,000 for every violation. This would force the companies to live by their promised TOS.

        They would still have the freedom to run their platforms as they like. They would just have to be honest about it. If Twitter, for example, wants to only enforce its rules against those on the right, fine. They just have to say so in their TOS.

        1. I think the better solution is to put teeth in suits to enforce terms of service.

          I agree that any solution is in enforcing TOS as contract claims. But I think making “a violation of a TOS by a tech company subject to attorney’s fees and statutory damages of say $250,000 for every violation” invites a flood of frivolous lawsuits. I don’t see why normal tort shouldn’t apply – if you’re damaged, seek compensation. If you aren’t damaged enough for it to be worthwhile to sue, you haven’t been significantly damaged.

          That aside, I still don’t see what Section 230 has to do with any of it, other than giving the government a bigger stick to wield against platforms whose politics it doesn’t like.

          1. It would not invite a flood of frivolous lawsuits. You could only sue the platform if it banned you or took down content. And that is a very small number of people and would get even smaller if they faced the real threat of suit.

        2. The whole ‘Section 230’ talking point is just to help people who have no understanding of the issue feel like they do.

          The real issues at play have to do with two things – TOS’s that are arbitrarily enforced, able to be unilaterally updated by one party, and are lacking in any form of consumer protection AND the lack of recognition that non-material ‘items’ can still have a monetary value. Facebook is ‘free’ but costs us our personal data to use. Youtube is ‘free’ but costs creators time and creativity. ‘Taking’ the good provided under one set of contractual terms, then arbitrarily changing the terms without compensation, should be resulting in serious monetary damages.

          I’m content to let the market sort it out, I’ve been around tech long enough to have seen most of the big ‘monopolies’ come and go. The concerns I have are over potential collusion between companies to remove individuals (cartel-like behavior) and over regulatory capture preventing competition.

    3. So this time they won’t fuck it up? What makes you think congress is any less beholden or swampy than the FTC?

      1. because the congress isn’t actually going to have to do much of anything. By repealing 230, the civil courts will solve this. When Google is hit with 5000 separate libel lawsuits, economics with force them to choose to go with Platform (ala the phone company) over publisher (ala the New York Times).

        1. When Google is hit with 5000 separate libel lawsuits, economics with force them to choose to go with Platform (ala the phone company) over publisher (ala the New York Times).

          Why, when the distinction will have been eliminated?

          Why do you think 5,000 separate libel lawsuits will lead to anything other than no-more-Google and nothing-like-it-ever-existing-again?

    4. Congress needs to investigate bc The Swamp is incapable of investigating?

      1. only insofar as they need to act. The swamp cannot remove 230, only congress can do that. If its just hearings for the sake of hearings, then no. Congress would be no better.

        1. I notice you answered every question but mine:

          What is it about getting rid of Section 230 that you think would address the problems that you feel you’ve identified?

          1. It’s the right-wing way to virtue signal about being on the “correct side” vs. Big Tech.

            It is similar to when left-wingers talk about “banning assault weapons” as if it will do anything about mass shootings. It won’t, they mostly know it won’t, but it is how they signal to their tribe that they are on the “correct side” vs. the NRA.

          2. Why not get rid of Section 230? Why should a large, financially weathy business sector be subject to the same laws as everyone else?

            Section 230 is a special exception to the laws that generally apply, just for these internet host business. The idea was that they were not editing content, just hosting it, so were given an exemption to being held responsible for the content. They are clearly acting as editors of content today so should they continue to have an exemption?

    5. Sooo you’re willing to give the swamp whom are the enablers of monopoly the awesome and arbitrary powers to decide who the winners and losers are…

  9. Hopefully one great thing that will come out of this DOJ investigation is that Americans will punish crony capitalists in the future.

    That and all internet control needs to be brought back to the USA, so the internet will remain free with speech and press.

    1. all internet control needs to be brought back to the USA

      How do you imagine that’s going to work?

        1. OK, I see what you mean. Sounds like ICANN is becoming a mess. Maybe it would be better to have it still under US government oversight. But I’m not wild about that idea either. Some kind of distributed system that doesn’t require a central administrator would be better, but I have no idea how that would work.

        2. didn’t know that. I was unaware we handed over admin oversite.

          1. Yeah, I suspected it would go to shit since most of the World are Socialist and corrupt pieces of shit. I was optimistic in spite of that.

    2. We’ll never punish Crony capitalism. Too many people in power want that. And as to bring internet control back to the US, pretty sure we still have it. If, by control, you mean the organizational infrastructure behind it.

      If you mean just “the internet”, that just aint possible. Servers all over the world aren’t going to relocate to colorado cause we want um too.

      1. “Too many people in power want that”

        Spot on. Many don’t understand, it is an inherent part of any government. The best we can do is make a constitutional amendment restricting cronyism but it’ll always squirm its way back in.

  10. ” Merely being “big” is not enough to justify government action.”

    Maybe not, but the size of the company is what makes them successful. The more users, the more advertisers will take notice, and the more user surveillance and behaviour modification the platform can carry out. Here’s a list of the top 5 social media platform, their owners and number of users: Facebook has about 2.4 billion users, YouTube (Google) has 2 billion, Whatsapp (Facebook) has 1.6 billion, Messenger (Facebook) has 1.3 billion. WeChat (China) has 1.1 users.

    At this point the number of users starts to dip below one billion. The next top biggest social media platforms are not much different. There are a number of Chinese companies, and the rest are Facebook properties. Looks like Facebook has a lock on the American market, at least. Competition is if anything healthier in China where there are more than one company competing for users.

    1. And none are anywhere close to a monopoly.

  11. Big Tech has a right to censor speech on their sites.
    These sites are theirs and have a right to do as they please with speech they deem inappropriate.
    Just like I have a right to call these Big Tech assholes a bunch of fascist pigs.

    1. No, actually they do not. They were given Section 230 and an exception from responsibility for the content on the basis that they were only going to host, not screen, edit, or otherwise manipulate content.

      If they are going to exercise their right to censor speech, they should, as editors of content, lose Section 230.

  12. Per Cato Institute Milton Mueller:

    “This hypertransparency is fostering a moral panic around social media. Internet platforms, like earlier new media technologies such as TV and radio, now stand accused of a stunning array of evils: addiction, fostering terrorism and extremism, facilitating ethnic cleansing, and even the destruction of democracy. The social-psychological dynamics of hypertransparency lend themselves to the conclusion that social media cause the problems they reveal and that society would be improved by regulating the intermediaries that facilitate unwanted activities.“

    He brings up a good point on the comparisons to earlier disruptive media technologies such as radio and television.

  13. But does Big Tech have “monopolistic power”? Not at all. Those big firms are in constant competition with one another and with smaller competitors.

    Those big tech firms have engaged in years of lobbying and regulatory capture, and they are not engaged in free and fair competition. On top of that, they are the recipients of massive amounts of government support.

    So, you are correct: they are not monopolies and they shouldn’t be regulated as such. But the government can do what it does to everybody else, which is to withhold government funding, government contracts, and cut special regulations like Section 230 until those companies comply.

    1. “Those big tech firms have engaged in years of lobbying and regulatory capture, and they are not engaged in free and fair competition”

      Not firms like Google, Amazon, Facebook, who were run by young nerds essentially. They all believe in the power of code. Lobbying was very much a reluctant after thought.

      “and cut special regulations like Section 230 until those companies comply.”

      Great, just what we need. More lawsuits.

      1. Not firms like Google, Amazon, Facebook, who were run by young nerds essentially. They all believe in the power of code.

        You mean young nerds who spent their entire lives being shaped and molded by anti-capitalist, government financed indoctrination camps before coming into wealth? Young nerds whose corporations were quickly blown up to multi-billion dollar valuations by behind-the-scenes machinations of highly connected VCs, lawyers, and MBAs, usually with their academic advisors acting as intermediaries?

        Not exactly free market enterprises. And why they didn’t have to engage in much lobbying to start with, now they lobby with the best of them.

        1. “You mean young nerds who spent their entire lives being shaped and molded by anti-capitalist, government financed indoctrination camps before coming into wealth? ”

          No, I mean the young nerds who created Facebook, Amazon and Google. The very companies I mentioned in the first sentence. If you want to believe they gained their position by sitting in front of bureaucrats begging for favours, you are wrong. Reflect a moment on who put this idea into your head and act accordingly.

          1. “No, I mean the young nerds who created Facebook, Amazon and Google. The very companies I mentioned in the first sentence. If you want to believe they gained their position by sitting in front of bureaucrats begging for favours, you are wrong. Reflect a moment on who put this idea into your head and act accordingly.”

            Well, I mean you’re a bullshitter par excellence.
            YOU reflect on your bullshit and tell us what you mean other than nothing.

          2. No, I mean the young nerds who created Facebook, Amazon and Google.

            Yes, same nerds: as I was saying, they went to places like Stanford and Harvard.

            If you want to believe they gained their position by sitting in front of bureaucrats begging for favours, you are wrong

            Not at all. They certainly were skilled, but they only were able to gain their position because they also had a social network consisting of academics, investors, and managers, all of which are deeply intertwined with government. That’s perfectly fine, but don’t try to pretend that these companies are pure free market creations that came into existence separate from Washington.

            Reflect a moment on who put this idea into your head and act accordingly.

            A few decades in Silicon Valley and first hand experience with said academics, investors, and managers.

            And I am acting accordingly: I’m pointing out what nonsense you are spouting.

            1. “They certainly were skilled, but they only were able to gain their position because they also had a social network consisting of academics, investors, and managers, all of which are deeply intertwined with government.”

              This is nonsense. Facebook got its start in a Harvard dormitory by Zuckerberg stealing university property. He was almost expelled. Your story about Facebook being intertwined with academics and other unsavory characters didn’t come into being until the Obama administration, years after the establishment of the company. I’ll repeat, these executive believe in code. Lobbying is very much a reluctant after thought..

  14. Funny; I don’t use Google, Facebook and seldomly use Amazon as eBay is usually cheaper. Not seeing any Antitrust violations here – but there is a problem with the “socialist” USPS giving kick backs to Amazon and China specifically especially when taxpayers have to keep bailing them out of their yearly bankruptcy.

    1. Is there evidence that USPS loses money on Amazon deliveries? It is not clear why they would do that, since nothing compels them to deliver at rates less than those posted publicly on their web site.

      It seems President Trump and some others believe it, but have numbers been produced that actually establish it as a fact?

      1. Pretty sure USPS loses money on *every* delivery, so it’s probably not hard to show they lose money on Amazon’s work.
        But who cares? Shutter the USPS, fire everyone who works there and let UPS, FedEx and others make money delivering the goods.

  15. Tulsi Gabbard sues Google for $50 Million, after they froze her ad account after the first debate, because of “unusual activity” (she was the most searched)

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