Antitrust

Anti-Tech Wave Grows with New Justice Department Antitrust Efforts

Apple, Google, Amazon, and Facebook are all in the federal government’s crosshairs.

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The U.S. is moving against big tech in a big way. Last week, the Department of Justice (DOJ) announced a broad antitrust investigation into whether unnamed technology companies have engaged in anti-competitive activities. This is in addition to DOJ's joint antitrust efforts with the Federal Trade Commission (FTC); DOJ is tackling Apple and Google, while the FTC has Amazon and Facebook. The FTC formed a separate task force to monitor competition in the technology industry earlier this year. Oh yeah, and the House Judiciary Committee is sniffing around for Silicon Valley shenanigans, too.

So far, the DOJ has not named names. Since "search, social media, and some retail services online" were specifically mentioned, it's a good bet that Google, Facebook, and Amazon are among the targets. We can probably throw in the Apple App Store, as well.

We also don't know whether the investigations will be voluntary, or if DOJ will exert authority to compel discovery on heretofore unknown dirty deeds. So it's hard to say exactly what DOJ has up its sleeves.

But if the Trump administration's posture towards big tech is any indication, we should expect a fairly aggressive examination of possible anti-competitive actions.

During his nomination hearing, Attorney General Robert Barr stated that he wondered "how such huge behemoths that now exist in Silicon Valley have taken shape under the nose of the antitrust enforcers" and advocated for "vigorous enforcement of the antitrust laws to preserve competition." In particular, Barr worries that large platforms enjoy network effects so substantial that "particular sectors could essentially be subsumed into these networks."

The writing was always on the Facebook Wall. It's true that until fairly recently, most technology companies had something of a neon halo about them. We used and enjoyed social media platforms every day, those harmless and amusing outlets for comradery and cat-posting. Amazon gave us great cheap junk, Apple had the coolest products. Google gave us, well, everything else.

But how the mighty fall. After a few bonkers elections and a mass awakening to just how all those "free" services make money, America now calls for tech companies' heads.

It's an illustration of general U.S. attitudes to antitrust. On paper, enforcers like the DOJ and FTC are only supposed to intervene when a firm restricts output and raises prices, or when it possesses an "essential facility" available nowhere else. In other words, officials should get involved where consumers are demonstrably harmed, as gauged by measurable economic outcomes like price increases or output restriction.

In practice, however, many call for firms to be broken up anytime we feel they are getting too big. We forget today, but at one point, the hot talk in tech was that MySpace and AOL were due for the antitrust treatment. Today, these names do not conjure images of anti-competitive activity because they were successfully competed against—by Facebook and Google. Yet their actions remain the same.

Under the "market structure" conception of antitrust, it's not so much about protecting consumers as it is about protecting competition—that is to say, protecting current and future competitors.

It's hard to argue, for instance, that Windows users were harmed by the free Internet Explorer browser that came preinstalled on their computers. Microsoft's aggressive behind-the-scenes campaign to convince vendors to snub alternative browsers didn't really affect user experience. If you wanted a different browser, you could just use IE to download another browser. But competitors like Netscape clearly were harmed by such structural defaults, which is why DOJ eventually intervened.

Microsoft was big and seemed unassailable. Of course, it wasn't, but not along the dimensions over which '90s antitrust regulators so agonized. The fall came, to regulators at least, out of nowhere: Apple's streamlined strategy and the open source operating system Linux dealt major blows to Microsoft's seemingly untouchable positions in the personal computing (hello, iPhone) and server markets. Browsers were the wrong battle—dirty as the fight may have been for poor Netscape—and today Microsoft browsers are considered a bit of a joke.

In a similar way, successes spelled trouble for tech titans. It was only a matter of time until they got big enough and unpopular enough to draw antitrust scrutiny. It's almost tautological: The most competitive companies in hindsight become the most "anti-competitive." (Is there a major company who got there by playing nice?) You can always find something to point to as an unfair and unbreakable barrier to competition.

It doesn't sound great to say you are breaking up firms to benefit other companies. Today, aggressive antitrust enforcement is couched in terms of "innovation." It's not that we are shoring up businesses that couldn't keep up. We are taking down today's titans so that they little guys can get a crack at them. With more breathing room, tomorrow's paradigm shifts can sooner take flight today. Some go so far as to claim that without the DOJ's antitrust case tying up Microsoft, Google would have never taken off.

The Justice Department's statements on their investigations hew to this new conception of antitrust as a harbinger of tomorrow's innovation. Its press release singles out practices that have "reduced competition" and "stifled innovation" for scrutiny. Last on that list, by the way, are activities that "otherwise harmed consumers."

We'll have to wait and see what the DOJ will dig up as evidence of anti-competitive behaviors. Perhaps they will discover some truly heinous deeds. Or maybe something fairly benign will be touted as proof that online platforms' gains were ill-gotten, or that their very size is on its face is bad for competition. After all, antitrust regulators will want to come up with something.

They walk a fine line. It's not hard to imagine scenarios where actions that are bad for competitors are also bad for consumers. Let's say Microsoft's browsers blocked users from downloading alternative options. That would clearly limit choice and competition, and would probably stall browser innovation as well. But it's not always the case that what makes competitors' jobs harder makes consumers' lives worse.  Regulators should keep the distinctions clear.

The big guys are ready for a fight, and their lawyers are surely fashioning preemptive rebuttals to defend their most notorious business practices from antitrust affronts. It's how the game is played.

Should we expect these antitrust efforts to do much for innovation? If the past is any guide, the Davids that will take down our Goliaths are probably putting together their slingshots as we speak, far from the eyes of antitrust regulators. And then the next decade's Justice Department will puzzle over just how those new giants got where they are in the first place. After all, if they had actionable information on what the next major markets will be, they might be in a different line of work.

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  1. Microsoft invested 150 million into Apple to get the regulators off their back.

  2. Apple, Google, Amazon, and Facebook are all in the federal government’s crosshairs.

    Live by the sword, die by the sword.

    These 4 companies all participate in helping the US government end run around the US Constitution. In particular, tracking, spying, and storing of that data on Americans.

    As with AT&T being the BFF of the Deep State, these companies will be fine after some political wrangling. Google is needed to provide the Commies of China with spy software that has a backdoor for US Intel. Apple to sell iPhones to Chinese that have back doors for US Intel. Amazon to store Chinese data that has back doors for US Intel. FB to spy on what Chinese are up to, with back doors into accounts.

    1. “Apple, Google, Amazon, and Facebook are all in the federal government’s crosshairs.” (Subtitle to article).

      Some hefty campaign contributions in just the right places, will make this all go away! Just another shakedown by Government Almighty in progress!

      Nothing to see here, folks! Move right along, now!

    2. “Google is needed to provide the Commies of China with spy software that has a backdoor for US Intel. Apple to sell iPhones to Chinese that have back doors for US Intel. Amazon to store Chinese data that has back doors for US Intel.”

      These are all American companies which China views with suspicion. It’s not all that different from the way European governments view them, only moreso. The Chinese seem way ahead of Americans when it comes to implementing their high-tech agenda. The Chinese don’t have to turn to Google to surveil their public.

  3. Good to see the anti-tech sentiment finally getting some legs.

    1. I hope that the legs of the anti-tech sentiments do NOT propel said sentiments out of the swamp sediments of D.C., but rather, walk these sentiments out of the sediments, straight into the abyss, never to be seen again!

      (I am not just trying to be sedimental… More so, seditious!).

    2. So, back to the manual typewriter or all the way to clay tablets?

      1. That would be silly.

      2. Parchment and quill pens should suffice.

  4. It’s hard for me to drum up much sympathy for any tech giant, since they practically beg for government oversight every chance they get. “Please, Mr Regulator, please regulate me!” Are they trying to get the government to whitewash their bigoted partisan social justice agenda? Don’t know, don’t care much; all will be out-competed and fossilized within 10-20 years anyway.

    I do object to the government stepping in where they aren’t needed. A wasted effort which will just make it that much harder for competition to do them in, just as enshrining AT&T made life harder for competitors.

    The anti-trust remedy is a puzzle. Aside from telling Amazon not to sell their own house brand (Amazon Basics), how can you split these companies up? Does one half get the customers (or sellers) whose names start with A-M, the other gets N-Z? Does Google-A only index sites A-M? A funny outcome for a company called Alphabet.

    The only “remedy” which seems possible for the social media companies is turning them into regulated utilities, which would basically freeze them in place and hasten their tumble from the top. Last thing teenagers want to use is the government-regulated old fogies’ utility!

    What a colossal waste!

    1. I had a debate with a sheeple who wants to “break up Facebook”, even though he uses it. I asked him how he would use the dozen baby FBs: give up on connecting with people who choose (or are “assigned”) to other networks; post and read across his own dozen accounts; ???.

      No coherent answer, but he knows FB is too big.

    2. Why people want to turn Facebook into the AT&T of the 60s, I have no idea.

      1. I don’t get the recent libertarian erection for monopolies.

        Want to really limit government power? Make the government try and dominate a few dozen smaller companies instead of 3 or 4 big ones.

      2. They only want to kill the anti competitive actions of these companies is such ad buy and kill. But that would take you actually understanding the issues and not being emotive.

        Another issue that I found interesting from yesterday is also forcing a company to delete any aggregate data they have on a user if the user is banned. I think that is ultimately fair to the user.

        1. But that would take you actually understanding the issues and not being emotive.

          Huh? Welcome to Hit & Run new guy.

          1. New? Sorry you dont understand what anti trust is meant to cover. When you learn what the purpose of anti trust legislation or investigations are for, please come back and have an adult conversation. The issue is with their actual actions. Apparently you could read even the first sentence where I stated the actions under investigation. Actions such as buy and kill for competitors.

      3. To be fair, AT&T of the 2010s is like Time Warner of the 1990s.

    3. The anti-trust remedy is a puzzle.

      This has always felt like a top-down remedy to a bottom up problem to me. Never an anti-trust case when the TOS are so absolute shit that there’s no way a large corporation and a lowly user could possibly agree on anything approaching equal footing. Gotta wait for that fruit to ripen into millions upon millions of users before you harvest it.

    4. Are they trying to get the government to whitewash their bigoted partisan social justice agenda?

      They are trying to create barriers to entry. Anything that requires a legal department or other kinds of staff to deal with creates a barrier to entry to competitors.

  5. “Anti-tech wave”

    Not sure my eyes can roll any more.

  6. Wouldn’t it be simpler for the feds to just go after them all for false advertising based on banning accounts in violation of the published terms of service?
    Or pass a law requiring a specific reason for all account bans? That would help the banned find a good lawyer. It could be covered as a civil rights thing to assure all protected classes are accorded equal treatment.
    Or a law requiring specific disclosure of each instance when personal data is sucked into the dark regions? Maybe even a positive acceptance for each instance?

    1. Wouldn’t it be simpler for the feds to just go after them all for false advertising based on banning accounts in violation of the published terms of service?

      Through civil suits, yes. I think there’s an argument for an FTC complaint in the area of collusion, but I don’t know what the specific remedy would be beyond fines. I’m categorically against “breaking up” big tech firms.

        1. Hes pro corporation and anti market behaviors based on his comments in this thread.

  7. If only Daddy Trump knew what the DOJ was doing…

  8. The fall came, to regulators at least, out of nowhere: Apple’s streamlined strategy and the open source operating system Linux dealt major blows to Microsoft’s seemingly untouchable positions in the personal computing (hello, iPhone) and server markets. Browsers were the wrong battle—dirty as the fight may have been for poor Netscape—and today Microsoft browsers are considered a bit of a joke.

    This is partially right. The part that’s spot on is that Browsers were the wrong battle. Everyone finally realized that the brand of TV you… watch TV on didn’t control what was on TV. How people didn’t see this in the 90s still escapes me.

    Where the above statement is wrong– or misguided is a combination of factors– I would say the advent of the smart phone as we see it today (Apple) and Linux, NOT in the server market (I’ve been in IT for 30 years and pretty much 97% of all servers are still Microsoft– however this might be finally changing with cloud services like AWS and the like. However, even if those cloud computing services are running Unix or a brand of Linux, they’re still spinning up Windows virtuals for their customers.

    No, the end run around Microsoft was the internet combined with mobile computing. Microsoft got caught flat-footed by the internet revolution, and stubbornly believed that people wanted “Windows Version xxx” on their mobile device (WinCE anyone?). It’s turned out that consumers don’t care what OS they’re running on their mobile device, as long as it’s intuitive and stays out of the way.

    Add into the fact that our perception of a ‘computing device’ has changed dramatically, causing Microsoft to lose market share and the home PC to become mostly irrelevant to most average users.

    1. ” It’s turned out that consumers don’t care what OS they’re running on their mobile device, as long as it’s intuitive and stays out of the way.”

      I’m not much of a consumer but I do have an interest in the OS of my smartphone. Android seems to have strayed far from its unix ideals, and while I’ve heard good things about Apple’s stability and security, I am wondering what, if anything, available is superior.

  9. If they don’t do something Texas Instruments and IBM will dominate tech.. Then there’s the Sears and Penny’s to worry about.

  10. Reasom once again focuses on everything but the anti market actions of these companies. the companies mentioned have all done buy and kills. They have all been accused of stealing ideas post pitch meetings. These are literal trust issues. And reason ignores all this. This is before the abusive actions of retroactive contract changes towards users.

  11. I worry every day about a huge, bad-acting, U.S.-based monopoly.

    But it’s not a tech company.

    1. I’m guessing it’s not even a company.

      1. Could it perhaps be Government Almighty?

        If so… Time to roll over dead! You can’t fight City Hall! The hangman has ALL of the nooses, and we’re just the cabooses! “Government Almighty, giveth, and Government Almighty taketh away; blessed be the name of Government Almighty.”

        Let’s give it up for Government Almighty!!!

        Dearest Government Almighty:
        Our Nannies, who art in D.C.,
        Hallowed by Thy Names!
        Thy Wokeness come,
        Thy Will be done,
        Everywhere, as it is in D.C.
        Give us permission to be,
        And forgive us our 3 felonies per day,
        As we bake cakes for those who are gay.
        Lead us not into incorrectness,
        But deliver us from un-wokeness.
        For Thine is the Empire and the power and the glory,
        Forever and ever and ever! Amen!

  12. If these companies didn’t violate their users’ privacy and demonetize / ban users who commit resources to create content on their platform, the anti trust would eventually lose steam. Net neutrality didn’t really resonate with the public since ISPs have virtually no record of widespread blocking or impeding access to sites based on politics.

    It speaks to the tone deafness of these tech companies that the government’s anti tech efforts grew this big. People frown on Apple and FB collaborating with various governments to mine data, but they eventually ignore it. When YT takes down entire channels due to some minor copyright infringement, the content creator loses his income. When Twitter allows antifa accounts to remain up but hunts down users for “learn to code”, indignation will amount.

    Would Mcdonalds ban people from entering their premise for twitter joke? 99% of the market doesn’t operate like tech. Retail will often defer to the customer in disputes even when they’re in the wrong. Companies have a right to jerk people around, but they’ll face backlash when they do.

  13. Amazon has always been a hot topic for all media to talk about.

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