Antitrust

Democrats Sharpen Tech Antitrust Messaging at Historic House Hearing

This isn't a debate about consumer needs. It's all about political control.

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Tech commentators often note that political antipathy to Silicon Valley is a bipartisan affair. When it comes to antitrust, that's not exactly true. This was especially apparent at last week's blockbuster House Judiciary Committee hearing that featured the digital visages of the CEOs of Facebook, Google, Apple, and Amazon.

It's not that the Republicans have any professed love for these companies. Beyond a few paeans to American capitalism and entrepreneurship, the elephants trumpeted against platform censorship and the left-learning companies' potential to tilt elections. But they didn't really talk about antitrust per se, much to conservative populists' outrage. To the extent that Republicans mentioned market power, it was mostly a tactic to pivot to their non-antitrust (although not necessarily unfounded) concerns.

Contrast this to the Democrats, who came both prepared and with receipts. One after another, they grilled the executives on specific allegations of competitive wrongs. Mark Zuckerberg had to account for his Instagram acquisition, Jeff Bezos for absorbing Diapers.com. Tim Cook got the least guff, but he still had some 'splaining to do on App Store fees. And Alphabet/Google CEO Sundar Pichai, whose company is perhaps more vulnerable to antitrust enforcement, had to defend basically everything Google does.

There was a decent amount of non-antitrust griping from the Democrats, too. And no real bombshells were dropped. But the sharpened antitrust focus of the Democrat representatives is undeniable.

Eagle-eyed observers noticed a woman seated behind House Antitrust Subcommittee Chairman David Cicilline (D-RI). This was Lina Khan, antitrust hipster extraordinaire. The paper she wrote as a Yale law student is credited with energizing the neo-Brandeisian movement to reform antitrust law. She now serves as counsel to Rep. Cicilline; no wonder he concluded the festivities with a quote from the ur-antitrust hawk himself, Supreme Court Justice Louis Brandeis.

It's a salient one: "We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both." In other words, the purpose of antitrust law should not intrinsically be economic, but rather political.

This is evident when you compare current antitrust doctrine with the neo-Brandeisian approach that seeks to dethrone it. Under the consumer welfare standard, the focus is on the final economic effects on, well, consumers. The goal is not to maintain a particular market structure or protect certain competitors. Rather, companies are punished when they abuse their market positions to raise prices or restrict output or lower quality.

The neo-Brandeisian approach would do away with the consumer welfare standard. In its place would be a market structure approach that would empower enforcers to intervene whenever a firm gets a little too big, regardless of whether or not that firm is anti-competitive or monopolistic.

As such, the Democrat line of questioning focused a lot on the tech companies' effects on competitors moreso than consumers. It is not hard to sympathize with the stories they presented. For instance, one rep played a soundbite from an Amazon seller whose large-immigrant-family-supporting business was apparently inexplicably delisted by the platform. You can promise to look into it, as Bezos did, but how can you argue against that?

The challenge now, as it was in Brandeis' time, is that it's hard to craft an objective antitrust approach not guided by consumer and price effects. So "bigness" is the problem. What is the solution? Neo-Brandeisians rarely draw a clear lines. They instead call for a broader range of social factors (which often just happen to align with the progressive agenda) to be considered in antitrust proceedings.

This is why adherents to the consumer welfare standard warn that a departure from this approach heralds another era of politicization in market oversight. Some neo-Brandeisians proudly admit this, touting intentions to wield antitrust enforcement to "create a more equitable society"—or at least what they consider to be a more equitable society. Markets, like everything else in life these days, are "inherently political" to these antitrust activists. And they wish to be empowered to decide which "different sets of beneficiaries" will prosper.

Say what you will about aggressive competition in the tech sector, it has yielded a lot of free or cheap stuff for users. (Indeed, according to some critics, this is precisely the problem.) With a more socialized antitrust regime, targeted benefits would be channeled to government-determined groups. And a lot of development—including on things that help or launch small businesses—would be stymied along the way. That's politics.

It's also "politics" to appeal to small businesses when advancing a new antitrust paradigm but forget them when it comes to things like lockdown policy and civil unrest. It's "politics" to accept campaign contributions from the same companies that you castigate (on this issue, at least). And it's "politics" to pretend that you're not being political about it at all.

Some observers came away from the hearing thinking the consumer welfare standard escaped unscathed. I must have watched a different event. The Democrats have honed their rhetoric on exactly this target. They may not have attacked it by name. But if they are successful, the welfare of favored political constituencies will triumph over that one identity that is at least common to all Americans: the consumer.

No wonder it is hard to mount an effective rebuttal. "We all pay the same low price!" is hardly a rousing battle cry, especially in this tense climate. Add in the many grievances the outer party's constituents harbor against Silicon Valley and you've got a recipe for a weird, unfocused, and largely ineffectual spectacle. Republicans can't bring themselves to clearly commit to defend what is arguably the biggest policy victory of movement conservativism: the adoption of economic analysis by the court system.

Earnest watchers who hope that this rediscovered wellspring of antitrust reform can spark a return to a more localist Americana they may have only glimpsed secondhand will probably be disappointed. After all, "class reductionist" is now a slur on the left. If relief for this cohort should come, I wouldn't expect it from neo-Brandeisian quarters.

The battle over the consumer welfare standard isn't about the poor little billionaires at the end of the day, although our legal environment is one where they could become fabulously wealthy. Elite businessmen can and do spend a lot of money on lobbyists and lawyers to protect their interests.  They will almost certainly die fabulously wealthy either way.

It's not even really about whether any particular big tech company is broken up, although that would bring many downsides for a lot more people than just the Bezoses and Zuckerbergs out there. The quality and price of living standards to which Americans are accustomed would slowly suffer—China is already ascendant. But this decline, too, would be managed.

What's at stake is the dynamism of the U.S. economy. It's something that is very difficult to build, but trivially easy to take for granted and destroy. And it looks increasingly likely to be something that the right is willing to sacrifice in a confused crusade that is simultaneously both for and against specific big businesses rather than for economic vitality per se.

The optimists in America think we can turn things around if we are allowed to build. With such radical proposed changes to antitrust laws, this call to build may become all the fainter.

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  3. a quote from the ur-antitrust hawk himself, Supreme Court Justice Louis Brandeis…: “We may have democracy, or we may have wealth concentrated in the hands of a few, but we can’t have both.”

    Uh, huh. A quote from Justice William O. Douglas: “Brandeis was a militant crusader for social justice whoever his opponent might be.”

  4. “it was mostly a tactic to pivot to their non-antitrust (although not necessarily unfounded) concerns.”

    Clearly Andrea has not gotten the memo re: this issue’s narrative.

  5. And the Tech companies have no one to blame but themselves. When the Tech companies really were apolitical, no one was interested in breaking up their monopolies after Bill Clinton’s disastrous attack on Microsoft. This peace lasted until 2008. Then the Tech companies decided they would become an arm of the Democratic Party. When you take sides in politics two things happen; the other side hates your guts and the side you take eventually does as well because you can never do enough for them. So now both sides hate the Tech companies and the very people who defended them back in the 90s, the Republicans, hate them most of all.

    Sometimes justice is served. They can pay reason to shill for them all they like but nothing is going to save them from getting the sort of big government they wish to inflict on everyone else good and hard.

    1. It could be the other way around. As tech companies got bigger and became bigger targets, they sought political patronage to shield themselves from these kinds of attacks.

      But yes, fuck the tech companies. We just need to be careful that our solution to screw them over doesn’t then also screw over any budding competitors that will come up to challenge them because monopolies come and go but legislation is forever.

      1. So what you are saying is that free speech and property rights should only be recognized for people whom you personally approve? I hope you aren’t American because we fought a revolution against that idea.

      2. We just need to be careful that our solution to screw them over doesn’t then also screw over any budding competitors that will come up to challenge them because monopolies come and go but legislation is forever.

        1. Legislation is not forever. CDA ’97 is almost entirely repealed, we just need to finish the job.

        2. Legislation isn’t the only way ours or any other government governs. There’s an entire branch of our government where the citizens arguably represent themselves fairly directly and in person.

        3. Legislative solutions are practically guaranteed to breed solutions that broadly screw over competitors while favoring established tech. Other branches, OTOH, are quite capable of making specific rulings on a case-by-case and business-by-business basis. Decisions that a scant few years later, they can find to be no longer relevant and overturn if need be.

        1. While you are technically not incorrect, laws rarely disappear unless it is in the process of and for the purpose of replacing it with legislation that is more egregious, or at least to the political benefit of a given group of legislators. There’s still a law in St Louis that one cannot sit on a corner and drink beer from a bucket, and likely because one alderman had an individual problem with it outside his business and sponsored it.

          Then of course there is the activist court issue. Unconstitutionally, they have been afforded incontestable veto power over both branches, state supreme courts, and even the will of the people in the rare remaining instances in which the people vote directly on a law. Activism takes several paths to create whatever it wants, rarely justifying it but occasionally over-interpreting the commerce or general welfare clause to cover its personal preferences, and/or periodically inventing “rights” out of thin air.

    2. I wonder how many techies really aspire to a post-modern utopia, based on a fusion of big government, big data, and big connectivity. And of course, they truly believe themselves to be the elite in such a world, with a mandate to impart their superior knowledge and values on the rest of us.

      1. They really believe that. The government breaking them up would actually being doing them a favor by saving them from themselves. If left alone, they are exactly the type of moron who ends up with their heads on the end of a spike at the hands of an angry mob.

        1. >>”If left alone, they are exactly the type of moron who ends up with their heads on the end of a spike at the hands of an angry mob.”

          While I don’t disagree with the historicity of your statement, this is one of several caveats that has really passed it’s time and no longer relevant [except for the purpose of chest-thumping], at least in anything resembling the culture in which we live.

          Neither are patriots going to take up arms and fight the government oppressors to reestablish liberty. Sad but true, and it barely worked in times of US Revolution against Britain, and that’s been 250 years. Had the Brits not burned as many farms or stolen the family’s last cow, there would have been fewer patriots who had nothing left to lose or been pissed off enough to take the risk, and they likely would have won.

          The more coddled a culture, the less likely they are to strike back against their oppressors because they stand to lose whatever they have left, even if it is little. Politicians and corporate egoists are the parasites that have learned what is the minimal life to leave in a culture to ensure that they are not unseated from their power base. Seriously, if 1.4B people in China have not revolted and put heads on pikes, we coddled Americans aren’t either, either physically or symbolically. Seriously, so long as Amazon gets the shipment of shoestrings to someone’s door in two days and so long as Google doesn’t start getting people lost, there will be no serious populist movement by which the powerful will be dethroned. The only danger to these powerful elite is if they start royally screwing up their products or stop donating to the Democratic Party.

          1. I agree to an extent, and 4 months ago I would have thought the chances of the boogaloo were basically nil. But the progressive elites in this country have not only stopped pretending that there aren’t different rules for them, they are now flaunting it in our faces, and this is pissing of more and more people.

            Hopefully another beating in the next election will get them to step back, but it appears they intend to do whatever it takes to win the next election.

  6. “Rather, companies are punished when they abuse their market positions to raise prices or restrict output or lower quality.”

    You left out the part about drumming the socialist message incessantly.

  7. “Rather, companies are punished when they abuse their market positions to raise prices or restrict output or lower quality.”

    Hmmm, so how does coordinated banning of specific individuals not count as restricting output or lowering quality? When you ban anyone with X belief or who says X, you are restricting output and lowering the quality of the service for anyone who wants to hear from that person. It seems the republicans are right.

  8. When I first read the headline, I misread it at “Histrionic House Hearing”.
    After reading the article, I think my mis-read was better.

  9. Stupid fucktards. So Facebook (may it burn in hell–wait a minute, hell might be just the place for Facebook) is “too big”? What’s their preferred solution? Lots of little Facebooks? Why would an average user, enjoying the simple(minded) connectivity with people around the planet, want to either restrict their contacts to a subset (local state or county? age group? like-minded political comrades?) or have to share the same cat video on dozens of different networks every day?

  10. The Republicans played it smart, let the Dems come up with the law that breaks them up and they can just sit back and let them get the blame whether it passes or not.

    1. Dems aren’t going to do anything either. This is pure pre-election puffery. They get to sit back in their protected positions [can’t sue a lawmaker for anything including extortion or character assassination], and sound tough for taking on the billionaires. Everyone understands that this is photo op time and nothing more. The only potential for moving forward with anything that truly attacks any of these companies is if they were to start supporting conservatives.

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  12. Political Control? Well, that is the golden question isn’t it? A demanded break/sell/part of a company running a 90% monopoly on worldwide data search isn’t much “political control” but one has to wonder, “Is that all they will legislate?”. A break-up would be good anything else I see as bad and the level of anything-else being equal to the level of terrible.

    1. A break-up would be good anything else I see as bad and the level of anything-else being equal to the level of terrible.

      A court could rule that (e.g.) Google acted in bad faith wrt (e.g.) James Damore by soliciting his opinion in confidence and then publicly shaming and firing him for it. They could issue a restraining order preventing Google from unduly influencing his future hiring decisions. It would prevent Google from further fucking over James Damore, carry implications but not be binding in their treatment of future James Damores, and carry little-to-no implications in their treatment of Alex Jones.

      As opposed to trying to roll all of James Damore, Alex Jones, banning gun channels, conveniently dropping Tulsi Gabbard’s campaign ads, etc., etc., etc. into one anti-trust hearing.

  13. The neo-Brandeisian approach would do away with the consumer welfare standard. In its place would be a market structure approach that would empower enforcers to intervene whenever a firm gets a little too big, regardless of whether or not that firm is anti-competitive or monopolistic.

    Companies like Facebook and Google achieve the market power they have only through regulatory capture in the first place. So, it’s not like regulators are intervening in a free market. Rather, they are trying to contain the mess that bad public policy created in the first place.

    1. I’m interested in a deeper explanation on that. In the 2000s various social media platforms and search engines were competing for a user base. Facebook and Google were the ones that came out on top. Where did the regulatory capture come in?

      1. Facebook and Google were the ones that came out on top. Where did the regulatory capture come in?

        If I plant a crop on a field I control and harvest only the most productive and best-growing plants, were the plants ever really anything other than captured? Sure, the sun and rain favored some plants over others but, ultimately, the fruits were mine.

      2. Where did the regulatory capture come in?

        The design of the Internet as a single, interoperable, open, neutral platform is largely the result of government regulation, policy, and subsidies; the free market wouldn’t have produced the Internet that we have. Without that kind of Internet, Google and Facebook would simply not be possible. On top of that, these companies are massively subsidized through the education system, research grants, government contracts, and the fed.

        We can’t undo all this; it’s part of how the country operates and has operated for a long time. But for libertarians to talk about Google and Facebook as if they were private companies operating in a free market, and hence should be free from government interference, is divorced from reality.

        1. That’s not what “regulatory capture” means at all.

          1. For clarification, regulatory capture is when the industry captures the regulator, not the other way around. For example, it’s regulatory capture when dentists are regulated by licensure boards composed of other dentists who write and enforce regulations that are exploited to exclude competition.

            Nothing in your explanation of Google or Facebook has anything to do with regulatory capture.

            1. For clarification, regulatory capture is when the industry captures the regulator, not the other way around.

              “For clarification, it’s only cronyism when industry jumps into bed with the government, not when government jumps into bed with industry!”

              It’s pretty clear why you personally need Google to be more successful.

              1. While you follow in the footsteps of Barack “you didn’t build that” Obama, libertarians will continue to defend unconditional property rights.

        2. Also, your assertion that the free market wouldn’t have produced a single, interoperable, open, neutral platform is contradicted by the many such platforms that have been produced over time. The network effect can be just as effective and driving near-uniform environments as regulation.

        3. Following along with your first point, Google and Facebook are not the Internet. They did not specifically benefit from any government regulation, policy, or subsidies. Anything they received from government support of the Internet was a general benefit, no more or less than their competitors that failed to stand out. This is not regulatory capture.

    2. Rather, they are trying to contain the mess that bad public policy created in the first place.

      Or at least appear to be cleaning up the mess. If there were never any spills or broke vases, or if you were completely capable of cleaning up any and all messes yourself, you might get the inclination that you didn’t need so many janitors standing around.

  14. Democrats Sharpen Tech Antitrust Messaging at Historic House Hearing

    Is this a joke, or was there some other hearing I don’t know about?

  15. Zuckerberg’s shiny mug on a 65″ television is just frightening.

    1. This. And for some reason they always capture him with his mouth as wide open as possible. Glad I don’t have to look at that in the mirror every day.

      1. Zuck the Cyborg from the Remy video yesterday was perfect

  16. I don’t think it was regulatory capture so much as good products combined with predatory activities. This would apply to Google and Facebook, not so much Amazon and Apple that are in a different category I will get into later.
    These two companies put out a good product and made a large profit to cost ratio. In many ways they used their money to improve the product but they also used the power it gave them to muscle out competitors. Where they could not outright buy the competitive products they would either use legal pressure (IE lawfare) or create similar products to run the competition out of business. They have now become so large that any competition is dwarfed and becomes a niche product, like the NFL vs. arena ball, it’s out there but who really watches these games unless there is nothing else to watch. What would really make an impression on them is not to force them to split up but to use the congressional power that Justice Roberts has confirmed they have and tax the heck out of them. A progressive tax on advertising revenue, one that does not start until you have a billion in gross revenue and the percentage goes up as the amount increases. These are both publicly traded corporations, the boards have let them get away with a lot because the profit ratio is so high but once the numbers start getting tighter they will clamp down on a lot of this SJW crap.

    Amazon should not even be on this list, just as the devil’s greatest trick was convincing us he does not exist for Bezos it is that he runs a Social Media company. It is not, it is just a better run Sears and Roebuck, just like WalMart etc. His big money maker now is cloud services but he has big competition coming from Microsoft. Amazon is more in line with a GE or RCA in it’s heyday.

    Same with Apple, they make a product a lot of people like but I don’t use one, a lot of people I know use competitors phones…so what they made a lot of money, they definitely do not have a monopoly and any road blocks they have put on apps there is a workaround online within a day.

    1. See above; the very network these companies operate on, the Internet, is the result of decades of government interference in the market. Without the globally interoperable Internet that government created, companies like Google and Facebook simply couldn’t have grown as they did. And once these companies got rich and powerful, they worked hard to preserve the status quo, as with their push for net neutrality.

      1. Ya, I’m not buying your claim today either. Your going to have to point to government regulation that favored Google and Facebook over other competitors if you want me to eat that story.

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  18. “…if we are allowed…” recognizes that citizens are ruled, and rulers can be cruel, stupid, stubborn, self-serving, and incompetent. So, why have them? Statist answer (argument): The only protection against bad people is to concentrate all power in the hands of a few. What if the rulers are bad? Doesn’t that make the problem worse? Why should the rulers be bad? Political power corrupts, the more power the more corrupt. What do failed politicians do? They ask for more power, i.e., to be rewarded for their failure.
    History shows rule is destructive, despite the rulers promotion of fraudulent history. Rulers continue to exploit by indoctrination of their victims. Victims are deluded into sacrificing themselves, “for he common good”, as if the common good was something other than a collection of individuals. It isn’t. We survive by protecting the smallest minority, the individual. That starts with self-governing, self-respect, e.g., citizens who never waive their rights or sanction abuse by govt. It means not waiting to be “allowed”. It means being a sovereign, a person who recognizes no rulers or a “right to rule”. This concept is self-contradictory.

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