Last week, Democrats on the House Subcommittee on Antitrust released their much-ballyhooed report on competition in tech to great fanfare. It's a beast of a crie de couer, clocking in at 449 meandering pages of disputations on the power (but not so much the efficacy) of big tech companies. To absolutely no one's surprise, antitrust hawks love it while antitrust doves (and the targeted companies) are picking it apart.
There was a minor subplot involving Republican subcommittee members splitting into two slightly differing dissenting reports, with ranking member Rep. Jim Jordan focusing on censorship against the outer party and Rep. Ken Buck offering a "third way" of marginal reforms (data portability, more merger scrutiny, more funding for regulators) that fall far short of the Democrats' proposed radical antitrust overhaul. But for the most part, the reports didn't break new ground (or really, much new news) beyond underscoring battle lines with a thick permanent marker.
Here's what the Democrats want: to remove "the narrow construction of 'consumer welfare' [e.g. effects on prices and quality] as the sole goal of antitrust laws" with legislation that would be designed to protect "workers, entrepreneurs, independent businesses, open markets, a fair economy, and democratic ideals" through a grab bag of new prohibitions on specific practices like mergers.
That might sound nice to many. The problem is that protecting workers can mean not protecting entrepreneurs (or vice versa) depending on the case and the judge. And what is a "fair economy"? What are "our democratic ideals"? "Open markets"—a term favored by both George Soros and Charles Koch (do they agree)? Would any two Supreme Court justices—let alone our army of lower court judges—come up with the same definitions?
A great strength of the consumer welfare standard is that it's, well, a standard. Some of us are workers, some of us are entrepreneurs, some of us own businesses, but we are all consumers. Setting the most inclusive group as the focus of attention removes the potential for inconsistently biasing exclusive groups.
You can measure economic changes. How do you measure democratic ideals? This is why critics say the Democrat plan would "politicize antitrust"—the proposed system introduces judicial subjectivity that could empower enforcers to effectuate social agendas through antitrust. Indeed, some antitrust hawks proudly admit this is the point.
Where the Democrats have been in lockstep, the Republicans have been a bit schizophrenic. It's easy to see why. On the one hand, Silicon Valley has no love for the GOP. Executives from the firms now under antitrust scrutiny had a bit of an open-door policy with the Obama administration (and vice versa). Needless to say, those chummy visits have stopped under the Trump administration.
On the other hand, the consumer welfare standard that is in the Democrats' crosshairs is arguably the greatest legal victory of movement conservatism. Republicans don't say it very forcefully, but departing from the consumer welfare standard would empower the courts with a broad grant of arbitrary power over the economy—much of which could be used to promote Democrat party priorities like climate change regulation, quotas, and income redistribution. It makes sense that Republicans would oppose this, even if they don't well articulate exactly why.
It's not as straightforward to see why the Democrats of all people are going after big tech in particular. Silicon Valley is a major Democrat support center. Their employees vote Democrat, they support other planks of the Democrat agenda, and many are personal friends of Democrat leaders. Why not go after another big business bogey—the healthcare industry (only slightly more Democrat leaning) or energy companies (mostly in the hole for Republicans)? What political sense does it make to "split up" or weaken the companies that reliably support your party?
Actually, the antitrust investigations against big technology companies are already snaking their way through the system. The Department of Justice could announce its big suit against Google any day now. Other cases against Amazon, Apple, and Facebook are in early stages among DOJ and the Federal Trade Commission (FTC). State attorneys general have their own legal efforts as well.
It is unlikely that the Supreme Court would overturn even one of the dozen or so precedents the Democrats singled out for axing before all of these cases have concluded, let alone that Congress could get its act together to pass major partisan legislation rendering those decisions moot in this climate. Will the election give Democrats more of an edge in the Senate (and perhaps the Supreme Court)? Maybe. But overturning the consumer welfare standard will have to be a longer-term play.
Looking at the bigger picture, this antitrust push is probably not only about "big tech." These tech companies just happen to provide a good excuse to make changes to antitrust that the left has wanted for a long time.
Some of the companies under scrutiny don't actually charge prices to users. They do charge prices to advertisers, and there is a good deal of competition there, but this kind of two-sided market does require new considerations about how to consistently apply the consumer welfare standard. If you don't like the antitrust jurisprudence in general, this is a great pretext to say "it doesn't work, away with it all!" and push through a more precautionary antitrust regime.
It's unfortunate that tech companies are the camel's nose being used to promote an unraveling of U.S. antitrust law. It may ultimately end up disappointing even those who think big tech should be reined in but otherwise desire a strong U.S. economy. For instance, these particular tech companies could end up far short of being "broken up" (and still quite left-leaning) while everyone else still becomes subject to the expanded prohibitions and punishments of the Democrats' proposed antitrust regime.
Take a look at the FTC's list of competition enforcement actions. You probably don't recognize many of the companies involved. Big companies' cases get a lot of media airtime, but competition law applies to everyone—under an expanded antitrust regime, a lot more company names will be on that list. Empowering government agents to preemptively determine what a "fair economy" (or whatever) looks like and punish random companies who violate those subjective norms does not bode well for economic vitality.
This is the whole reason that the consumer welfare standard emerged in the first place: before it, you had judges going after Utahn frozen pie makers for selling cheaper lemon meringue than the former market leader. Consider our hyperpolitically charged atmosphere. Returning to the unfocused antitrust environment that produced such bizarre old pie-jinks would today come with the bonus of contemporary hot-button social issues. Does this sound like a great environment in which to live and do business?
The House Democrats pose as FDR-style populists, holding power to account on behalf of the forgotten man. They often quote Justice Louis Brandeis: "We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both." Because we all know that the Democrats are famously hostile to moneyed interests. This is why you see decidedly non-moneyed interests like the senior chairman of Goldman Sachs enthusiastically endorsing the House report on CNBC. Republican populists would do well to point these things out.