Behind Washington’s Antitrust Gambit

Policy

from the big-is-bad? dept

Summer is nearly over, but, for many politicians, destructive tech regulations are always in season. Congress is back from recess, and the American Innovation and Choice Online Act (AICOA) is once more under consideration. 

Senator Amy Klobuchar’s “antitrust” pet project would crack down on the five biggest tech giants — Amazon, Apple, Facebook, Google, and Microsoft — for business practices alleged to be “anticompetitive.” The bipartisan support that propelled the bill through the Judiciary Committee and into the Senate is easy to explain: The stench of grievance politics is so thick one can practically taste it. 

The AICOA, however, is quite bad policy. It is founded on questionable economic theories and obtuse moral assumptions. If passed, it will raise prices for shoppers and erect barriers to entry for up-and-comers in the digital space. It will make the online world more confusing and less safe. It will squash innovation. 

The AICOA is also a masterclass in bad governance: The bill is filled with shoddy writing that will delegate vast, arbitrary powers to the administrative state.

First off, the AICOA’s language is incredibly vague. As noted by the American Bar Association, the bill’s drafters eschewed the typical legalese of antitrust — terms whose meanings and limitations have become scrutable through years of use and litigation — for nebulous new phrases such as “materially harm” and “materially restrict or impede.” The legal parameters of this new terminology can be known only to God and the FTC.

Moreover, while a previous draft bans conduct that would cause “harm to the competitive process,” the current bill forbids conduct that would “result in harm to competition.” This semantic slide step suggests that Klobuchar et al. are more interested in picking individual winners and losers than protecting the systemic integrity of online commerce. 

To fill in these intentionally cavernous ambiguities, the bill would empower the Federal Trade Commision and the Department of Justice to draft and publish guidelines to clarify which business practices are and are not to be considered anti-competitive. This is clearly too much legislative power delegated to unelected Article II folks. But it gets worse: The published guidelines won’t be binding, and the FTC and DOJ would be given further latitude to designate which eligible platforms would actually be subject to law. There would be no telling what behavior would violate the AICOA and which platforms would be subject to scrutiny in the first place. Given the record of current FTC Chair Lina Khan, however, you’d have to assume the worst. Giving bureaucrats the latitude to capriciously choose who is and isn’t affected by congressional statute and to apply laws on a discretionary basis is arbitrary power in its purest, most noxious form. 

So how has this bill found bipartisan support? The answer lies in a pair of half-baked moral propositions.

Senator Klobuchar and many other Democrats have adopted the neo-Brandeisian view of antitrust: that corporate bigness is inherently evil. Barack Obama’s infamous “You didn’t build that” has morphed into “You must have stolen that.” The notion that big tech firms enjoy huge market share primarily because they have innovated and deployed economies of scale that enrich consumers and business users alike is inconceivable to the neo-Brandeisians. They can’t grasp the fact that market consolidation is often due to the quality and convenience of goods and services provided by market incumbents. In the case of the AICOA, as in most of their efforts, protecting consumer welfare plays second fiddle to an idiosyncratic need to claw at our society’s most successful entrepreneurs. If the AICOA’s drafters were actually concerned with preventing anticompetitive behavior, its restrictions would apply to all online businesses as well as brick-and-mortar retailers — instead of exclusively targeting a small cadre of currently disfavored tech giants.

AICOA’s Republican proponents — senators of no less stature than Ted Cruz and Josh Hawley — have another, more cynical justification for their “yea” votes: They see Klobachar’s antitrust blunderings as a convenient weapon with which they can fire away at their political foes. In order to score a largely symbolic victory over the presumed censorial instincts of big tech, Cruz and Hawley are happy to balloon federal power, hamper innovation, impose costs on their constituents, and blow up the market’s existing data-privacy safeguards. And after cleaning, polishing, and loading this regulatory gun, they are handing it directly to Khan’s radical FTC. Such efforts are cynical and profoundly un-American. 

Friedrich Hayek famously argued that would-be regulators have a knowledge problem: that the information necessary to plan an economy is not and cannot be possessed by a philosopher king or an executive agency. These difficulties are surely compounded in a sector as dynamic and generally misunderstood as tech. The situation only worsens when politicians attempt to manifest their various culture war revenge fantasies. 

Although the neo-Brandeisian Democrats and burn-it-down Republicans may never realize it, their constituents have already endorsed big tech with dollars and downloads. Once again, Hayek is vindicated: The uncoerced actions of individual actors will indeed create far more prosperity than the self-important machinations of their elected technocrats.

David B. McGarry is a Consumer Choice Fellow with Young Voices. He writes extensively on tech policy issues, appearing in such publications as RealClearPolicy and National Review. Follow him on Twitter @davidbmcgarry.

Filed Under: aicoa, amy klobuchar, antitrust, josh hawley, ted cruz