Recent Antitrust Push Is Weirdly Narrow, Pretends Telecom And Banking Don't Exist

from the do-not-pass-go,-do-not-collect-$200 dept

As you've probably noticed, there's a big new "antitrust" push afoot in DC. As you may have also noticed, many of these proposals don't actually do a whole lot to reform US antitrust or monopoly problems in any broad way. Scholars for decades have warned that US antitrust enforcement has become feckless, and that we need to rethink how we approach antitrust in a world in which companies often seem to have more and more power over our lives.

The U.S. is dominated by anticompetitive giants in banking, telecom, insurance, health care, air travel, and countless other sectors. And generally, we've historically encouraged them by underfunding our regulators, steadily weakening antitrust enforcement, rubber stamping merger after terrible merger, and replacing competent Judges with bobble head dolls. All under the pretense that doing anything else would be disastrous, while clinging tightly to a consumer welfare standard that sometimes seemed incapable of addressing modern market, labor, and consumer harms.

That's a lot to fix, but with this vast interconnected dysfunction being so profitable, and with so many cross-industry corporations (with bottomless budgets and immense lobbying control over Congress) opposed to real reform and oversight, that doesn't seem likely to actually happen. So instead we've been getting something else. A very selective new wave of "antitrust reform" that focuses exclusively "big tech," while leaving sectors like banking or "big telecom" free to run amok. Despite evidence that those latter sectors actually do things that harm consumers (the supposed standard for antitrust).

The movement to rein in big tech and shore up antitrust enforcement certainly has valid components, based on justified anger at years of dodgy business practices. But this anger has been proven to be exploitable by folks like News Corporation and AT&T. Both companies are looking to saddle their Silicon Valley competitors in online advertising with rules that don't apply to their own businesses, while simultaneously demolishing constraints and oversight of their own sectors (see: net neutrality, the dismantling of FCC authority, or the steady erosion of media consolidation rules protecting small businesses).

Enter Rep. David Cicilline, in charge of the House Judiciary Committee's antitrust panel. He says Democrats have introduced a suite of different antitrust bills in the belief it will keep "big tech" on its heels, making it harder to defeat one centralized bill. He claims that by narrowly targeting specific issues of antitrust it will be easier to get the 10 Republican votes needed to pass the bills with a 60 vote majority in the Senate. But so far there's no indication the obstructionist GOP, whose interest in "antitrust reform" has generally been of the performative populism variety, has any interest in helping out (last I saw the proposals had about 3 GOP votes in the House, just enough to market the effort as "bipartisan").

Meanwhile, many of the bills are oddly selective in what they deem to be a "dominant platform." The Platform Competition and Opportunity Act (pdf), for example, greatly restricts what constitutes a monopolistic offender, making sure to carve out exceptions for telecom giants, Mastercard, VISA, and Walmart. The bill bans companies from owning or operating a business that "presents a clear conflict of interest," but only if the company in question has 50 million monthly active U.S. users and a market cap of over $600 billion:

"...is owned or controlled by a person with net annual sales, or a market capitalization greater than $600,000,000,000, adjusted for inflation on the basis of the Consumer Price Index, at the time of the Commission’s or the Department of Justice’s designation under sec13 tion 4(a) or any of the two years preceding that time, or at any time in the 2 years preceding the filing of a complaint for an alleged violation of this Act."

Again, this very specific restriction omits a lot of companies that are engaging in the same kind of anticompetitive behavior, including many that see overlap in markets dominated by technology giants (telecom). It's also just kind of an arbitrary restriction given that what others value you at isn't necessarily what determines whether or not you're engaging in anticompetitive behavior. The actual, anticompetitive behavior does.

But just looking at the $600 billion valuation threshold gives a sense of just how this line-drawing happened. Under this definition (including the number of US users), it looks like the law only applies to Apple, Microsoft, Amazon, Google (Alphabet) and Facebook. That's it. It seems notable that companies which are also kinda powerful and dominant, but happen to fall just somewhat beneath the threshold, include Visa, Mastercard, JP Morgan Chase, Bank of America, Walmart, Disney... and Comcast, AT&T, and Verizon. How very, very interesting.

It's hard to argue that different rules should apply to Amazon as compared to Walmart. Or that Comcast, AT&T and Verizon should be spared from such antitrust scrutiny, when their control over some markets is clearly a much larger stranglehold than the five impacted companies. It's almost like these bills are designed to be a performative attack on just one sector while pretending otherwise.

That's not to say that all the proposals in all the bills lack merit or benefit. I think at least one part of the Merger Filing Fee Modernization Act does something important: namely shoring up lagging FTC funding in an era where the agency is being asked to do more and more with a fraction of the staff and resources of their international counterparts. Recall a major reason the telecom lobby neutered net neutrality and FCC oversight is that they knew enforcement responsibilities would fall to an FTC without the resources, staff, or authority to do the job properly.

But given the tight restrictions of most of the proposals, I'm still left wondering just how much input into these bills media/telecom policy and lobbying folks had as authors built in compromises for the sake of "bipartisanship." Telecom giants like AT&T and Comcast have spent the last three or four years successfully convincing many DC policymakers that Silicon Valley giants are the only dominant giants worth worrying about. Rupert Murdoch has been playing similar reindeer games. Pretending "big tech" monopolies are the only monopolies that need immediate fixing benefits both, and exploiting legitimate public anger at big tech isn't particularly hard right now on either side of the aisle.

US Antitrust most definitely needs reform, but it's unlikely we'll obtain it through legislation so compromised for the sake of "bipartisanship" that it views the issue through a pinhole. Or via bills heavily shaped by telecom and media monopolies that want to be excluded from meaningful oversight. The appointment of Lina Khan does suggest a government awakening to the narrowness of the consumer welfare standard in the Amazon era. But like so many issues (climate comes quickly to mind) passing meaningful legislation will first require cleaning up Congressional corruption, and that still seems well over the horizon.

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Filed Under: antitrust, banking, big tech, telco, valuation


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  1. identicon
    Anonymous Coward, 17 Jun 2021 @ 7:50pm

    I wonder if this could survive court


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