Bill Clark/CQ Roll Call via AP Images
Rep. David Cicilline (D-RI) in April
The most important line in the sprawling, 449-page investigation of competition in digital markets from the House Antitrust Subcommittee isn’t new. It actually comes from the very beginning of the 16-month investigation, reiterated here. In front of the American Antitrust Institute, Rep. David Cicilline (D-RI), the subcommittee chair, said in a speech in July 2019, “Congress—not the courts, agencies or private companies—enacted the antitrust laws, and Congress must lead the path forward to modernize them for the economy of today, as well as tomorrow.”
I would have added “economists” to the litany of groups who did not enact the antirust laws; in fact, they’ve ruined them as much as anyone. But the signal from Cicilline then, and now, is that he wants Congress to be Congress again, to wield the power granted under the Constitution, and to start writing the laws that guide commerce in America. This report offers a brief window into that possibility, and it’s glorious.
Let me start by saying something that might be a little controversial: This is not a report about the digital economy. Superficially it is: It covers Facebook, Google, Amazon, and Apple (though, bizarrely, not Microsoft, a company that flits around the edges of the report and holds market power in a number of areas). But the self-regard of the tech press, that they occupy the center of the universe, has blinded them to the reality that this is just a document about monopoly. The industries are in a sense interchangeable, and the recommendations for action would affect all companies with market power.
This is the Democratic Party’s outline for taking back the government from monopolists.
Even the ones specific to the tech industry—structural separation of business lines, nondiscrimination statutes that prevent companies from preferencing their own products, interoperability, presuming mergers anticompetitive if undertaken by dominant firms—all have antecedents outside the tech world, going back to the Interstate Commerce Act of 1887, banking separation laws like Glass-Steagall, the net neutrality order preventing telecoms from discriminating against content on its wires, and so on. There’s nothing inherently tech-based about them.
I view this report as using tech as simply a case study on what an invigorated legislative body can do to rein in corporate power of any type. And that’s appropriate. Just this week, Veolia one of the two largest water-privatization companies in the world, took steps toward a hostile takeover of its main competition, Suez. Apps are important, but we’re talking about a monopoly on water. You can break up Amazon, and you’d still have to deal with the company hijacking a basic element required to live for a profit. This report offers a guide to that as well. Therefore, it’s not a report about tech companies.
So why choose Big Tech, then? Well, it happens to offer an excellent case study into the dangers of monopolization that are not rooted in prices. For 40 years in America, price has become the dominant consideration in mergers and acquisitions, rather than power. Many of the services Big Tech offers are free; price cannot be seen as the dominant factor. Yet power, and a remarkably similar iteration of it, is evident in everything the tech platforms do.
The platform monopolies use their position as a gatekeeper in their particular markets—social media, search, e-commerce, cloud computing, smartphone operating systems and app distribution, voice assistants, and more—to maintain market power, crush and exploit rivals, and make partners who rely on their services subservient.
All four firms have acquired hundreds of competitors and adjacent companies in the past decade (there’s a list of all of them in a 45-page appendix) and did so deliberately; Facebook executives called it a “land grab,” and CEO Mark Zuckerberg said the company “can likely always just buy any competitive startups.” They have stolen from their competition as well, either cloning their products or appropriating their data; Google just taking travel information or restaurant reviews, for example, or Amazon ripping off sales information from third-party sellers to boost its products. They have used restrictive contracts to prefer their own products and make them the default settings on just about everything; over 99 percent of all mobile browsers come from the companies who make the smartphone operating systems, Google and Apple. They have engaged in predatory pricing, selling things like Amazon Alexa or Google Home at a steep loss to get users relying on their voice assistants. They have made their competitors live in fear, knowing that any whim from the monopolists could destroy their business. This is palpable throughout the report.
Another thing that’s palpable, while less-noticed, is that this incumbent dominance makes everything a little bit worse. As this was a key element of my book Monopolized I was pleased to see it get its rightful place in the report. Time and again, the report describes the consequence of the absence of competition being that “quality has deteriorated over time,” through degraded privacy protections, less relevant search results, the rise of misinformation and counterfeits, and the decline of trust in what we read. Monopolies are bad because they make things demonstrably worse.
Much of the report’s findings were on display at the remarkable hearing with all four Big Tech CEOs; there isn’t a lot new here. But it’s organized extremely well, and makes an unassailable case that these companies are abusing their power. In fact, what we have here is a rap sheet, a public record of unmitigated lawbreaking. The report excoriates the antitrust agencies for failing to enforce the law against Big Tech, and the court system for perverting the laws, as much as it attacks the firms themselves.
In the recommendation section is where the report really gets going. It notes that Congress has a long record of oversight, citing a 1958 report on airlines, a 1957 report on broadcast television, and a 1992 inquiry into telecom markets. (That all of these sectors have monopoly problems today further suggests that this is merely a case study into the failures of reining in corporate power generally, not a “Big Tech” report.) Out of that oversight came legislative action, the kind that would restore Congress’s rightful place as the driver of market structure.
In this case, the Cicilline report nods to a few specific actions to bring Big Tech to heel, all of them variations on antitrust and antimonopoly laws used on other sectors in the past. But it goes further. The report calls for wresting away the antitrust laws from courts and economists that weakened them, presenting the view that under-enforcement was preferable to over-enforcement, and making them impossible to enforce at any rate.
The report cites ten specific Supreme Court and other court decisions that should be overruled, by Congress simply by rewriting and clarifying the statutory intent. This is something never discussed in public, that Congress can simply rewrite laws if the courts toss them out, since many of the rulings are based on statutory interpretation. This is a shot across the bow of the conservative Court, among other things; try to put thumbs on the scale for corporate power, and Congress will cut those thumbs off.
In addition, the report calls for a “structural presumption,” a market-share threshold above which a dominant firm can no longer acquire rivals. The burden of proof would be on the merging parties to say they aren’t concentrating the market. The law could clarify that antitrust agencies don’t have to prove that a nascent competitor would become successful in order to prevent a monopoly from buying it. It could reiterate that the Clayton Act prevents mergers that “may lessen competition or tend to increase market power,” or that the Sherman Act makes it illegal to “monopolize, or attempt to monopolize.” Actions like vertical mergers (acquiring companies throughout the supply chain) or predatory pricing (low prices to knock out competitors) that have been made effectively legal by courts and economists could be restored as actual illegal activities.
The report also recommends greater civil penalties, more scrutiny of the failing antitrust agencies, revolving-door standards to get people in those agencies who are actually interested in enforcement, and higher budgets for them as well.
In sum, this is a full-spectrum assault on the status quo that has concentrated corporate power for the past four decades. It’s long overdue, and it centers the people’s representatives as the engine of the popular will. It also gives notice to Joe Biden’s would-be incoming administration that this is the standard by which they will be judged on corporate power questions. Biden’s team got briefed on the report, and if they don’t come aboard on its key recommendations, tensions will simmer over. This is the Democratic Party’s outline for taking back the government from monopolists.
Some advocates are excited by the prospect of a reinvigorated legislative sphere, and see breakups and restructuring of the corporate sector to ensue. I’m a little more skeptical. Rep. Ken Buck (R-CO), a critical subcommittee member, released his own report titled “The Third Way” that agrees with practically all of the findings that tech platforms are much too powerful, without wanting Congress to do anything about it, preferring to leave it to the antitrust agencies to figure out. “He’s coming from a party and an era in which using government power is not the thing to do,” said Stacy Mitchell of the Institute for Local Self-Reliance, a prominent Amazon critic. It’s like he can’t take that step and recognize that the legislative branch has a role to fill.
Buck did notably agree on some points, mainly around clarifying Congressional intent. And that may be enough. Congress has been inert for far too long while corporations ran roughshod over Washington. The agencies and the courts have been willing co-conspirators in this process. If Cicilline’s report can reverse that trend, it will have done the nation a great service.
