Big Tech or Too Big Tech?

Everybody has a complaint or two against Big Tech: it’s too big, it’s biased, it invades privacy, it’s too powerful, it has too much influence…variations of this have come out of my mouth too. But here is a question for you: who made them so powerful? Meaning, successful? We all know the answer: we did.

Thinking of it in those terms, the argument for government regulating Big Tech, whether through the antitrust process or any other mechanism, is saying: “I can’t control myself, so you have to exert control.” Or worse: “Others can’t control themselves, so you should exert control.”

Yes, I’m being a touch facetious, but for many of the issues that end up on the legislative agenda – or more commonly the regulatory agenda – we ignore our own complicity in growing a perceived problem. From climate change to fast food, somebody else should address the problem. Perish the thought we take responsibility ourselves. The companies are forcing me to buy their products!

But I’ll get off my high horse; in fact, there are times when companies act in their own interests to the detriment of the consumer and cross over into illegal territory. We should have no tolerance for illegal activity. But we should also define what is illegal clearly, with as little ambiguity as possible. Too often, our rule-makers and legislators do the opposite, encouraging interpretation to spawn endless lawsuits.

Let’s start by defining Big Tech, an aggregate term for the five biggest tech companies in the world— Facebook, Amazon, Apple, Google, and Microsoft. The U.S. developed a process to regulate competition and prevent monopolies known as our antitrust laws. Antitrust is different from efforts to reform the liability shield afforded to Internet platforms under Section 230 of the Communications Decency Act. (I’ll examine Section 230 in a future article).

Congress passed the first antitrust law, the Sherman Act, in 1890 as a "comprehensive charter of economic liberty aimed at preserving free and unfettered competition as the rule of trade." In 1914, Congress passed two additional antitrust laws: the Federal Trade Commission Act, which created the Federal Trade Commission (FTC), and the Clayton Act. With some revisions, these are the three core federal antitrust laws still in effect today.

As beneficial as these laws seem, the degree of subjectivity is problematic. Though the Sherman Act outlaws "every contract, combination, or conspiracy in restraint of trade," and any "monopolization, attempted monopolization, or conspiracy or combination to monopolize," the Supreme Court decided the Act does not prohibit every restraint of trade, only those that are unreasonable. The key word there is unreasonable. Subjective indeed.

Consequently, many economists feel the past several decades have exhibited significant problems of under-enforcement of antitrust laws, giving corporations far too much leeway and power. Others assert that antitrust regulations harm consumers, competition, and innovation and should be repealed altogether. Aggressive antitrust enforcement creates economic?uncertainty, generating a chilling effect on long-term investment and innovation in products and business practices that could otherwise benefit consumers.

The economy has become high-tech, specialized, and global. Many believe antitrust policies formed in the smokestack era are perhaps less applicable, or inadequate. Big Tech is an unprecedented evolution of communication/information technology, surpassing Gutenburg's printing press or Bell's telephones in scope and influence. Does this require more aggressive antitrust laws? Should we modify our laws for this purpose? Would that suggest that the underlying principles our existing antitrust laws are founded on are flawed?

This is the argument put forth by Lena Khan, the newly appointed head of the FTC, stating that consumer harm is an insufficient standard for monopolistic practices in the tech industry. Consumer welfare has been the FTC standard guide to assessing unfair competition. Her assertive position is not without controversy.

Where did that standard come from? Judge Robert Bork is primarily remembered for his failed Supreme Court nomination in 1987. Less familiar is his role in transforming U.S. treatment of mergers and monopolies, prompting legal and historical scholars to consider him the single most important person concerning antitrust in America. His ideas set the standards we still adhere to, fundamentally, the identification of economic efficiency - interpreted as consumer welfare - as the sole objective of U.S. antitrust law. In The Antitrust Paradox published in 1978, he wrote that he saw four observable trends in antitrust law:

1. a?movement away from political decision by democratic processes toward political choice made by courts
2. a movement away from the ideal of free markets toward the ideal of regulated markets
3. a tendency to be concerned with group welfare rather than general welfare; and
4. a movement away from the ideal of liberty and reward according to merit, toward an ideal of equality of outcome and reward according to status

Interestingly, in these polarized times, both Republicans and Democrats are leaning towards regulation, but for different reasons. For Democrats, the instinctual urge to protect the underdog, champion fairness, translates to hostility towards large powerful corporations…unless they can control them. Republicans sense that conservative voices are stifled, the deck stacked against them, their positions misrepresented through the distorting lens of left-leaning media, including tech…except for Fox News, talk radio, Breitbart, The Daily Caller…

Neither of the above – valid or not - are sound reasons to amplify government power over commercial interests. There must be a balance between requiring companies to adhere to legal standards of practice, vs. becoming full-on partners by virtue of regulation. The latter is the slippery slope towards a centrally planned economy, where what starts as a nudge, mere guidance, or marketed as private/public partnership, evolves into full autocratic government control over industry. Think banking or health care.

And before we consider setting new standards or creating new laws, let’s review established precedent, underlying principles, and successful outcomes. The past 40 or so years of decreased antitrust action have gone hand-in-hand with the explosion of technological innovation. Coincidence? Competition has been fierce, and the more successful entities grew large, while others declined or disappeared. Should we be punishing those that emerged on top? For their success? Are the powerhouses stifling competition? Then how did TikTok get so big, so fast? Has there been consumer harm? Thoughts to consider.

Undoubtedly, many feel differently. Often, I do too. I’m open to contrary perspectives; so, take the opportunity to share yours.

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