House Republicans’ Cynical, Empty Threats Against Big Tech
On July 6, Rep. Jim Jordan, ranking member of the House Judiciary Committee, released an ambitious agenda for “taking on big tech.” Its urgency was clear from its first, bold sentence: “Big tech is out to get conservatives.” This agenda, largely determined by House Minority Leader Kevin McCarthy, is supposed to remedy this alleged animosity while also responding to a package of bipartisan antitrust bills recently passed by the Judiciary Committee. On June 24, Jordan stated that Democrats are “pushing radical antitrust legislation that will systematically change the United States economy as we know it.”
Jordan’s agenda includes the now-familiar appeal for government to regulate speech on social media platforms, both by rescinding the safe harbor in Section 230 of the Communications Decency Act and by creating new statutory causes of action. Republican proposals and lawsuits along these lines so far have ranged from unwise to unhinged. But now Jordan and co. have linked them to antitrust—indeed, the word “antitrust” appears nine times in the short agenda.
The actual antitrust proposals in the Jordan agenda range from limp (expedited trial court procedures) to inane (direct appeal of antitrust cases to the Supreme Court). But all the proposed changes to “antitrust” law are superficial. The truth is that Reps. McCarthy, Jordan, and other Republicans who remain “conservative” about antitrust don’t really want to change the antitrust laws. Instead, they’re making empty gestures about changing antitrust law so they can look like they’re doing something against tech companies perceived to be hostile to conservatives.
But many of Reps. Jordan’s and McCarthy’s colleagues really do support major tech antitrust reform, including through the bipartisan bills Jordan called “radical.” The Republican party is riven by an ongoing dispute over how antitrust law should apply to big tech companies—especially social media. It’s unclear whether the Republicans who support aggressive antitrust action subscribe to the broader arguments and policy proposals of serious antitrust reformers, which call for significant governmental control over the Internet. At the heart of the disagreement are conflicting visions of the proper role of antitrust laws in the first place.
The core U.S. antitrust statutes, including sections 1 and 2 of the Sherman Act, are famously lean of expression, leaving the courts ample room for interpretation. Since the Reagan era, the reigning interpretative paradigm has been that of the “Chicago School” originally championed by figures such as Robert Bork. This paradigm has been modified in many ways since the original Bork days, but its core principle still stands: antitrust law protects competition, not competitors. This means the final measuring stick, whether for a horizontal agreement claim under Section 1 or for a vertical integration, refusal to deal, tying, or other monopolization claim under Section 2, is whether the alleged conduct hurts consumer welfare through reduced output and higher prices.
A new generation of antitrust scholars and activists is challenging the Chicago consumer welfare standard. Dubbed the “New Brandeis” movement, or somewhat derisively, “hipster antitrust,” these scholars and activists argue antitrust should focus on “structural” concerns rather than on what they consider the narrow, technocratic consumer welfare emphasis of the Chicago School. They have issued a manifesto, the “Utah Statement,” that summarizes their goals—and some of their members are prominent in the Biden administration: Lina Khan, whose academic work helped spark the New Brandeis movement, is head of Joe Biden’s FTC, and Tim Wu, famous for coining the term “network neutrality,” was appointed special assistant to the president for technology and competition policy. Nearly every one of those goals is reflected in the package of bipartisan antitrust bills recently passed by the House Judiciary Committee, notwithstanding the opposition of some Republicans such as McCarthy and Jordan.
Under the Chicago consumer welfare standard, large or even dominant market share is not itself unlawful, and a competitor usually cannot be forced to deal with its rivals. In Verizon v. Trinko, decided by the Supreme Court in 2004, Justice Scalia’s opinion for the majority noted three reasons why refusals to deal are not inherently unlawful, even when the defendant is a provider of telecommunications serves that could be considered business infrastructure: (1) a firm’s “infrastructure” might be the result of competitive innovation, something antitrust law is meant to promote; (2) “compelled sharing puts federal courts in the role of central planners”; and (3) compelled sharing may result in collusion that harms further innovation and competition. The Trinko decision sharply limited “essential facilities” claims under U.S. antitrust law.
The Trinko precedent was among the core reasons Federal District Judge James Boasberg recently dismissed antitrust complaints against Facebook filed by FTC and State enforcers. The FTC and the States claimed that Facebook refused to share interfacing tools (APIs) with app providers it considered potential competitors, or acquired those potential competitors to enhance its own services. Judge Boasberg held that the FTC’s pleadings failed to allege that Facebook held a market share sufficient to confer monopoly power: “It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist.” But even if Facebook had market power, Judge Boasberg held, under Trinko, “Facebook’s general policy of refusing to provide API access to its competitors does not in itself violate Section 2” of the Sherman Act.
According to the New Brandeis movement, opinions like Judge Boasberg’s in the Facebook case are precisely the problem. The New Brandeis movement’s emphasis on “structure” means antitrust law would more actively shape markets, regardless of specific proof of harm to consumer welfare. The Utah Statement holds that Trinko should be overruled and that “[t]he essential facilities doctrine should be reinvigorated for dominant firms that deny access to critical infrastructural services.”
The Judiciary Committee antitrust bills supported by some Republicans would enact core pieces of the New Brandeis platform. The American Choice and Innovation Online Act, for example, would establish a “Bureau of Digital Competition” within the FTC to publish interoperability standards, including presumably APIs, that the large platforms would be required to adopt. Another of the bills, the Platform Competition and Opportunity Act, would forbid large platform providers from acquiring present or potential competitors, regardless of any analysis of actual competitive effects of the merger. And the Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act would require large platform providers to share user data with present and potential competitors. These requirements would be enforceable directly by the agencies with hefty penalties or by private litigation buttressed by statutory treble damages and attorneys’ fees.
There’s something undeniably appealing about these proposals. No rational person thinks Facebook has their best interests at heart, we all know Google and Amazon’s influence over our lives is creepy, and we rightly fret about social media’s corruption of public discourse and amplification of untruths. Sticking it to Big Tech feels right. And in a sense the New Brandeis advocates are right to focus on infrastructure and interoperability. The internet exists because everyone uses common interconnection protocols that are agnostic about the physical devices being connected, who is doing the connecting, or the content being shared.
But the regulatory genius of the early internet era, including the Telecommunications Act of 1996, was to recognize that the internet should not be subject to the regulatory burdens placed on radio, television, and cable television providers. The “physical” layer of the Internet—modems, routers, and cables—was mostly privately owned and generally was subject to little or no regulation; the “code” layer—the internet protocol—was left to the community of coders and engineers, not to any government; and the “content” layer, at least in liberal democracies, was mostly protected by free speech principles and governed by free markets.
The New Brandeis school agrees with all this. In fact, many of the New Brandeis school’s leaders are internet nerds. Their fear, however, is that closed interoperability standards such as proprietary APIs will lead to a “splinternet” of competing cyberspaces owned by Facebook, Amazon, Google, and so on.
This may or may not be a reasonable fear. After all, as Judge Boasberg noted in the Facebook case, “[a]t the time of the last great antitrust battle in our courthouse—between the United States and Microsoft—Mark Zuckerberg was still in high school.” Who knows what social media and ecommerce will look like ten or twenty years from now if left more or less alone? The Microsoft Windows/Internet Explorer bundling antitrust case began in 1998, the same year Yahoo failed to license the search technology that would become Google; Amazon started selling books online in 1994; the first iPhone was released in 2007. What kinds of devices and platforms will exist in 2035, 2045 or 2050? The parts of Facebook, Amazon, and Google some people today consider essential facilities might not be as essential tomorrow. Did CompuServe or AOL forums eat the public Internet? Did the AOL-Time Warner merger, ominously announced at the start of Y2K, portend doom for other providers seeking media convergence?
Today’s Internet giants didn’t arise because the final settlement between the Justice Department and Microsoft in 2001 contained some relatively weak API-sharing requirements. They grew because they innovated and competed as the technology rapidly changed. Of course, like everything else in this space, the significance of the Microsoft antitrust case is debated. Wu argues that the Microsoft case paved the way for the open Internet; others say this is bunk because the rise of Google changed everything.
At the very least, it’s fair to wonder whether a “Bureau of Digital Competition” within the FTC, bristling with enforcement powers and enabling a new wave of tag-along private class actions, would facilitate a more free and open internet in the near term, much less over decades of rapid change. And, without any doubt, this is an option that contradicts decades of standard conservative thinking about technology, markets, and antitrust.
Even if many of the New Brandeisians’ proposals would likely do more harm than good, at least they value a free and open internet. The breed of Republicans who combine paranoia over social media “censorship” with a genuine desire to control the internet under the guise of antitrust law are much more frightening. The antitrust feints by Reps. McCarthy and Jordan are transparently cynical. They don’t want to ditch the Chicago consumer-welfare standard and they don’t want to pass any major antitrust reform. They want to control the Internet—or at least, to threaten its major institutions—for their own ends. Whatever that movement might be called, it should be resisted.