Antitrust and Big Tech

In these posts I aim to identify the issues in the public dialog about antitrust and tech/big data, and assess which of them really sound in antitrust law versus which sound in other laws -- data privacy, consumer protection, disclosure and transparency, public safety, content regulation, standards for editing and publishing vast amounts of information, copyright and compensation to content providers, counterfeiting, or a populist reaction against bigness.

Although obvious, it needs to be restated: The big tech and data companies have been massively pro-competitive. Functions, services, products, scope of reach, efficiencies, and costs savings have been invented that most of us could not imagine a generation ago.  In U.S. antitrust law, we do not penalize success, we laud it.  If inventors achieve large returns, it is these very returns that incentivize the next inventor to come along and create something new which consumers and customers will want even more than the current offerings.  With rare exception, someone who achieves market power in the U.S. through superior skill, foresight, knowledge or acuity is entitled to recover the returns on their invention.  Absent some non-antitrust law regulatory statute, successful inventors, entrepreneurs, and first movers are not required to provide a free ride to would-be competitors or to customers who would prefer not to pay.

U.S. antitrust law covers agreements in restraint of trade. Some agreements are per se unlawful without further examination of the facts; these include agreements between competitors on the prices of outputs or inputs, or which allocate customers or territories among themselves.  Other agreements are evaluated by a rule of reason balancing test: does the agreement in fact present a restraint on competition, if so what are the bona fide business reasons for the restraint, in what market context does it occur, and is the restraint any broader than is necessary to accomplish the legitimate goal?

In addition, U.S. antitrust law covers monopolies and attempts and conspiracies to monopolize.  Here the threshold issue is whether a monopoly in fact exists in light of customers' alternative choices, and if there is a monopoly (usually at least 60% of a properly defined relevant market) was it achieved by means other than superior skill, foresight, knowledge and acuity, or by some anti-competitive means such as tying, exclusive dealing, or acquisitions of competitors.

U.S. antitrust law also covers acquisitions of stock or assets the effects of which "may be substantially to lessen competition or tend to create a monopoly." This is an incipiency standard; if an acquisition may create a monopoly, it can be nipped in the bud.  There is no need for a new body of law.  Case law and the joint FTC/DOJ Merger Guidelines could address this well and take potential competition into account – if all parameters of competition (not just price) were taken into account, and if all affected lines of commerce (e.g., labor markets, externalized costs to public services, innovation, and ownership of technologies) are evaluated.

I will look at many of the topics in the public dialog: data privacy, self-preferencing, "killer acquisitions", and interoperability.  For each topic, I try to consider the facts, insofar as they are in the public domain, under established U.S. antitrust law.  If the courts find a violation, or the authorities decide to allege one, I suggest that any remedy sought should be tailored only to a violation which can be proven on the facts.  Overbroad remedies can have unintended and harmful effects, for example, deterring innovation, increasing costs, or rewarding inferior products or services that customers do not want.