How Judiciary should handle today's Big Tech hearing
It's become a fact of modern American politics that Republicans and Democrats agree on virtually nothing, with the House of Representatives serving as the epicenter of the partisan divide. But Congress will bridge that divide this week as members of the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law discuss legislative solutions to address Big Tech's arguably unchecked market power today, Feb. 25.
After spending 16 months investigating the state of competition in the digital economy, the committee released a 450-page report in the run-up to the hearing outlining a long list of evidence that Google, Apple, Amazon, and Facebook have knowingly exploited their monopoly statuses in an array of anti-competitive ways.
The findings of Judiciary's investigation should prompt the subcommittee to agree to a serious governmental overhaul of tech oversight to ensure future compliance and industry prosperity.
At the very least, Congress needs to reassert its authority to regulate monopolies.
Committee leadership must discuss how the Sherman and Clayton Acts, the congressional blueprints for monopoly prevention, are outdated and have fallen under self-inflicted restraint. They simply haven't kept up with the times and have led to increased market concentration in the digital square that's harmed businesses and consumers alike.
One area of consideration for members to target could include reforming Section 7 of the Clayton Act. It currently prohibits mergers and acquisitions that "substantially lessen competition, or ... tend to create a monopoly." Many believe that it should also address policy concerns like vertical mergers (when two companies merge to control the supply chain), which has arguably led the four targeted tech giants to obtain an unhealthy level of power.
This concern about vertical integration is exactly why Americans for Limited Government cheered on the Antitrust Division of the Department of Justice for trying to prevent the merger between AT&T and Time Warner. While a federal judge held in favor of the merger, it's now up to Congress to address the dangers of corporate power accumulation and subsequent market manipulation through vertical integration.
It's well documented that conglomerates use acquisitions to eliminate competition and grow their market control. As highlighted by the Judiciary Committee's Big Tech report, moves like Facebook's purchase of Instagram and WhatsApp eliminated social media alternatives that threatened to curtail its dominance in the online advertising industry. It also suggested that Google's YouTube and Android acquisitions are examples of vertical mergers that have allowed the company to move into new markets and ultimately centralize power of user data.
Reforms like these to Congress's antitrust laws can go a long way to ensuring that the innovation that has made America's tech industry the envy of the world thrives without becoming stifled by monopolies intent on killing competition.
One of the biggest failures of antitrust regulation in the past two decades has come from Congress failing to direct federal agencies to increase their oversight over Big Tech's mergers and acquisitions.
The FTC is supposed to review potential industry-harming mergers, yet the committee found that in the case of Facebook, the FTC gave serious scrutiny to only one of the hundred acquisitions it reviewed.
Having proper guidance from Congress can go a long way.
Look no farther than the case of Google v. Oracle, which just reached the Supreme Court in October after a decade's worth of court battles concerning whether or not Google used 10,000 stolen lines of coding to get its Android mobile system running.
The Judiciary Committee's report suggested that Google initially purchased Android to grow its search monopoly and corner the mobile market. Eventually, it forced smartphone-makers to make its search engine and apps the default setting as the price of doing business with Google.
Under the current rules, the DOJ and government regulators have had little power to do anything aside from issue briefs and public statements that urge the courts to rule against Google. As a result, this case has gone on for ten years and counting, with a ruling still at least months away.
These market-harming vertical mergers and abuse of dominance have become the industry standard in the absence of strong regulators. Congress passing laws that allow regulators to better oversee industry action upfront will protect the time and resources of smaller companies that may not have the monetary or legal resources to fight Big Tech, resulting in a fairer marketplace that's more supportive and protective of innovation.
House Republicans, like Antitrust Subcommittee ranking member Ken Buck (R-Colo.) are wisely proceeding cautiously. Overregulation could kill the path to innovation that Congress hopes to restore. That said, the complexity of the task at hand shouldn't excuse inaction.
Big Tech's market concentration has without question reached a dangerous level, and the American people are counting on their representatives to fix the problem now before it's too late.
This subcommittee hearing to examine potential legislative solutions has presented the best prospect for reform in years. Now Congress needs to put politics aside and follow through.
Richard Manning is the president of Americans for Limited Government.