Agencies Need More Resources to Face Big Tech

If the U.S. government does not provide more funding for federal antitrust agencies to contend with Big Tech giants like Facebook and Google, it risks the future U.S. economy and the “way of life it supports,” said Sen. Amy Klobuchar, D-Minn., today. 

The agencies challenging these giants, the Federal Trade Commission and the Justice Department’s Antitrust Division, must “be as sophisticated as the people they are regulating,” said Klobuchar, chairwoman of the Senate Judiciary’s Subcommittee on Competition Policy, Antitrust, and Consumer Rights.

The FTC and the Division are tasked with enforcing antitrust laws – statutes governing market competition – but they are a mere “shadow” of the size they were 40 years ago, Klobuchar said during the hearing entitled, “Competition Policy for the Twenty-First Century: The Case for Antitrust Reform.” 

The antitrust budgets have not kept up with the growing pace of the economy, she added. 

“Compelling” economic evidence has pointed out that more antitrust enforcement is needed to curtail the harmful effects of anticompetitive conduct, said Nancy Rose, professor of applied economics at Massachusetts Institute of Technology. From buying up smaller rivals before they become a competitive threat to imposing a search bias favoring the online platform’s products over others, these harmful behaviors will trickle down to the average consumer either by a lack of product choice or higher prices and stymieing innovation, Rose said. 

These companies are simultaneously competing and “exercising dominant influence” across multiple industries, said Sen. Josh Hawley, R-Mo. Google, for example, has market power in online search, cloud services, maps, and many others, he said. 

“There is no reason for them to be so connected … there should never be competition [between] the provider of the services and the users,” said Barry Lynn, executive director at the Open Markets Institute. The provider will always put their interest before that of the third parties using their service, he said. 

Even though the agencies have a win-rate of 85% when bringing cases to court, Klobuchar said, this does not indicate they are successfully enforcing antitrust law. It just means they are bringing the cases they know they will likely win, and they are not taking enough of these to court, she said. 

From her own experience at the Division in 2014, Rose pointed out that there was an “overreliance on settlements” by the agencies. Simply put, they settle rather than go to court due to their lack of resources – in this case, staff. The tech giants, on the other hand, have almost unlimited resources to fight them in court. 

The result of changing the focus of antitrust laws four decades ago from “liberty, democracy and community” to focus on efficiencies – the dollar-value benefits from a merger or acquisition – is that “Americans [now] face the greatest set of domestic threats to liberty and democracies,” Lynn said. 

This “battle to restore the people’s control over the U.S. economy,” Lynn said, starts with recognizing the full extent of the “monopolist threat” to democracy. The government must go back to the “original intent” of antitrust laws, he said, which is to bolster democracy and individual rights. It then has to reconcile this original intent with anti-discrimination rules that have somehow not been applied to these giants, he added, and look at the companies’ structure. 

“Structure is important,” Lynn said, particularly for companies like Google that are “extremely far-reaching,” conducting multiple businesses and maintaining market power across many industries. Traditional antimonopoly law recognized this, he added.

“If you’re selling books, you don’t publish books,” Lynn said. 

Earlier this year, Klobuchar introduced a new bill seeking a sweeping reform of antitrust laws, which has been met with both praise and criticism.