In antitrust we trust – or at least a “look into” antitrust?
News came Monday (Nov. 5) that, according to President Donald Trump, the current administration is – in his words – “looking into” possible antitrust violations that may have been committed by tech giants such as Facebook, Amazon and Alphabet (which owns Google).
CNBC reported that in an interview with Axios that aired on HBO, the president said “we are looking at [antitrust] very seriously. Look, that does not mean we are doing it, but we are certainly looking, and I think most people surmise that, I would imagine.” He said that such scrutiny had occurred during previous years, but added that a “previous administration” had curtailed that examination, without naming which administration had done so.
“You know they were actually talking about this same subject – monopoly.”
The president has previously stated that such “looking into” has been and is on the table. Back in August, the administration said through Economic Adviser Larry Kudlow that it was “taking a look” at regulating Google and its eponymous search engine.
This time around, the president told Axios that the administration is looking at “all three” companies, a statement that embraces Amazon, Facebook and Google.
Trump's comments come against a backdrop where in past months, the Justice Department has met with state attorneys general to look at antitrust behavior. And as has been reported by The Washington Post, there is also the possibility of a “multistate inquiry” into possible antitrust behavior. “Those discussions are in their early stages,” said The Post.
Blueprint from Across the Pond?
As the Trump administration seems set to scrutinize what Big Tech is doing for its customers, and ostensibly against its smaller brethren, the blueprint is there for U.S. regulators, it seems. There is, of course, the $5 billion fine that had been imposed against Google in July by the EU, tied to Android. Trump has criticized that ruling – predicated on how the company bundled and marketed its apps – and told Axios that "the European Union takes a lot of money out of our companies, and I actually went to my people and said, ‘You know, if they're gonna do it, we should be the one doing it, not them.' These are our companies.”
Might a sense of ownership – akin to "this is our regulatory backyard, keep out" – quicken administrative pulses to be more aggressive? There is both defensive posture and some promise to go on the offensive here, a bit like a parent who doesn’t want a golden child disciplined by any other parents.
But then again … roughly a month and a half ago, the head of the Justice Department’s antitrust division said he has not seen evidence that Google and Amazon have in fact harmed the competitive landscapes in which they operate.
“You’re hearing various anecdotal stories, but I don’t know if any of the enforcement bodies necessarily have that credible evidence of that type,” said Makan Delrahim, the antitrust head, in the wake of the aforementioned meetings with those state attorneys general.
The same regulator was quoted in Recode in September as asking whether “more aggressive enforcers [are] better.” Delrahim continued: "Does that mean that they’re better at antitrust or better for the marketplace? I don’t think so. … We don’t have an international agreement. We don’t have an agreement about how you view this. And one of the more dangerous things, I think, that could happen moving forward is that a country uses the antitrust laws as a weapon, as an economic weapon, against one of our companies in their country.”
Delrahim’s comments seem to be cautious, acknowledging that these companies have become big because they have become successful – not that they have become successful because they are big.
There’s a bit of a mixed message coming from the powers that be. In the meantime, the FAANGs of the world – the acronym that denotes Big Tech as a group – may be buffeted about by the “will they or won’t they” saga coming from regulatory corners. The crosswinds are hitting shares in these companies, of course, predictably down mid-single digits as of this writing.
The drumbeat in Europe, that Big Tech needs to be broken up, may lead a rhythmic U.S. chant to rip these tightly integrated companies asunder, drowning out prudence. As evidenced by Amazon, for example, the platform is connected to supply chains, across borders, across time zones and countries and languages. Where to begin the cleaving of ecosystems that ultimately are a boon to consumers? After all, antitrust enforcement is about addressing the harm that comes to consumers through the concentration of businesses that drive prices higher. It’s hard to argue – at least with a straight face – that consumers are being harmed, or that they don’t have as many places to shop or that prices they pay are being forced higher through the efforts of these firms.
As noted pre-Halloween in this space by Karen Webster, who detailed the frightful things that could stymie Big Tech, a rush to judgement might hurt end users. Perhaps the overarching strategy for the regulators and lawyers poking around the Big Tech landscape should be: Take a look, perhaps take a look again … look all you want, but for the sake of the consumer, don’t touch.