What Antitrust Regulations Can't Do

The US has opened new antitrust cases against Google, Apple, Facebook, and Amazon. But can old laws answer today’s challenges?

By Xische Editorial, June 17, 2019

Source: Zentangle/ Shutterstock

Source: Zentangle/Shutterstock

After years of scrutiny and calls for regulation, the United States government is getting serious about reigning the power and reach of big tech. But it’s methods are confusing. This month, the US Justice Department and the Federal Trade Commission (FTC) announced a joint effort for antitrust investigations of America’s biggest technology companies. The Department of Justice opened investigations into Google and Apple, while the FTC is targeting Facebook and Amazon. After more than two weeks, many are still unclear over exactly how these antitrust investigations will be carried out and whether any meaningful regulations will arise from them.

Given the sheer reach of these technology platforms, we have argued that smart regulation is needed to safeguard data privacy and ensure that innovation continues to take place in the technology space. But smart regulation is much different than just any regulation, and US lawmakers, who play an outsized role in this debate because the major technology companies operate in their jurisdiction, have shown an unwillingness or inability to understand how the modern internet works. Some prominent US senators even had to ask Facebook CEO Mark Zuckerberg how his company made money during congressional testimony.

With the announcements from the Justice Department and the FTC, it looks like the US is getting serious about regulation. But the complex nature of antitrust law and how they apply to big technology companies has left many wondering whether meaningful changes to data protection and other pressing issues are possible. The MIT Technology Review outlines the tension with antitrust law in several key points.  

The first is that these companies mostly give their services away for free. Antitrust legislation in the US is designed to protect consumers from unfair price manipulations as a result of monopoly behaviour by companies. That leads us to the second challenge: these companies aren’t “natural monopolies” similar to what you find in the utilities industry. While Amazon’s practices might be aggressively competitive, they don’t amount to monopoly behaviour as we have come to understand it.

Companies like Google and Facebook use data gathering to create insights to provide even more free services. It is hard to see an antitrust violation, as the laws are currently written, in this behaviour. The antitrust model frequently cited with regards to technology is the action taken against Microsoft in the late 1990s. Regulators found that Microsoft had a monopoly over operating systems for personal computers that gave them an unfair advantage. Companies such as Google, which operates a near monopoly on web search, have long argued that competition is just a click away and consumers could choose a service like DuckDuckGo if they wanted.

For the time being, we are left to speculate as to how these moves will change the business practices of the world’s leading tech companies. If Wall Street is any guide, their bottom lines will not be gravely affected. The crux of the issue remains how to update existing legislation to fit with our digital world. Antitrust laws might be a good place to start in the US but they are only a launching point because they were written before smartphones even existed.

Ben Thompson, the author of the popular Stratechery newsletter, notes that, “ultimately, when it comes to antitrust actions against tech companies in the U.S., there really isn’t nearly as much there as all of the attendant fervor would suggest. Google is absolutely vulnerable, Apple somewhat less so, and it is very hard to see any sort of case against Facebook or Amazon.”

Smaller countries with more nimble legislative environment can help advance the tech sector by creating sensible regulations that protect the marketplace but don’t stifle innovation. As we have written, the Chinese technology ecosystem features similar regulations but they come as a result of the lack of separation between the public and private sector. The European Union is also making attempts to strike a balance with laws such as the GDPR. Without clear leadership from the US, however, nothing will fundamentally change.

One thing is for sure: this issue is not going away anytime soon. With leading presidential candidates wrangling over how to rope in the power of big tech, changes are coming. Hopefully, cooler heads will prevail and the incredible power of the internet and private companies will continue to flourish.