Regulatory Policy

House Antitrust Hearing Discusses Everything but Antitrust Law

Facebook CEO Mark Zuckerberg testifies before the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law on “Online Platforms and Market Power” on Capitol Hill, July 29, 2020. (Mandel Ngan/Pool/via Reuters)
Judged by the only standard that counts, Big Tech has been a force for good.

In Wednesday’s antitrust hearing with the CEOs of Amazon, Apple, Facebook, and Google, questions from liberal members of Congress laid the groundwork for expanding the scope of U.S. antitrust law. Questions from the conservative members highlighted concerns about political bias in content moderation. Notably lacking from the political theater was the current U.S. standard for antitrust: consumer harm.

Consumer harms that would trigger antitrust action include reduced output, unusually high prices, or sluggish innovation. But all four of the companies featured Wednesday offer many services to users for free, innovate rapidly, and compete vigorously, often with each other. None of the tech giants in the hot seat meet the legal standard for monopoly market share in their respective strong suits (Amazon: 38 percent of U.S. e-commerce, Apple: 58 percent of U.S. smartphone operating systems, Google: 30 percent of digital ads, and Facebook: 23 percent of digital ads). The facts of the tech industry do not a traditional antirust case make.

But the agenda from the left is to expand and shift the focus of U.S. antitrust law to be more in line with the European Union’s antitrust laws. This explains Wednesday’s focus from Democrats on alleged harms to competitors, not consumers.

The questioning by committee chairman David Cicilline (D., R.I.) of Mark Zuckerburg about Facebook’s acquisition of Instagram implied that the world’s biggest social-media platform had gobbled up a small challenger to suppress competition. But when the U.S. antitrust standard of consumer harm is applied, the question becomes, so what if it did? Facebook’s superior resources and expertise took Instagram from a modest and glitchy app to one with a billion users as of 2018. Facebook’s know-how constantly improved the Instagram user experience, attended to technical compatibility issues, and innovated despite concerns it might alienate its incumbent users with the changes. Facebook took a risky bet on Instagram, Instagram’s owners were compensated to the tune of $1 billion, and more users than ever use and presumably enjoy an improved experience. Whatever Facebook’s motive was in acquiring Instagram, it’s clear that the consumer has not been harmed. The bottom line is that a billion consumers have benefited from Facebook’s purchase of Instagram.

Similarly, Representative Pramila Jayapal (D., Wash.) questioned Amazon CEO Jeff Bezos about accusations that the company consulted sales information on third-party sellers that influenced the development of private-label merchandise. (Amazon released a statement that the practice is against internal policy, and the incident is under investigation.) But grocery stores, big-box retailers, and department stores have used data from branded products to inform their treatment of generics for decades. Amazon generates only 1 percent of its revenue from private-label goods, while Kohl’s makes 46 percent and Target 33 percent that way. Coming back to the consumer-harm standard, the practice benefits customers with more product options, often at lower prices. It’s unclear why that benefit wouldn’t extend to Amazon Marketplace customers.

Questioning from the right revolved around anecdotal accusations of content bias against conservative viewpoints online. Representative Jim Jordan (R., Ohio) asserted that “big tech is out to get conservatives.” Perhaps, but formal free-speech concerns have little merit here. These online platforms are private property. The First Amendment protects citizens against the suppression of speech by the government. Just as one does not have the right to hold a political rally in a neighbor’s backyard without the neighbor’s permission, neither does an online poster have the right to insist that private platforms host all content. The Supreme Court agrees and has held that “merely hosting speech by others is not a traditional, exclusive public function and does not alone transform private entities into state actors subject to First Amendment constraints.” To argue differently would be like not allowing Disneyland to remove a guest who was screaming obscenities in the line for It’s a Small World.

Today’s hearing showed the stark difference between the regulatory agenda for big tech from the left and the right. In light of all the good these companies have done during the recent quarantine and the less positive track record Congress can point to, consumers will be better off if legislators on both sides of the aisle stay out of the way.

Jessica Melugin is the associate director of the Center for Technology and Innovation at the Competitive Enterprise Institute.


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