Before the highly publicized release last week of a report on “Big Tech” by the House Judiciary Subcommittee on Antitrust, a draft minority response was leaked to Politico. It represents an attempt to square a circle — agreeing with the majority-staff report that Big Tech is an antitrust problem, but rejecting most of its big-government solutions. However, even that rebuttal concedes far too many points. Conservatives should be wary of letting their anger with Silicon Valley’s liberal leanings lead them to compromise on principle.
To begin with, it is significant that ranking member Representative Jim Sensenbrenner did not author the draft response. Sensenbrenner said during the recent Big Tech hearings that he is unconvinced any changes to antitrust laws are necessary and that existing antitrust laws are sufficient to deal with any problems that regulators might find. He is right on this, and conservatives should do what conservatives are supposed to do best — follow tradition.
By contrast, the majority-staff report and the minority members’ response reject that. They both believe we need new laws, or changes to existing laws, to rein in Big Tech. (My colleague Jessica Melugin has outlined the majority report’s many faults here.)
To begin with, the minority accepts many of the majority staff’s arguments. It believes it has found evidence of anticompetitive behavior by the Big Tech firms. If this is the case, Representative Sensenbrenner is right, and the regulators will be able to bring a case and prove it. We will soon have two test cases here, as the Department of Justice and the Federal Trade Commission (FTC) are said to be on the verge of launching cases against Google and Facebook, respectively.
However, the response, authored by Representative Ken Buck (R., Colo.), agrees with the majority staff that more resources are needed for regulators to prosecute more cases. The theory is that resource constraints prevent the regulators from winning cases. This simply isn’t so. Regulators tend to win their cases — the FTC went 19 years from 1995 to 2014 without suffering a defeat in court — and have power in simply bringing action, as when its challenge to Illumina Inc.’s planned acquisition of PacBio earlier this year led to the parties abandoning the deal. At the very least, the minority should wait to see how the Google and Facebook cases go before suggesting that more resources are needed to bring more cases.
The draft also concedes that government needs to be able to force tech companies to allow data portability and interoperability, just like transferring a telephone number. But your data is not a telephone number. Such mandates can impose significant costs on service providers, while providing little benefit to users who end up not using them. Moreover, as European Union officials are finding out, data portability is inherently in conflict with user privacy. It should be up to the consumer to balance these wants, not to regulators to impose a one-size-fits-all policy.
Worse, the minority draft agrees that the burden of proof needs to be reversed and that companies should have to prove that their mergers and acquisitions are not anticompetitive. This is an affront to the evidence. First, as noted, the government regularly blocks mergers and acquisitions, often by just initiating antitrust investigations.
Second, the acquisition most often pilloried, Facebook’s acquisition of Instagram, was examined in detail by every major antitrust body in the world, and none found it problematic.
Third, reversing the burden of proof is a fundamental abuse of due process, and likely unconstitutional. Conservatives should have no problem imagining what regulators would do with such a reversed burden of truth in almost any other circumstance. The precedent would be disastrous.
Finally, the majority agrees that regulators should not have to bother with defining markets before crashing in and stopping business taking place. This ignores what my Competitive Enterprise Institute colleagues have termed the “relevant market fallacy.”
None of this is to say that the response does not have many good points. It rightly castigates the majority staff for going too far in things such as calls to break up Big Tech companies. However, where it concedes, it concedes too much. The minority needs to tear up this draft memo, and start again.