Platform Accountability and Contemporary Competition Law: Practical Considerations

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November 20, 2018, 4:03 pm
By Philip Verveer, Visiting Fellow, Shorenstein Center on Media, Politics, and Public Policy

The Sherman Act of 1890 was the first federal law to address business monopolies. Are antitrust laws a good framework for regulating today’s digital giants?

Introduction

“As you know, many people think it is a very antitrust situation, the three of them. But I just, I won’t comment on that.”  President Donald Trump with respect to Google, Facebook, and Amazon, interview with Bloomberg News, August 30, 2018

Digital platforms that enable two-sided markets—Google, Facebook, Amazon, and Twitter, among others—are, to understate the case, the object of significant and growing critical attention.  Their economic, social, political, and cultural power has become a source of disquiet.[1]  A concern that is only heightened by the certainty that some of the companies’ activities have been exploited by hostile intelligence and security services.

The discussion about how to deal with the power of digital companies is growing in volume and intensity. Competition law has been employed by officials in Europe and recommended by advocates in the United States as a device to control or ameliorate digital platform company power.  Are competition laws in fact better than potential alternatives, a first or a last resort?

At its most fundamental level, antitrust law as presently construed is concerned with two evils:  the possibility that buyers are paying too much and receiving too little, and the possibility that industry dynamism or progressiveness is being impaired.  Antitrust law does not deal in a direct way with other concerns, for example, with privacy, political or cultural influence, national security, or income distribution.

What are the practical realities confronting the Assistant Attorney General for Antitrust and the Chairman of the Federal Trade Commission if they contemplate using their antitrust authority to address these concerns?  What should they consider as they contemplate the possibility of bringing the kind of government monopolization case that has become a once in a generation occurrence?

This essay focuses on competition law as presently understood and practiced and its applicability to the current digital marketplace. It does not address the other controversies surrounding the major platforms.  It is limited to a description of the laws available to the antitrust agencies and the other relevant considerations facing the heads of the federal antitrust agencies if they were to consider a major action—a monopolization case–against a major platform.  Collectively, they constitute formidable, though not insurmountable, obstacles to successfully concluding a lawsuit seeking to diminish or dismantle the power, economic or otherwise, of any of the major platforms.

Its present custodians insist that the antitrust laws are sufficiently flexible to address high technology platforms,[2] that the laws as presently construed would reach the status and activities of major platforms.  Accepting that view provides a starting point in this consideration of platform accountability.

But it is just the beginning.  Any exercise of the law’s monopolization provisions necessarily confronts a range of practical considerations, including the unavoidable uncertainties surrounding litigated outcomes; the time to resolution; the changes in technology, business models, and consumer preferences that will occur inside the time envelope; the opportunity costs to a prosecuting agency; and the difficulty in conceiving remedies that are sure to bring net benefits.  The last two significant government monopolization prosecutions, both involving technology companies, provide illustrations. Among the practical considerations, they afford a reflection on what may be the most important one of all: the uncertainty of what would eventuate from a successful prosecution.

Taken together, the state of the relevant jurisprudence and numerous associated practical considerations cast a shadow over the efficacy of existing competition laws as a major—let alone the principal–legal mechanism securing society’s interests in the operations of major platforms.  Describing the considerations involved in deploying the antitrust laws against internet platform power raises the question—a very significant question–of whether it would be better to look elsewhere for such assurances.

Read the full paper here.


[1]   The Harvard Kennedy School Shorenstein Center on Media, Politics and Public Policy’s Platform Accountability Project has produced several papers discussing the major digital platforms.  See Thomas Wheeler, “Time to Fix It:  Developing Rules for Internet Capitalism,” and “The Root of the Matter: Data and Duty;” Dipayan Ghosh, “#DigitalDeceit: The Technologies Behind Precision Propaganda on the Internet,” and “Digital Deceit II:  A Policy Agenda to Fight Disinformation on the Internet.”

[2]   See, e.g., Makan Delrahim, “All Roads Lead to Rome:  Enforcing the Consumer Welfare Standard in Digital Media Markets,” Rome, May 22, 2018; “Don’t Stop Believin’:  Antitrust Enforcement in the Digital Age,” Chicago, May 19, 2018.