While everyone was riveted on the huge bipartisan deal between President Biden and a group of moderate Republican and Democratic Senators – talks that ultimately led to agreement on the largest infrastructure program in US history – another drama was unfolding on Capitol Hill in the House Judiciary Committee: the most significant move to bring the antitrust laws to bear on the most powerful companies in America (and the world) since Microsoft was the target of a move to break up its business model 23 years ago.
Two business days later, a bolt of reprieve for Facebook out of the blue. A Federal District Court judge threw out the antitrust lawsuit filed by over 40 states against the company and rejected a parallel pleading by the Federal Trade Commission which was initiated last December by the agency, then led by a Trump appointee. The court ruling took the FTC to task for not making anything close to a convincing case but invited the agency to re-file with more hard data on why they accuse Facebook of monopolising the personal social media marketplace.
The FTC, now under new management by Lina Khan, a highly regarded social media industry expert, has until the end of July to restructure their lawsuit. The 40 states may appeal to a higher court to revive their case.
Facebook and the markets took the surprise court ruling as a huge win. The company ended the day with a market capitalisation of over a trillion dollars.
For several years as the Big Tech companies – especially Facebook, Google, Amazon, Apple – have been growing and extending their power and scale across personal, social, commercial and political life, there has been increased scrutiny, especially by regulatory authorities, on how they operate their platforms, and whether they dominate their markets and limit competition, with consumers and users abused as a result.
The intent of the lawsuits filed during Trump’s presidency by the FTC and the Justice Department – it acted against Google last year – is consistent: break up their business models, introduce more competition, and establish rules to protect consumers.
This is one issue that has strong bipartisan support: from Republicans, because Big Tech is seen as too big and pro-left, cancelling out the voices of President Trump and QAnon acolytes, and from Democrats, who fear Big Tech’s rampant concentration of power. It is this bipartisan united front that has opened the door to a reckoning with Big Tech over how they do business.
The six bills approved by the House Judiciary Committee, with bipartisan support, would block mergers that eliminate competitors or reinforce monopoly power, prevent social media platforms from favouring their own products at the expense of distorting the market, and encourage the antitrust authorities to stop Big Tech – by breaking them up if necessary – from using their monopoly power to destroy competition with their platforms.
The immediate political reaction is that the District Court’s halt to the existing antitrust lawsuits will seriously cool Congress’ jets to proceed with legislation. But the Facebook Champagne corks will be forced back into their bottles for compelling political reasons:
The court ruling raises the question of whether existing antitrust laws are sufficient to hold Big Tech accountable for their activities in the market. Rep Ken Buck, the leading Republican supporter of the House bills said, “Our constituents sent us to Congress to solve problems now, not in a future Congress. We have a chance to act now to hold Big Tech accountable.”
Similarly, in the Senate, Amy Klobuchar, who ran for president last year and is a warrior on these issues, and intends to move parallel legislation, was also undeterred: “The FTC should do everything it can to pursue its case against Facebook. But the ruling shows why our antitrust laws need to be updated after years of bad precedent. We can’t meet the challenges of the modern digital economy with pared down agencies and limited legal tools.”
In other words, after the court threw out the lawsuits, we need this legislation more than ever.
Make no mistake, even with this bipartisan sense of renewed urgency, these bills will be difficult to enact into law. Republicans in Congress are divided. Trump supporters do not believe the structural remedies in these bills is enough, that they do not address their principal problem with Big Tech: stopping the social media platforms from gagging conservative voices, such as the moves of Twitter and Facebook to silence Trump.
Moreover, the door is now wide open for the new Biden appointees – Merrick Garland at Justice and Khan at the FTC – to own these issues in full and show how the rule of law in the public interest should work. We will see more Big Tech antitrust cases under this president.
These dramas will also boomerang here on our ACCC. The continued high visibility on these issues in Washington will provide more bandwidth to the ACCC to focus on what needs to be done here to curb Big Tech’s excessive market power. Indeed, the ACCC’s taking the scalp of Big Tech to support local media in Australia was a direct hit in DC.
The Big Tech lobbyists can slow down Congress. But the lawsuits prosecuted by President Biden’s Executive Branch will find their footing. Big Tech’s day in court is coming.