Competition policy is poised to become a core part of the tech accountability tool kit. We’ll need it to curb the antidemocratic effects of concentrated tech power.
Weak enforcement of antitrust laws by government has allowed a handful of Big Tech companies to mediate many domains of life. But a reinvigorated interest in antitrust enforcement is cutting to the heart of concentrated tech power.
Over the past two decades, a handful of tech firms have adopted policies and infrastructural designs that enabled them to grow their power massively.1See Lina M. Khan, “Sources of Tech Platform Power,” Georgetown Law Technology Review 2, no.2, (2018): 325–334; and K. Sabeel Rahman, “The New Utilities: Private Power, Social Infrastructure, and the Revival of the Public Utility Concept,” Cardozo Law Review 39, no. 5 (2018): 1621–1689. They were enabled by conservative and hands-off enforcement of antitrust laws, in combination with an “innovation”-centered US tech policy agenda that treated tech companies like national champions.2Daniel Schiller, Digital Capitalism: Networking the Global Market System (Cambridge, MA: MIT Press, 2000). These firms intentionally took an approach that would ensure their eventual dominance: they rapidly and aggressively acquired competitors as they emerged,3See Tim Wu and Stuart A. Thompson, “The Roots of Big Tech Run Disturbingly Deep,” New York Times, June 7, 2019; and DensityDesign Lab and Tactical Tech, GAFAM Empire, 2022, accessed March 3, 2023. leveraging data they were able to vacuum up through surveillance and acquisition to favor their own products and reinforce their dominance.4See for example Steve Lohr, “This Deal Helped Turn Google into an Ad Powerhouse. Is That a Problem?” New York Times, September 21, 2020; and Khari Johnson, “The iRobot Deal Would Give Amazon Maps inside Millions of Homes,” Wired, August 5, 2022. They specifically designed their systems with the intent to lock in users, raising the costs to switch to different platforms.5See OECD, “Data Portability, Interoperability and Digital Platform Competition,” OECD Competition Committee Discussion Paper, 2021; and Investigation of Competition in Digital Markets, CP 117–8, Part 1, 117th Congress, July 2022. They built marketplaces in which they themselves competed, boosting their own products over those of third party competitors.6See European Commission, “Antitrust: Commission Sends Statement of Objections to Amazon for the Use of Non-Public Independent Seller Data and Opens Second Investigation into its E-commerce Business Practices,” press release, November 10, 2020; and European Commission, Information on the Commission’s Initiation of Antitrust Proceedings in Case AT.40703, November 10, 2020. Without regulatory friction7 Paul Ohm and Brett Frischmann, “Governance Seams,” Iowa Innovation, Business & Law Center, Iowa College of Law, n.d., accessed March 3, 2023. or even much public oversight, they built an ecosystem in which it is now virtually impossible to escape the technological systems of a handful of firms.8Kashmir Hill, “I Tried to Live without the Tech Giants. It Was Impossible,” New York Times, July 31, 2020. None of this is the byproduct of innovation; it’s just a markedly aggressive business strategy that was amply financed by the venture capital sector without requiring firms turn a profit or even meaningfully contribute to the public good.
But at long last, policymakers are poised for change. An emerging policy perspective aims to aggressively curb these practices and introduce a stronger set of checks and balances on tech corporate power.9Ibid. See also Lina M. Khan, “The Ideological Roots of America’s Market Power Problem,” Yale Law Journal Forum, June 4, 2018; Sandeep Vaheesan, “The Twilight of the Technocrats’ Monopoly on Antitrust?” Yale Law Journal Forum, June 4, 2018; and Tim Wu, The Curse of Bigness: Antitrust in the New Gilded Age (New York: Columbia Global Reports, 2018). This upswell is occurring within enforcement agencies in countries around the globe, through the appointments of Lina Khan, Jonathan Kanter and Tim Wu to leadership positions in the US government and through policy movements taking place in the US,10Investigation of Competition in Digital Markets, CP 117–8, Part 1, 117th Congress, July 2022. and EU,11European Commission, “Digital Markets Act: Rules for Digital Gatekeepers to Ensure Open Markets Enter into Force,” press release, October 31, 2022. Australia,12Australian Competition & Consumer Commission, “Digital Platform Services Inquiry 2020–25: Project Overview,” n.d., accessed March 3, 2023. South Korea,13“South Korea Approves Rules on App Store Law Targeting Apple, Google,” Reuters, March 8, 2022. and India,14Sourabh Jain, “India’s Competition Watchdog Is Probing Deals between Amazon, Flipkart and Their Preferred Sellers,” Business Insider India, May 31, 2022. among others.
Competition law is well designed for this purpose. It provides for both structural and behavioral remedies that can, when combined, end the kinds of practices that have allowed these companies to get so big.15Lina M. Khan, “The Separation of Platforms and Commerce,” Columbia Law Review 119, no. 4 (May 2019): 973–1098. It includes both ex ante interventions that can prevent firms from gaining too much market power and ex post enforcement measures that can address abuses of dominance when they occur.
This revitalized perspective on the proper role of competition law hearkens back to the origins of trust-busting (an era during which Progressives sought to break up monopolies and their hold on American industry and politics), and its recognition of the antidemocratic effects of consolidated economic power.16“Sherman Anti-Trust Act (1890),” Milestone Documents, National Archives, accessed March 3, 2023. This reinvigoration of antitrust doctrine marks a long overdue return to the original goals of the law: since the 1980s, antitrust enforcers have largely taken the view that corporate consolidation isn’t necessarily harmful if it doesn’t lead to higher prices, a legal doctrine referred to as the consumer welfare standard.17Robert Bork, The Antitrust Paradox: A Policy at War with Itself (New York: Free Press, 1993). This is a poor fit for addressing digital markets where consumers pay nothing to use services but nevertheless experience the harms of toxic competition.18See Lina M. Khan, “Amazon’s Antitrust Paradox,” Yale Law Journal 126, no. 3 (January 2017): 710–787; John M. Newman, “Antitrust in Zero-Price Markets: Foundations,” University of Pennsylvania Law Review 164, no. 1 (December 2015): 149–206; John M. Newman, Antitrust in Zero-Price Markets: Applications, Washington University Law Review 94, no. 1 (2016): 49–111; John M. Newman, Antitrust in Attention Markets: Objections and Responses, Santa Clara Law Review 59, no. 3 (2020): 743–769; John M. Newman, “Antitrust in Digital Markets,” Vanderbilt Law Review 72, no. 5 (2019): 1497–1561; and Maurice E. Stucke, “The Relationship between Privacy and Antitrust,” Notre Dame Law Review Reflection 97, no. 5 (2022): 400–417.
But it’s going to take time, effort and—most importantly—resources in order to effect meaningful change in the power concentrated in tech firms. There are decades of legal precedent under the consumer welfare standard to contend with, and antitrust enforcers likely have tough battles ahead while they attempt to steer the ship back toward a more direct confrontation of the sources of corporate power. As DOJ antitrust head Jonathan Kanter put it: “Unless we give courts the opportunity to confront new fact patterns, new issues, new economic realities that are becoming pervasive throughout the economy, we’re never really going to have the opportunity to advance the law in a way that makes it relevant and applicable to market realities and a modern economy.”19See Brian Fung, “The US Government Is Still Trying to Find Ways to Regulate Big Tech. He Has Some Ideas,” CNN, January 11, 2023, https://www.cnn.com/2023/01/11/tech/jonathan-kanter-doj/index.html; see also Charlotte Slaiman, “No Pain, No Gain: FTC Loses Bid to Block Facebook’s Acquisition of Within,” Public Knowledge February 9, 2023.
Even as they adopt a more muscular stance toward prosecuting Big Tech firms for antitrust violations in the courts, enforcement agencies are using other levers to make changes in the here and now: for example, the FTC and DOJ are pursuing a significant revision of the merger guidelines used to evaluate whether acquisitions by firms are anticompetitive.20Federal Trade Commission, “Federal Trade Commission and Justice Department Seek to Strengthen Enforcement Against Illegal Mergers,” press release, January 18, 2022. The FTC updated its interpretation of Section 5 of the FTC Act, which addresses “unfair methods of competition,” restoring legal authorities the FTC was charged to use by Congress but which the Commission largely left dormant in recent years.21Federal Trade Commission, “Policy Statement Regarding the Scope of Unfair Methods of Competition Under Section 5 of the Federal Trade Commission Act, Commission File No. P221202,” November 10, 2022. And it is pursuing rulemakings, such as one recently proposed to prohibit the use of non-compete clauses that serve to prevent workers from switching jobs within the same industry on the basis that these employer agreements depress wages and are an unfair method of competition.22Federal Trade Commission, “FTC Proposes Rule to Ban Noncompete Clauses, Which Hurt Workers and Harm Competition,” press release, January 5, 2023.
The changes afoot will necessarily be slow, and will likely involve political losses: antitrust cases take years to move through the courts, and take significant investments of resources and time from the agencies that pursue them.23See Kari Paul, “Google is facing the biggest antitrust case in a generation. What could happen?” Guardian, October 21, 2020, https://www.theguardian.com/technology/2020/oct/21/google-antitrust-charges-what-is-next; and Lauren Feiner, “The DOJ’s Antitrust Case against Google Is Ambitious but Risky,” CNBC, January 27, 2023. But these changes will be well worth the fight.
Antitrust and/as Industrial Policy
Industrial policy, or the deliberate strategic effort by governments to encourage the development of particular sectors of the economy, offers a useful macro-level lens through which to view recent movements in antitrust and the path ahead. The European Union has been early and aggressive in its prosecution of Big Tech firms28See Javier Espinoza, “How Big Tech Lost the Antitrust Battle with Europe,” Financial Times, March 21, 2022; Samuel Stolton, “EU braces for Big Tech’s legal backlash against new digital rulebook,” Politico, August 10, 2022; and Steve Lohr, “To Rein In Big Tech, Europe Looked Beyond Lawsuits. Will the U.S. Follow?” New York Times., but arguably doing so also aligns with its economic interest: Europe’s national champions have largely been eclipsed by US and Asian tech companies, and restoring competition in the tech industry is very much a strategic priority.29 “Emerging Non-European Monopolies in the Global AI Market,” Future of Life Institute, November 2022. By contrast, US industrial policy in recent decades has largely focused on the expansion of US corporate dominance globally, and this has enabled US-based tech monopolies to reach the scope and scale that they have: their interests have broadly been interpreted as being in the US national interest.30Maurice E. Stucke and Ariel Ezrachi, “The Rise, Fall, and Rebirth of the U.S. Antitrust Movement,” Harvard Business Review, December 15, 2017.
Historically, however, the United States has also acknowledged that allowing the concentration of unfettered monopoly power can create downstream political and governance harms, particularly where it begins to rival the power of the state—and this is reflected in the White House Executive Order on Promoting Competition in the American Economy, which acknowledges that America’s growth and economic standing in the world is threatened by the problem of economic consolidation.31White House, “Executive Order on Promoting Competition in the American Economy.” As the Order puts it, ”the answer to the rising power of foreign monopolies and cartels is not the tolerance of domestic monopolization, but rather the promotion of competition and innovation by firms small and large, at home and worldwide.”32Ibid. And Tim Wu, a former adviser to the White House on technology and competition policy, recently argued that sound industrial policy makes its investments in support of foundational technology and ecosystems, rather than funding companies as national champions.33“The Internet’s Midlife Crisis, Day 2 Keynote, Tim Wu,” Silicon Flatirons, February 9, 2023, video, 44:35, .
As such, though it may be more challenging to overcome past precedent and the significant lobbying resources of Big Tech firms, both in terms of its doctrine and enforcement powers the United States is potentially much better positioned to enact the kinds of clear structural reforms that would lead to long-lasting change if it can move beyond stating its intentions toward making concerted interventions.
Antitrust enforcement will be most effective where it engages how concentration in digital markets leads to—and results from—other kinds of tech-enabled harms.
A primary source of tech firms’ power is their ability to leverage the unique insights derived from their platforms, insights that gain greater weight through their network effects.34See Khan, “The Separation of Platforms and Commerce; and Khan, “Sources of Tech Platform Power.” Given the high level of concentration in the industry, these firms also use a variety of measures expressly designed to lock users into their ecosystem, making it harder to use other services and harder for new entrants to compete in a market.
Given this state of affairs, antitrust enforcement would be missing half the picture without also addressing how privacy, data protection, security, and other tech policy issues feed and are likewise shaped by the lack of competition in the tech industry. While enforcement agencies already have a number of tools at hand, many of the policy initiatives outlined below are designed with exactly this in mind. To boost their ability to pursue the unique nature of competition in digital markets, these proposals coalesce around a set of data-related issues that interface with competition specific to tech:
- Data advantages: Tech firms often try to acquire other firms to seek the additional insights that can be derived from their data. Some policy proposals seek to curb these data advantages by prohibiting firms from combining certain types of data streams, such as combining data collected from a covered platform and third-party data, or data across different lines of business, including recently acquired firms. Still others require that a firm can’t condition the quality of service on a platform to a user consenting to give over their data. In other words, opting out of data collection can’t result in a degradation of service.
- Interoperability and data portability: These provisions are designed to prohibit tech firms from building moats around their platforms, preventing (both consumer and business) users from switching to other services or leveraging insights from covered platforms.
- Self-preferencing: Many large tech firms operate marketplaces and also sell their own products on them. Several policy proposals mandate that these firms can’t tip the scales by promoting their own offerings above others, such as in search rankings or in ad placement.35For example, a recent NBER study found that Amazon consistently ranks its own branded products higher than observably similar products in consumer search results. See Chiara Farronato, Andrey Fradkin and Alexander MacKay, “Self-Preferencing at Amazon: Evidence from Search Rankings,” National Bureau of Economic Research (NBER), working paper 30894, January 2023.
The European Union’s Digital Markets Act will have important downstream implications for tech accountability, but will be part of a broader chorus of policy changes rather than its horizon.
The passage of the EU’s Digital Markets Act adds a number of tools to regulators’ tool kits to enable them to respond quickly to changes in the digital marketplace: from limits on combining data streams to transparency mandates.36See European Commission, “Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on Contestable and Fair Markets in the Digital Sector and Amending Directives (EU) 2019/1937 and (EU) 2020/1828 (Digital Markets Act),” Official Journal of the European Union, October 12, 2022; and “The Digital Markets Act Promises to Free People from Digital Walled Gardens,” EDRi, March 25, 2022. Whether they will do so—and to what extent the DMA’s guidelines will be self-enforceable—remains to be seen.37 Anne C. Witt, “Can the EU’s Digital Markets Act Rein in Big Tech?” Conversation, October 21, 2022.
The DMA will be applied adjacent to existing EU competition law, rather than as a replacement of existing statutes, and fills in a number of gaps in the current regulatory regime.38Luca Bertuzzi, “The Data Provisions in the EU’s Upcoming Big Tech Law,” International Association of Privacy Professionals (IAPP), March 22, 2022. The DMA also will complement the GDPR, strengthening and extending some of its rules for user consent and enhancing data portability and transparency requirements for consumer profiling algorithms through a set of ex ante obligations. Distinct from the GDPR, the DMA is much more focused on business users than it is on individuals. It is designed with several goals in mind: to ensure that digital markets stay open to new entrants, to ensure fairness in the relationships between digital gatekeepers and business users, and to strengthen the internal market within the EU by harmonizing national regimes as they apply across the EU.
There are several aspects of the DMA that could strengthen tech accountability:
- Restrictions on combining data silos: The DMA limits the ability of Big Tech (“gatekeeper” firms) to combine multiple sources of data from disparate data streams in order to gain insights across their many platforms and business holdings. This would prevent firms from combining data across their holdings—for example, between Amazon Web Services and Amazon Marketplace—and those of third parties.
- Restrictions on coercive “conditional consent”: This requires “gatekeeper” firms to offer less personalized but equivalent versions of the same platform to all users, regardless of whether the end user consents to give companies access to their data.39Damien Geradin, Konstantina Bania, Theano Karanikioti, “The Interplay between the Digital Markets Act and the General Data Protection Regulation,” August 29, 2022. See page 10.
- Marketplace mandates: Under the DMA, “gatekeeper firms” must allow their business users to curate their offerings across different kinds of marketplaces—for example, app makers should be able to tailor their offerings across Apple’s App Store and Google’s Android—and gatekeepers cannot bundle several platform services or combine them with identification services. This provision is designed to inhibit existing practices that lock business users into certain marketplaces and prevent them from offering different prices or services across marketplaces.
- Data portability: The DMA also contains requirements that gatekeepers enable data portability continuously and in real time, so that end users can transfer their data outside the covered platform service, reducing the burden involved in switching from one platform to another. This provision is designed as a complement to the GDPR, and extends to business users of a covered platform in addition to individual end users. Gatekeepers also must implement high-quality technical measures—like APIs—that ensure that data can be ported continuously, in real time and free of charge.40It may also extend beyond data provided by an end user to cover data that is inferred or derived by the platform. Ibid.; see page 5.
While all of these provisions will have important effects on reducing concentration of power and address the mutually reinforcing dynamics across competition, privacy, and tech policy, there are some limitations to the legal regime outlined under the DMA that indicate competition policy will ultimately need to go further. Most notable is the way the law approaches defining who will be covered by its provisions. The DMA is targeted to the largest firms, which act as gatekeepers. Its definitions require that firms have a large size and impact on the EU internal market, that they control an important gateway for business users to reach end users, and that control be entrenched and durable.41See European Commission, “Digital Markets Act: Rules for Digital Gatekeepers to Ensure Open Markets Enter into Force”; and “The Digital Markets Act Must Do More to Protect End Users’ Rights,” EDRi, February 11, 2021. The size requirements under this definition would by default likely exclude certain firms (including Twitter), though the provision that the European Commission could select gatekeepers based on more subjective criteria such as market impact could potentially enable Twitter’s inclusion.42Caitlin Chin, “Elon Musk Bought Twitter Just in Time for a Social Media Crackdown,” Slate, December 21, 2022. This definitional challenge indicates that who counts as “Big Tech” will likely be a key front for policy battles to come.
The antitrust bill package before Congress contains a number of structural curbs on firms’ power. Though the American Innovation and Choice Online Act and Open App Markets Act are the flagships, the entire package is important for reducing key levers through which tech firms amass power.
The package of congressional bills intended to supercharge enforcers’ ability to push back against concentration in the tech industry received a flurry of attention in 2022, but little movement forward. Built upon a lengthy House investigation into competition in digital markets, the package is designed to introduce a series of curbs on tech firms’ power. Two bills form the flagship antitrust measures: first, the American Innovation and Choice Online Act, or AICOA (HR 3816, S2992), focused on self-preferencing practices used by tech platforms to advantage their own products.43American Innovation and Choice Online Act, S. 2992, 117th Congress (2021–2022). It outlines a series of measures that prevent firms from disadvantaging other companies’ products and services, and also states that they can’t use nonpublic data to advantage their own products. For example, this would prevent Amazon from promoting its own products, such as pushing private-branded goods up in search rankings over those sold by third-party sellers using its Marketplace platform. Second, the Open App Markets Act would set terms for operation of app marketplaces by prohibiting companies like Apple and Google from prohibiting users from uploading apps from sources other than their proprietary app stores, and requiring companies to let users access payment systems that don’t charge the app store commissions.44Open App Markets Act, S.2710, 117th Congress (2021-2022).
While these bills have received the bulk of the attention, the other bills constitute important structural and behavioral curbs on tech power: for example, the Platform Competition and Opportunity Act declares acquisitions of direct and potential future competitors unlawful and shifts the burden of proof to dominant platforms to demonstrate that the merger isn’t anticompetitive, an ex ante measure that would significantly relieve the underresourced merger review teams at the enforcement agencies.45See Anna Edgerton and Leah Nylen, “Biden’s Antitrust Chiefs Seek Funds for Strong Enforcement,” Washington Post, September 22, 2022; and Federal Trade Commission, “FTC Adjusts its Merger Review Process to Deal with Increase in Merger Filings,” August 3, 2021.
The Ending Platform Monopolies Act would curb interplatform conflicts of interest by forbidding ownership of lines of business that use the covered platform for sale or provision of products and services from offering products that the covered platform requires a business user to purchase in order to access the platform, or that create a conflict of interest.46Ending Platform Monopolies Act, H.R. 3825, 117th Congress (2021–2022). The bill also tackles the complicated web of interfirm board memberships endemic within the industry by forbidding individuals who are in leadership positions at covered platforms from simultaneously serving on the boards of other covered platforms.
The ACCESS Act would reduce barriers to switching between services, requiring covered platforms to maintain interfaces for the secure transfer of user data to other platforms and to enable interoperability with other platforms’ systems.47ACCESS Act of 2021, H.R. 3849, 117th Congress (2021–2022). It would also provide for the noncommercialization of data by mandating that covered platforms can’t use interoperability to collect, use, or share user data except for the purpose of maintaining the privacy and security of the information or to ensure interoperability.48See Bennett Cyphers and Cory Doctorow, “The New ACCESS Act Is a Good Start. Here’s How to Make Sure It Delivers,” Electronic Frontier Foundation (EFF), June 21, 2021; and Bennett Cyphers and Cory Doctorow, “Privacy without Monopoly: Data Protection and Interoperability,” Electronic Frontier Foundation (EFF), February 12, 2021.
Lastly, the Merger Filing Fee Modernization Act adjusts premerger filing fees to tie them to the Consumer Price Index49Merger Filing Fee Modernization Act of 2022, H.R. 3843, 117th Congress (2021–2022)., increasing the resources available to cash-strapped antitrust enforcement agencies; and the State Antitrust Enforcement Venue Act would prohibit firms from requesting state antitrust cases from being transferred to other venues or consolidated into a single multidistrict litigation proceeding.50State Antitrust Enforcement Venue Act of 2022, H.R. 3460, 117th Congress (2021–2022). These last two measures were signed in to law, even despite significant tech-driven opposition. While these were arguably the most low-hanging, they remain critical wins and indicate movement on antitrust is possible.
The entire package together provides a strong set of levers for addressing concentration of power in the tech industry, if the tenuous bipartisan coalition can see them through. But they’re facing an uphill battle: tech firms are bankrolling a ferocious lobbying campaign in opposition to these bills, and thus far have been successful in ensuring they never see the floor of the Senate for a vote.
Summarizing Antitrust bills in consideration