Last Updated on June 29, 2021 by admin
WASHINGTON — When the nation’s antitrust laws were created more than a century ago, they were aimed at taking on industries such as Big Oil.
But technology giants like Amazon, Facebook, Google and Apple, which dominate e-commerce, social networks, online advertising and search, have risen in ways unforeseen by the laws. In recent decades, the courts have also interpreted the rules more narrowly.
On Monday, a pair of rulings dismissing federal and state antitrust lawsuits against Facebook renewed questions about whether the laws were suited to taking on tech power. A federal judge threw out the federal suit because he said the Federal Trade Commission had not proved that Facebook holds a dominant market share, and that the states waited too long to make their case.
The decisions underlined how cautious and conservative courts could slow what has become an increasingly aggressive push by lawmakers, regulators and the White House to restrain the tech companies, fueling calls for Congress to revamp the rules and provide regulators with more legal tools to take on the tech firms.
For months, Congress has debated whether the monopoly laws need reform. At a hearing in March, Representative David Cicilline, a Democrat of Rhode Island, said the country needed a “massive overhaul of our antitrust laws and significant updates to our competition system” to police the biggest technology companies.
Moments later, Representative Ken Buck, a Colorado Republican, agreed. He called for lawmakers to adapt antitrust laws to fit the business models of Silicon Valley companies.
This week’s rulings have now put the pressure on lawmakers to push through a recently proposed package of legislation that would rewrite key aspects of monopoly laws to make some of the tech giants’ business practices illegal.
“This is going to strengthen the case for legislation,” said Herbert Hovenkamp, an antitrust expert at the University of Pennsylvania Law School. “It seems to be proof that the antitrust laws are not up to the challenge.”
The proposed legislation, which is made up of six bills, was introduced this month and passed the House Judiciary Committee last week. The bills would make it harder for the major tech companies to buy nascent competitors, give preference to their own services on their platforms, and ban them from using their dominance in one business to gain the upper hand in another.
The bills are far more expansive than traditional antitrust doctrine. Under current norms, which have been solidified by decades of business-friendly court rulings, companies tend to be judged to have violated competition laws if their behavior has hurt the welfare of consumers. The main measure of that harm has been whether companies have charged people higher prices.
But tech companies like Facebook and Google provide most of their services free. (They are instead paid by advertisers.) Many tech and legal experts — including Lina Khan, a scholar whom President Biden named this month to run the F.T.C. — have argued that a broader definition of consumer welfare, beyond prices, should be applied. Consumer harm, they have said, can also be evident in reduced product quality, like Facebook users suffering a loss of privacy when their personal data is harvested and used for targeted ads.
In one of his rulings on Monday, Judge James E. Boasberg of U.S. District Court for the District of Columbia said that Facebook’s business model had made it especially difficult for the government to meet the standard for going forward with the case.
June 29, 2021, 12:44 p.m. ET
The government, Judge Boasberg said, had not presented enough evidence that Facebook held monopoly power. Among the difficulties he highlighted was that Facebook did not charge its users to access its site, meaning its market share could not be assessed through revenue. The government had not found a good alternative measure to make its case, he said.
He also ruled against another part of the F.T.C.’s lawsuit, concerning how Facebook polices the use of data generated by its product, while citing the kind of conservative antitrust doctrine that critics say is out of step with the technology industry’s business practices.
The F.T.C., which brought the federal antitrust suit against Facebook in December, can file a new complaint that addresses the judge’s concerns within 30 days. State attorneys general can appeal Judge Boasberg’s second ruling dismissing a similar case.
Lindsay Kryzak, a spokeswoman for the F.T.C., said that the agency was “closely reviewing the opinion and assessing the best option forward.”
For Facebook, the rulings were another instance of the company’s continued ability to evade the harshest consequences to its business. Though the social network was fined $5 billion by the F.T.C.
in 2019 for privacy violations, there were few significant changes to how the company’s products operate. And Facebook continues to grow: More than 3.45 billion people use one or more of its apps — including WhatsApp, Instagram or Messenger — every month.
The decisions were particularly deflating after actions to rein in tech power in Washington had gathered steam. Ms. Khan’s appointment to the F.T.C. this month followed that of Tim Wu, another lawyer who has been critical of the industry, to the National Economic Council. Bruce Reed, the president’s deputy chief of staff, has called for new privacy regulation.
Mr. Biden has yet to name anyone to permanently lead the Justice Department’s antitrust division, which last year filed a lawsuit arguing Google had illegally protected its monopoly over online search.
The White House is also expected to issue an executive order this week targeting corporate consolidation in tech and other areas of the economy. A spokesman for the White House did not respond to requests for comment about the executive order or Judge Boasberg’s rulings.
Activists and lawmakers said this week that Congress should not wait to give regulators more tools, money and legal red lines to use against the tech giants. Mr. Cicilline, along with Representative Jerrold Nadler, the chairman of the House Judiciary Committee, said in a statement that the judge’s decisions on Facebook show “the dire need to modernize our antitrust laws to address anticompetitive mergers and abusive conduct in the digital economy.”
Senator Amy Klobuchar, a Democrat of Minnesota who chairs the Senate Judiciary Committee’s subcommittee on antitrust, echoed their call.
“After decades of binding Supreme Court decisions that have weakened our antitrust policies, we cannot rely on our courts to keep our markets competitive, open, and fair,” she said in a statement. “We urgently need to rejuvenate our antitrust laws to meet the challenges of the modern digital economy.”
But the six bills to update monopoly laws have a long way to go. They still need to pass the full House, where they will likely face criticism from moderate Democrats and libertarian Republicans. Then they will have to survive the Senate, where Republican support is necessary for proposals to overcome the legislative filibuster.
The bills may also not go as far in altering antitrust laws as some hope. One of the bills was amended last week by the Judiciary Committee to reinforce the standard around consumer welfare.
Even so, Monday’s rulings have given the proposals a boost. Bill Baer, who led the Justice Department antitrust division during the Obama administration, said it “gives tremendous impetus to those in Congress who believe that the courts are too conservative in addressing monopoly power.”
Facebook and the tech platforms might like the judge’s decisions, he said. “But they might not like what happens in the Congress.”
Mike Isaac contributed reporting.