Congress Faces Renewed Pressure to ‘Modernize Our Antitrust Laws’

WASHINGTON – When the country’s antitrust laws were created more than a century ago, they were aimed to conquer industries like big oil.

But tech giants like Amazon, Facebook, Google, and Apple, which dominate e-commerce, social networks, online advertising, and search, have risen in ways unforeseen by the law. In the last few decades the courts have also made the rules more restrictive.

On Monday, two judgments to dismiss federal and state antitrust lawsuits against Facebook once again raised the question of whether the laws are suitable to take over the power of technology. A federal judge dismissed the federal suit because he said the Federal Trade Commission had failed to prove that Facebook had a dominant market share and that states had waited too long to bring their case.

The decisions underscored how prudent and conservative courts could slow the increasingly aggressive urge by lawmakers, regulators, and the White House to curb tech companies, fueling calls for a regulatory overhaul by Congress and providing regulators with more legal tools. to the tech companies.

For months, Congress has been debating whether the monopoly laws are in need of reform. At a March hearing, Rep. David Cicilline, a Democrat from Rhode Island, said the country needed “a massive overhaul of our antitrust laws and major updates to our competition system” to oversee the largest tech companies.

Moments later, Rep. Ken Buck, a Republican from Colorado, agreed. He called on the legislature to adapt antitrust law to the business models of Silicon Valley companies.

This week’s rulings have now put pressure on lawmakers to pass a recently proposed legislative package that would rewrite important aspects of monopoly laws to make some of the tech giants’ business practices illegal.

“This will bolster the case for the legislation,” said Herbert Hovenkamp, ​​an antitrust expert at the University of Pennsylvania’s Law School. “It seems to be evidence that antitrust laws are not up to the challenge.”

The bill, which consists of six bills, was presented this month and passed to the House of Representatives Judiciary Committee last week. The bills would make it difficult for big tech companies to buy emerging competitors, prefer their own services on their platforms, and forbid them to use their dominance in one business to gain the upper hand in another.

The bills are far more extensive than the traditional cartel doctrine. According to the current norms, which have been strengthened by decades of business-friendly court rulings, companies tend to be judged as violations of competition law if their behavior has harmed the well-being of the consumer. The main indicator of this damage was whether companies charged people higher prices.

But tech companies like Facebook and Google offer most of their services for free. (They’re paid by advertisers instead.) Many technology and legal experts – including Lina Khan, a researcher who President Biden named to lead the FTC this month – have argued that a broader definition of consumer welfare beyond prices should be applied . Consumer harm can also translate into decreased product quality, as Facebook users experience a loss of privacy when their personal information is collected and used for targeted advertisements.

Judge James E. Boasberg of the US District Court for the District of Columbia said in one of his rulings on Monday that Facebook’s business model made it particularly difficult for the government to meet the standard for proceeding.

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June 29, 2021, 1:58 p.m. ET

The government, said Judge Boasberg, did not provide enough evidence that Facebook held monopoly power. One of the difficulties he highlighted was that Facebook did not charge its users to access its website, which meant that its market share could not be measured by revenue. The government has not found a good alternative measure to advance its position, he said.

He also spoke out against another part of the FTC’s lawsuit, which looked at how Facebook monitored the use of the data generated by its product, while also pointing out the kind of conservative antitrust doctrine that critics felt was inconsistent with the Business practices of the technology industry.

The FTC, which filed the federal antitrust lawsuit against Facebook in December, can file a new complaint within 30 days that will dispel the judge’s concerns. The attorneys general can appeal against Judge Boasberg’s second verdict, which dismissed a similar case.

FTC spokeswoman Lindsay Kryzak said the agency is “closely reviewing the opinion and evaluating the best option for the future.”

For Facebook, the rulings were another example of the company’s continued ability to evade the harshest consequences for its business. Although the social network was fined $ 5 billion by the FTC for data breaches in 2019, there have been few significant changes to the way the company’s products work. And Facebook continues to grow: More than 3.45 billion people use one or more of its apps every month – including WhatsApp, Instagram and Messenger.

The rulings were particularly deflationary after measures to curb tech power in Washington gained momentum. Ms. Khan’s appointment to the FTC this month followed the appointment of Tim Wu, another lawyer who is critical of the industry, to the National Economic Council. Bruce Reed, the President’s deputy chief of staff, has called for a new privacy policy.

Mr Biden has yet to name anyone to permanently head the Justice Department’s antitrust division, which filed a lawsuit last year arguing that Google illegally protected its monopoly on online search.

The White House is also expected to pass an executive order this week aimed at consolidating companies in technology and other areas of the economy. A White House spokesman did not respond to requests for comments on the executive order or Judge Boasberg’s rulings.

Activists and lawmakers said this week that Congress shouldn’t wait to give regulators more tools, money, and legal red lines to use against the tech giants. Mr Cicilline, along with Rep. Jerrold Nadler, chairman of the House Judiciary Committee, said in a statement that the judge’s decisions on Facebook “demonstrate the urgent need to modernize our antitrust laws to address anti-competitive mergers and abusive behavior in the digital economy fight. ”

Senator Amy Klobuchar, a Democrat from Minnesota, who chairs the Antitrust Subcommittee of the Senate Judiciary Committee, answered her call.

“After decades of binding Supreme Court rulings 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 law in order to meet the challenges of the modern digital economy.”

But the six bills to update monopoly laws still have a long way to go. They have yet to pass the full house, where they are likely to be criticized by moderate Democrats and libertarian Republicans. Then they must survive the Senate, where Republican support is needed for proposals to overcome the filibuster of the law.

The bills may also not go as far as changing antitrust law, as some hope. One of the bills was amended by the Judiciary Committee last week to strengthen the standard on consumer welfare.

Nonetheless, Monday’s rulings gave impetus to the proposals. Bill Baer, ​​who headed the Justice Department’s antitrust division during the Obama administration, said it “gives a tremendous boost to those in Congress who believe the courts are too conservative when it comes to monopoly power.”

Facebook and the tech platforms might like the judge’s decisions, he said. “But they may not like what happens in Congress.”

Mike Isaac contributed to the coverage.

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