In the United States, the executive branch, the courts and Congress are working to restrict the dominance of the American tech giants.
In the 1960s, the US economy was driven by the big three in the auto industry: GM, Chrysler and Ford. Today it is powered by Big Tech. Over the past decade, US Big Tech has revolutionized the Internet economy, but has reportedly abused its dominance.
In June 2019, antitrust authorities agreed to focus on Google, Apple, Facebook and Amazon, while dividing the responsibility for investigations. In October 2020, the House committee completed a report recommending a series of measures to tackle allegedly anti-competitive behavior by companies. And in June, the committee ordered the flagging of a series of antitrust bills directed at Big Tech.
Last December, the U.S. Federal Trade Commission (FTC), in cooperation with 46 U.S. states, launched an antitrust lawsuit against Facebook over its acquisition of two rivals, Instagram and WhatsApp, and its monopoly power. result.
The Antitrust Division of the US Department of Justice (DOJ) is preparing a second monopoly lawsuit against Alphabet’s Google over its digital advertising business.
Congress could also call for legislation to tackle the anti-competitive behavior of Big Techs.
These are just a few of the recent signals that US antitrust laws may be on the verge of tightening.
Big Tech’s $ 9 trillion market capitalization
The combined market capitalization of the five biggest tech giants reflects their dominance. It exceeds $ 9 trillion: Apple ($ 2.4 trillion), Microsoft (2.2 tr), Google (1.8 tr), Amazon (1.7 tr) and Facebook (1.0 tr). It is their controversial conduct that has made them antitrust targets.
In the United States, antitrust law emerged with industrialization, income polarization and Big Business in the late 19e century. It was then that the Sherman Act (1890), the Clayton Act (1914) and the Federal Trade Commission Act (1914) were enacted to promote competition and remove monopolies. These laws have been interpreted and applied differently in different times.
If the more permissive “rule of reason” reflected early antitrust policies, post-Depression advocates relying on “structuralist” rules aimed at combating excessive market concentration. As neoliberal economic policies triumphed in the 1970s, they were accompanied by the rise of the “Chicago School” and its more permissive antitrust views, presumably grounded in law and economics.
Since then, these interpretations have reflected the leverage effect of large companies, but also concerns about competitiveness in the face of global competition. Over the past decade, criticism of Big Tech has intensified, as evidenced by broad antitrust investigations in the United States and the European Union (EU).
Revolving doors between antitrust agencies and their targets
The first Big Tech case emerged when 19 states and the Justice Department sued Microsoft in 1999. Despite the software giant’s decision to split, subsequent years of transactions resulted in a seamless settlement.
Just days ago, the FTC recently discovered that the Big Five had engaged in 616 acquisitions in 2010-19, each exceeding $ 1 million, but too small to report to antitrust agencies. It was a clever panman strategy to stimulate monopoly practices.
When President Biden appointed Lina Khan as FTC chairman earlier this year and Jonathan Kanter as head of DOJ antitrust, these steps were applauded by antitrust reformers. But Big Tech’s counterattacks followed quickly. Big Tech accuses Khan and Kanter of “unfair bias” and “conflict of interest” – but without a legal basis.
The real challenge for US antitrust laws is the “revolving door” policy. Big Tech has been recruiting antitrust regulators from the FTC and DOJ for years. From the executive suites of the companies they should oversee; antitrust law enforcement officials are reluctant to turn against their former and future potential employers.
The problem is systemic and results in conflicts of interest and moral hazards, to the detriment of competition and consumers.
Antitrust considerations in emerging economies
To some extent, US antitrust practices parallel similar trends in high-income Western countries. But since the American tech giants have reigned in the global technology sector, their predominance merits further examination.
Over the past decade, a generation of new multinational corporations has also emerged from developing economies, including Chinese internet giants Tencent, Alibaba, JD, Xiaomi, and Baidu. Hence also the rise of the anti-monopoly law in China since 2008.
Yet antitrust law in emerging economies is complicated by additional considerations. In their home markets, per capita incomes are significantly lower than in the West. Thus, large companies must rely on profitable operations, difficult to reproduce by multinationals in rich countries. This is why the American automakers – GM, Ford – recently withdrew from India.
Second, domestic markets fueled the national monopoly conduct of the US tech giants until the rise of the European and Japanese challengers in the 1960s and 1970s. In contrast, the challengers of emerging economies had to fight from the start. departure with richer and more globalized technological giants.
Third, the Trump and Biden administrations have exploited controversial instruments, particularly against Chinese technology challengers, including tariff wars and protectionism, unilateral sanctions not supported by international law; even the illegal detention of company directors. Such behavior does not appear to be motivated by competitive concerns, but by geopolitics aimed at reclaiming 5G leadership for military purposes.
Distinctive challenges, distinct policies
Competitive considerations and distinctive challenges – lower purchasing power, global competition and controversial protectionist attacks – underscore the importance of equally distinct antitrust policies in China and other emerging economies.
Antitrust authorities should seek to ensure fair and competitive markets in their country. Yet they cannot ignore the impacts of global competition, including adverse trends and controversial practices against the challengers of developing economies.
It’s a difficult balancing act.
The original version was published by China Daily on September 27, 2021.