Use and Abuse of Antitrust Law

Antitrust is a unique issue in modern American politics. In an era of deep political polarization, there is a bipartisan consensus that Washington should act to rein in big tech’s perceived power. While conservatives argue big tech has a liberal bias and are censoring their speech online, liberals contend that big tech has amassed too much market power and has depressed wages for workers. While conservatives and liberals disagree about the consequences of big tech’s influence, both seek to use antitrust statute to resolve these concerns.

The desire of both conservatives and liberals to use antitrust statute to resolve their political issues with big tech displays a profound misunderstanding of what antitrust regulation is, its role in protecting consumer welfare, and guaranteeing a competitive market. Political misunderstanding surrounding antitrust should concern everybody because it opens the opportunity for politicians to subvert the purpose of antitrust protections and inflict significant harm onto the people it’s designed to protect, the consumers.

In October 2020, Democrats on the House Antitrust Subcommittee released their much-anticipated report arguing big tech companies had “captured control” of the digital marketplace. The report, opposed by Republicans who released their recommendations, ultimately called for breaking up the big tech companies. Federal antitrust enforcers were also busy in 2020, with the Department of Justice (DoJ) and Federal Trade Commission (FTC) suing Facebook, Google, and Visa.

Conservatives have attempted to use antitrust reform to resolve their concern about big tech censoring their opinions online. In Rep. Ken Buck’s (R-CO) minority antitrust report, he explicitly claimed that tech platforms are “exerting overt bias against conservative outlets,” and Congress needs to act. While speech on the internet is an important philosophical issue, it is well beyond the scope of antitrust legislation that is predominantly concerned with limiting monopolistic companies’ ability to dictate prices. Republican concern about speech online would be better solved through focused debate on Section 230 of the Communications Decency Act.

Democrats have been equally aggressive in attempting to correct non-related issues through antitrust reform. Progressives have sought reform to antitrust law by arguing that big tech companies depress wages and employ people on starvation wages. In fact, Sen. Amy Kloubauchar’s Competition and Antitrust Law Enforcement Reform Act claimed more stringent antitrust legislation was needed because monopolies “depress wages.”

Similar to Republican critics of censorship online, concern over low pay is well beyond the scope of antitrust reform given it does not deal with the power of monopolies to control the market. This concern would be better addressed through reforming current legislation such as the Fair Labor Standards Act.

Data privacy is another issue that has become central to the contemporary antitrust debate. Critics of big tech have consistently warned about how large tech companies are abusing consumer data. This debate is also peripheral to the original intent of the antitrust statutes, given it concerns how both large and small companies handle consumer information. Additionally, there are only a narrow set of circumstances in which data could be used in an anti-competitive manner or in a way that harms consumers. This is because consumers often provide their data willingly in return for a product or service.

Instead of inserting data privacy into the antitrust debate, Congress should pass a comprehensive federal data privacy law that harmonizes standards across the states and ensures consumer data is not vulnerable to misuse and theft.

Muddling free speech issues, workers’ pay, or data privacy into the antitrust debate misses the importance of antitrust law to facilitate a competitive economy that prioritizes consumers. Additionally, it ignores the original intent of antitrust law: to protect consumers from anti-competitive practices.

America’s first Antitrust law, the Sherman Antitrust Act, was signed into law in 1890 and outlawed “every contract, combination, or conspiracy in restraint of trade.” The Sherman Act also outlawed “monopolization, attempted monopolization, or conspiracy or combination to monopolize.” Most significantly, the Act also gave the federal government the power to break up large monopolies, such as Standard Oil in 1911.

The Sherman Act was strengthened when President Wilson signed the Clayton Act into law that created the FTC, prohibited anti-competitive acquisitions, collusive price fixing, and predatory pricing.

The 1970s saw the last significant change to antitrust legal theory, with the adoption of the consumer welfare standard. While there is no uniform definition of the consumer welfare standard, its proponents believed “antitrust law should serve consumer interests and that it should protect competition rather than individual competitors.”

The consumer welfare standard first came into antitrust jurisprudence in 1974 when the Supreme Court correctly ruled “statistics concerning market share and concentration, while of great significance, are not conclusive indicators of anti-competitive effects.”

What unifies all three changes to antitrust law is how they prioritize consumers and a competitive marketplace. Despite this, politicians on both the left and right seek to use antitrust for alternative political purposes to place the consumer and competitive marketplace second to partisan rancor. Using the antitrust statute and reform against its original intent deprioritizes consumers and the marketplace. While both parties may have legitimate concerns about big tech’s power, any changes that are disconnected from the original purpose should be pursued by separate legislation that can better deal with perceived problems. This way, issues of market monopolization can be addressed without harming consumers or the marketplace. Any changes to antitrust law should always first and foremost prioritize consumers and consumer welfare.

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