Bad Moon Rising? House Hearing on Tech Filled With Calls for Government Intervention

The House Judiciary Subcommittee on Antitrust held their last of seven hearings on major technology companies Thursday, with testimony from a number of stakeholders on what (if any) changes should be made to antitrust laws and enforcement - specifically to address the role tech companies play in the modern American economy and society. Unfortunately, the more prudent calls for little or no changes to antitrust laws were few and far between at the hearing. Instead, many lawmakers and most of the majority’s chosen witnesses advocated for aggressive, expansive changes to antitrust laws and enforcement that would upend decades of pro-growth policy across the three branches of government.

NTU wrote last month that this hearing was an opportunity for policymakers to reject a major shift in antitrust enforcement. Unfortunately, some lawmakers from across the ideological spectrum have sought a shift away from the decades-long “consumer welfare” standard for antitrust enforcement and towards political adventurism. As we wrote in September:

The history of antitrust is littered with unforeseen consequences - eventually, the beneficiary of an FTC or DOJ action in one setting will become the target in another. That is why carefully defined, universally applied limits on antitrust power are vital.

The calls from several witnesses and some lawmakers at Thursday’s hearing were nearly the opposite of “carefully defined, universally applied limits on antitrust power.” Sally Hubbart, an expert at the Open Markets Institute, wants Congress to reverse “wrongly decided court decisions” on antitrust, “make antitrust cases easier, faster, and cheaper,” ban certain mergers and acquisitions during the COVID-19 public health emergency, and create a type of Glass-Steagall for technology companies that bans them from selling their own products on platforms or marketplaces they also operate.

This latter proposal was a popular one at the hearing, and the view is shared at least in part by Sabeel Rahman at Demos and Zephyr Teachout at Fordham Law. More concerningly, Antitrust Subcommittee Chairman David Cicilline (D-RI) has expressed interest in a proposal like this. As the Brookings Institution wrote of their recent interview with Cicilline:

Congressman Cicilline feels America needs Glass-Steagall legislation for the internet because large internet platforms have unfair advantages and harm small and medium-sized businesses. He says it is time for Congress to develop new rules of the road for the digital economy and stop firms from selling goods while also determining the shape of the marketplace.

NetChoice’s Carl Szabo recently pointed out how harmful these proposals are, noting that physical marketplaces like Target, Walmart, and Costco sell their own products in marketplaces they control to the great benefit of consumers. If lawmakers would not ban the Targets of the world from selling their own products (often at a lower cost than brand names), it makes little sense to ban this practice in a digital marketplace.

Several witnesses also called on Congress to break up major technology companies like Google and Facebook, and/or to unwind acquisitions these companies made years ago (i.e., Facebook’s acquisition of Instagram). While it may be easy for witnesses to issue statements of support for these drastic measures, none of witnesses appeared to offer remedies for the impact such breakups would have on employment at these companies, on the millions or billions of users for these various platforms and services, or on the efficiencies and innovations that acquired companies have developed in tandem with each other over years of partnership.=

At least one witness called for “public options” to the services that technology companies provide. This viewpoint ignores the numerous historical failures of federal ownership in emerging enterprises. Fortunately, the Subcommittee’s ranking member, Rep. Jim Sensenbrenner (R-WI), explicitly rejected this approach. It is nonetheless concerning that such a proposal was raised in the hearing.

This same witness, Mr. Rahman from Demos, argued at one point:

...unlike governmental regulators, the decisions made by private firms with infrastructural power are not subject to mechanisms for democratic representation, participation, or public accountability.

There’s a fundamental irony in such a statement being made in the midst of an expansive, far-reaching, year-long Judiciary Committee investigation into the private firms in question. Democratically elected representatives are seeking to hold these companies publicly accountable for alleged harms to competition, and inviting citizens to participate in the process. In other words, all three things Mr. Rahman says cannot happen with private firms are instead happening as we speak. While Congress and other government bodies have the ability to hold businesses accountable when necessary, they must use this authority judiciously. Consumers generally provide a more effective and timely check on businesses by opting to take their time, membership, or money to firms that provide the best goods and services. Public options might theoretically also be accountable to the people, but do not respond to market signals like private businesses. We need only point to extraordinary levels of government waste and abuse of taxpayer funds at the Pentagon, in the farm bill, and across government to suggest that public oversight of taxpayer dollars is much easier in principle than in practice. “Public options” for basic internet services would have to wrestle with all of these questions and more.

A more concerning theme of the hearing is that some stakeholders who purport to be advocates for limited government were also calling for a significant enhancement of the federal government’s powers to police technology companies. Rachel Bovard of the Internet Accountability Project said that she does not support an update of antitrust laws, but that a potential benefit of more aggressive antitrust enforcement would be a correction of so-called “viewpoint bias” against conservatives. Other limited government advocates, including NTU, believe that antitrust enforcement should never be pursued because of real or perceived political benefits. In other words, the consumer welfare standard does not allow room for the federal government to pursue antitrust enforcement with political or ideological aims.

Rep. Ken Buck (R-CO) said he considers himself a “small government Republican,” but also suggested that the budgets of the antitrust agencies should be significantly higher than they are.

It is difficult to square these “small government” claims with the significant impact existing  antitrust laws have to shape the American economy. As George Mason University’s Abbott Lipsky pointed out:

...since antitrust enforcement provides the main standards for competitive conduct throughout the private economy, these refinements in substantive antitrust interpretation must be given a significant share of the credit for the long period of unprecedented economic success that the U.S. has enjoyed.

And herein lies the danger of the “bipartisan” label on the Judiciary Committee’s investigation and subsequent report, which reports indicate is due in the coming days. There may be a bipartisan distaste for specific technology companies among some lawmakers, though lawmakers have reached these opinions for vastly different reasons.

What this investigation should not translate to is a false bipartisan consensus on the future direction of the nation’s antitrust laws. Embedded in Chairman Cicilline’s aggressive pursuit of this investigation is tentative support, at minimum, for significant changes to antitrust law that would steer the branches of government away from a steady consumer welfare standard. The follow-on effects of such proposals, if enacted into law, could make the U.S. less wealthy, less innovative, and less well-prepared to lead the world in industries, sectors, and technologies that will determine the direction of the global economy for decades to come. We would urge all lawmakers, Republican and Democrat, to proceed with significant caution. As Ranking Member Sensenbrenner said, we do not need to change existing laws or the consumer welfare standard.