The Antitrust Dilemmas of “Big Tech”

The Digital Revolution of the last decade increasingly permeates every walk of life. How, in your view does technology transform our lives and our societies including the markets in general?

It’s difficult to understate how much the Digital Revolution has altered society and markets. First off, I think it’s important to note that companies have historically sought to capture our attention as a source of economic value by clandestinely monitoring, tracking, and engaging us. That said,

modern technology offers companies a litany of ways of slyly influencing our social and economic habits that can hardly be compared to conventional method in terms of magnitude, effectiveness, and (unintended) consequences.

For instance, it’s remarkable, or scary, that companies have so effectively monetized “free” (or better yet, “zero-price) content. In light of this dynamic, some companies have determined that people are more likely to pay attention to, and engage with, “angry” types of content, incentivizing companies to emphasize extremism, racist content, and misinformation. Given the scale of large platforms and apps, this dynamic has truly altered society’s fabric and discourses. Markets as well as our lives are indeed meaningfully different than just a couple of decades ago.

The Digital Revolution allows non-state actors such as large tech companies to become centers of powers in an information society. Is there any parallelism between this phenomenon and the so called “Gilded Age” that was marked by the rise of corporate giants? What similarities and differences do you see between the “Gilded Age” and today’s rise of Big Tech such as Amazon, Apple, Google, Facebook and Microsoft?

This is a really good yet difficult question. To a lot of observers, a motivation of the Sherman Act was the accumulation of political power—not just economic power. It is said that people during the Gilded Age feared not just high prices and restricted output, but also the ability of large corporations and powerful magnates to alter America’s political and social landscape. In this light, you could perhaps draw similarities between the Gilded Age and today’s era of Big Tech. There are, however, notable differences. A huge distinction is that some of today’s ostensible monopolists like Amazon offer a wide variety of cheap prices! Another firm described as a monopolist, Apple, offers extremely popular products known for their high-qualities. In this sense, it can be much more difficult to tell how monopoly power harms people—at least using conventional metrics. And this is precisely why antitrust law is at the center of vibrant debate:

the nature of Big Tech can seem so different than the types of harms resulting in the Sherman Act in 1890.

Some argue, including the current U.S. administration along with the theorists of the so-called Neo-Brandeisian school that antitrust law should react to and eliminate the detrimental effects of the rise of Big Tech. Different schools of thought such as the Harvard or the Chicago schools have different approach to antitrust law. Price, consumer welfare, innovation, competition or something else should be the priority of the antitrust policies in the digital markets in your view? Which approach would you prefer applying to these markets?

Again, a very difficult question. I’ve long been sympathetic to many of the Chicago School’s ideas about “consumer welfare.” That said, a significant question is whether antirust should favor competition for the sake of competition—regardless of prices or other traditional indicia of consumer welfare. I think there are certainly dangers that populism could run amok if enforcement was able to condemn large firms for merely being large. To me,

the concept of consumer welfare shouldn’t necessarily be scrapped,

but courts and enforcers should enlarge the scope of harms considered to impair consumers. And I think this is happening; after all, it was only a few short years ago when diminished privacy became something that antitrust could remedy. So perhaps a better understanding of how exclusionary conduct can degrade society’s mental health, the environment, or similar conditions should be better understood as economic harms impacting consumer welfare. It is certainly a tricky tradeoff about how to make antitrust better equipped for the 21st century without making it a populistic catchall.

Under what conditions antitrust law should have room for intervention? There might be a “competition” among the different conceptions of antitrust regulation in the digital age. What would be the ideal approach that can preserve the advantages of competition but eliminate or lessen the downside of the concentration of digital markets and large tach companies?

It is imperative that enforcers, scholars, and courts understand the importance of future competition in digital markets. In conventional markets, a primary fear is that the largest competitors will merge or collude. For instance, antitrust enforcers might seek to intervene if the only two hospitals in a city seek to combine. But in digital markets, the acquisition of an emerging firm—as opposed to an established competitor—seems more likely to render lasting effects on competition. For instance, the U.S. government is currently seeking to undo Facebook’s acquisition of Instagram, but keep in mind that Instagram was relatively tiny when it was bought—only 13 employees were working for the company. 

That said, recognizing the potential importance of future competition does little to solve the issue’s complexity. After all, it’s pretty tough to determine when a Facebook is seeking to acquire the next Instagram. Albeit an incomplete solution,

it’d be helpful if courts and enforcers paid greater attention to non-price factors such as incentives to innovate, network effects, and likelihood of accumulating data barriers.

These types of forward-thinking effects could potentially help enforcers to envision the likelihood of future harm. The point is indeed that constructing an ideal approach in light of digital market is extremely difficult.

Beyond the scope of antitrust law how do Big Tech endanger the fundamental rules and values of the political communities? The State of Texas attempted to bar large social media platforms like Facebook and Twitter from removing posts based on the viewpoints they express. However, in its recent decision, the U.S. Supreme Court blocked Texas from enforcing social media law. How do you see the case as well as the challenges of such regulation?

There are great reasons why the Supreme Court has limited antitrust enforcement based upon constitutional boundaries. Since a state’s efforts to control speech on a platform would likely run afoul with the First Amendment, it seems unlikely that these types of efforts will succeed. Even it is worth investigating whether society would improve if states wielded more power to eliminate extremist, racist, or dangerous content online, the “neutral” framework of the First Amendment will continue to frustrate states’ efforts to regulate internet speech and the platforms hosting speech.

What is your opinion of the views that see digital platforms as modern public squares and thus want to introduce regulation accordingly? How do you see the conflict between the ownership’s rights of private platforms and the free speech requirements of the Constitution?

I’m personally against characterizing platforms as public squares. Justice Oliver Wendell Holmes, who was instrumental in establishing the modern theory of the First Amendment, made a good point that all ideas shouldn’t flourish. It was his belief that private actors and businesses operating in a marketplace (of ideas) should determine what types of speech survive or die rather than the government.

In his view, private actors like platforms must be able to exclude certain ideas for the First Amendment to work.

I think this is a pretty wise approach which would be undermined if platforms were treated as public squares.

How do you see the digital regulation of the European Union including the Digital Market Act and the Digital Service Act?

I think some of these legislations might make a lot of sense. In the United States, there’s a prevailing belief that “competition is good,” meaning that a person or firm can compete however they want. And if legitimate efforts to compete creates a monopoly, well, monopoly profits are considered a “temporary” type of incentive for companies to innovate and create great products.

In the European Union, it is more commonly thought that large companies can “abuse” their market power by making it difficult for small firms to enter a market.

And the EU seems to have a better understanding of how combining data can erect barriers to entry. That said, animosity against Big Tech is perhaps one of the only unifying issues in American politics. If the EU’s proposed legislations are successful, I don’t think it’d be a stretch to see the United States mimic European regulations.