Stakeholders Preparing for New FTC Era, Potential ‘Techlash’
An argument against concerns about the size of online platforms is that they're providing useful services consumers enjoy, and government intervention would damage the quality of products. That's not stopping tech critics from both parties from ratcheting up their scrutiny of major tech companies, a trend that some expect to continue.
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Sen. Richard Blumenthal, D-Conn. -- who recently joined Republican Sens. John Thune, S.D., and Ted Cruz, Texas, in grilling four incoming FTC commissioners about tech market share -- told us recently he understands consumers like these products. “That’s what monopolists often do,” he said. “The question is whether they have power and exercise that power in a way that prevents innovators from coming into the market and providing products that consumers like even better at lower prices.” Some say the likes of Facebook and Google would pay in a more competitive market to collect data that consumers now offer freely.
TechFreedom founder Berin Szoka expects Democratic senators like Blumenthal, Elizabeth Warren, Mass., and Amy Klobuchar, Minn., to push their party’s FTC nominee, former Consumer Financial Protection Bureau Assistant Director Rohit Chopra, to play the role of antitrust “activist.” He said Klobuchar tried to move the antitrust goalposts, citing her Merger Enforcement Improvement Act (S-1811), to put the burden on companies to prove takeovers don't harm competition. Szoka said that would flip antitrust law to guilty until proven innocent.
Based on comments from FTC Chairman-nominee Joseph Simons, online platforms could face increased scrutiny from the FTC’s incoming regime. He told the Senate Commerce Committee (see 1802140047) the agency needs to keep close tabs on large concentrations of market power, particularly in tech, where the FTC could be most important as an enforcer. “There is no reason to think that Simons is not serious about enforcement,” or the commission under him won't follow through with examining tech market share, said Lina Khan, Open Markets Institute director-legal policy. Not only are Amazon and Google providing essential services for critical infrastructure for a host of other businesses, they're competing with those businesses, she said, calling it a “huge conflict of interest.”
House Commerce Committee Chairman Greg Walden, R-Ore., told a recent event (see 1802280034) that when a company is as big as Facebook or Google, it takes on additional public interest obligations. If the company doesn’t respond to those obligations, government steps in, he said: “I’m not looking for a lot of regulation. I’m looking for responsibility, but if responsibility doesn’t flow, regulation will.” An online platform’s business model -- providing free communication and search engine services in exchange for personal data -- isn't the problem, he said, but these companies have gotten “so big and pervasive” that market share has become an issue. To have a competitive market, communications regulation needs to be modernized, he said.
Marianela Lopez-Galdos, Computer and Communications Industry Association policy director-competition, echoed comments from Simons, who testified big doesn’t always necessarily mean bad. Commissioners understand market share might imply violation, but it doesn't signify a violation on its own, she said: “You cannot punish a company for just being big and successful, especially in the tech industry." The FTC and Internet Association didn't comment.
Gigi Sohn, fellow for Georgetown Law and Mozilla Technology Policy, suggested FTC expand Section 5 authority under the FTC Act. At a recent event, she noted ex-FTC Chairman William Kovacic, now a professor at George Washington University Law School, considered Section 5 a “zombie provision” because of how infrequently it’s used. Sohn told us the agency has narrowed the provision to go only after fraudulent behavior or when a company lies to or fails to inform customers, instead of looking at the full scope of unfair behavior. Expanding the authority could enable the agency to scrutinize privacy policies, data algorithms and practices favoring certain content producers and sellers, she said: “There’s a wide range of discriminatory anti-consumer practices that Section 5 could be used for.”
The market is highly competitive, since industry leaders constantly compete to redefine the market, Szoka said. Platforms like AOL and MySpace show how a dominant site can disappear overnight. “If you take that dynamic approach to antitrust, you’re going to be a lot more skeptical about market share and a lot more concerned about the costs of getting it wrong: intervening when in fact what appeared to be a dominant market position was just a temporary blip,” he said.