Some GOP Senators Skeptical of Facebook Breakup in FTC Case
Republican senators are watching closely to see how the FTC and state enforcers apply antitrust standards to digital platforms in lawsuits against Facebook (see 2012090062). Some senators offered skepticism in interviews about a potential Facebook breakup and the forced sale of WhatsApp and Instagram, as requested by the FTC. The agency is in a far different position than when it allowed the Instagram and WhatsApp deals, legal experts told us, while drawing comparisons to the Microsoft case in the 1990s.
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“I know we’ve got a problem, but I’m not quite sure what the best solution is,” John Cornyn, R-Texas, told us, saying he’s not necessarily open to a Facebook breakup. “The problem is, how do you apply antitrust principles in this context? Antitrust has always been an amorphous, evolving doctrine, and we’ve gotten new technologies for these platforms, which are unlike anything else we’ve seen before.”
It’s a unique situation because the FTC is arguing to unwind deals it previously allowed, said Senate Consumer Protection Subcommittee Chairman Jerry Moran, R-Kan. “There needs to be certainty in this. If you approve it one day, you ought not to disapprove it the next.”
“It just shows you that the FTC is looking at and responding to what they’re hearing from business owners, the state [attorneys general] about the anticompetitive nature of Facebook,” said Sen. Marsha Blackburn, R-Tenn. “We’ll see where they go.”
The only way to stop such companies is to “look at a lot of conducts over time and their effects on competition,” said Chalice Custom Algorithms CEO Adam Heimlich, who testified before the Senate Antitrust Subcommittee in September. On the Instagram and WhatsApp takeovers, enforcers know much more now about long-term conduct, he said: “The process of approving those mergers wasn’t intended to look at all information. They’re looking at information related to the single acquisition. I don’t think it was part of the process to bring in, ‘Well what about the last three acquisitions?’”
Heimlich accused Facebook and Google of “weaponizing” application programming interfaces. The Microsoft case established how a company with market power can use APIs to “shut down access to a market” or create an “application barrier to entry,” he said. With Facebook, the APIs, which create access to markets, were opened up to make the platform a standard and then “shut down” once the market was dominated, he added: “It’s a good thing for regulators to look at and focus on.”
It’s worth noting that the FTC made the decision “not to block” the Instagram and WhatsApp acquisitions, “which is different” from approval, said antitrust attorney Alicia Downey. The Facebook lawsuits rely on different legal theories than the Microsoft case did because consumer and competition harm is being defined less in “classical, economic, price-related terms” and more in “terms of the decline of quality to consumers,” she said. Most antitrust cases are defined by “price effects,” she added: “That’s what makes them new and pushing the envelope.”
In addition to antitrust, the Senate Judiciary Committee will focus on privacy, data security and Communications Decency Act Section 230 in 2021, Blackburn told us. The committee shot down an amendment from Josh Hawley, R-Mo., last week to establish a private right of action for individuals to sue platforms over specific content moderation decisions (see 2012100072). Hawley told us he was “delighted” to have the support of Chairman Lindsey Graham, R-S.C., Ted Cruz, R-Texas, and others but was a “little bit surprised” by some members who voted no. “This is what the president’s been proposing for months, so anyway, some of that was a little surprising,” he said. It's “interesting” to have support from Democrat Sen. Sheldon Whitehouse of Rhode Island. He noted Richard Blumenthal, D-Conn., signaled support for the concept.