House Antitrust Report Hits Apple, Amazon, Facebook, and Google

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If wishes were antitrust law… Surprising absolutely no one, U.S. lawmakers—who have been tossing whatever claims of bad deeds they can at Big Tech for a good while—are now angling for antitrust law changes that they say are necessary to rein in Amazon, Apple, Facebook, and Google. On Tuesday, the House of Representatives antitrust committee put out a 450-page report on the subject, suggesting that all four companies were too big for their britches and if the law didn’t currently ban their business practices, it should.

The report is the result of a 16-month-long investigation from the House Subcommittee on Antitrust, Commercial, and Administrative Law. As part of it, representatives barraged the CEOs of all four companies with inane and irrelevant questions in a public hearing. The investigation also included seven other hearings and the obtaining of “1,287,997 documents and communications; testimony from 38 witnesses; a hearing record that spans more than 1,800 pages; 38 submissions from 60 antitrust experts from across the political spectrum; and interviews with more than 240 market participants, former employees of the investigated platforms, and other individuals,” as well as discussions “with industry and government witnesses,” it states.

Whether we’re talking a smoking gun or a needle in a haystack, that should’ve been sufficient to find it. Instead, representatives seem to have given up on pretending that the investigation makes sense on traditional antitrust grounds.

There’s scant evidence of elements historically necessary for an antitrust violation. Rather, lawmakers are pushing a major overhaul of antitrust action, using these companies as a test case. The new House antitrust report calls for “for sweeping changes to federal laws so that government regulators can bring Silicon Valley back in check,” The Washington Post puts it. More:

The report recommends a significant overhaul of the federal government’s antitrust powers, including making it illegal for a company like Amazon or Google to give greater weight to their own products in their online marketplaces. Other suggested changes would empower consumers to bring lawsuits and give new legal tools to the Justice Department or FTC [Federal Trade Commission] to block future tech mergers.

The whole thing has followed the bipartisan playbook previously in use with Backpage and Craigslist, except applied to competitive practices instead of content moderation. That is: Pick the biggest examples of a tech company or phenomenon that the government wants to curb or stop, subpoena a bazillion internal documents under some trumped-up pretense of criminal activity, and go fishing for something that can be spun into a call for congressional action—action that won’t involve just (if at all) going after scapegoated companies for the originally alleged violation but changing the underpinnings of internet and business and speech law in a way more friendly to federal control.

(You can read the whole antitrust report here.)

Essentially, it faults Amazon, Apple, Google, and Facebook for making products that people want to use, improving those products based on market trends and consumer research, and engaging in very normal business practices (such as Amazon prioritizing the display of its own products, or Apple being a little choosy about what it allows in its app store), all of which it portrays as unconscionably nefarious. A lot of weight is given to what rival businesses have to say.

Ultimately, the subcommittee concludes that “Facebook has monopoly power in the market for social networking,” “Google has a monopoly in the markets for general online search and search advertising,” “Amazon has significant and durable market power in the U.S. online retail market,” and “Apple has significant and durable market power in the mobile operating system market.”

In response, it recommends an array of policy changes that would give the federal government unprecedented input in tech business practices and decisions, as well as new power to punish these companies and a relaxing of rules that allow them to push back. The report recommends, among other things:

• Structural separations and prohibitions of certain dominant platforms from operating in adjacent lines of business;

• Nondiscrimination requirements, prohibiting dominant platforms from engaging in self-preferencing, and requiring them to offer equal terms for equal products and services;

• Presumptive prohibition against future mergers and acquisitions by the dominant platforms;

• Taking additional measures to strengthen overall enforcement, including through overriding problematic precedents in the case law

• Restoring the federal antitrust agencies to full strength, by triggering civil penalties and other relief for “unfair methods of competition”rules, requiring the Federal Trade Commission to engage in regular data collection on concentration, enhancing public transparency and accountability of the agencies, requiring regular merger retrospectives, codifying stricter prohibitions on the revolving door, and increasing the budgets of the FTC and the Antitrust Division; and

• Strengthening private enforcement, through eliminating obstacles such as forced arbitration clauses, limits on class action formation, judicially created standards constraining what constitutes anantitrust injury, and unduly high pleading standards.

Tech Companies Respond

“All large organizations attract the attention of regulators, and we welcome that scrutiny,” Amazon responded in a blog post decrying the “fallacies…at the core of regulatory spit-balling on antitrust.”

“Large companies are not dominant by definition, and the presumption that success can only be the result of anti-competitive behavior is simply wrong,” Amazon continued:

The flawed thinking would have the primary effect of forcing millions of independent retailers out of online stores, thereby depriving these small businesses of one of the fastest and most profitable ways available to reach customers,” the company continued. “For consumers, the result would be less choice and higher prices. Far from enhancing competition, these uninformed notions would instead reduce it.

Apple and Google also issued public responses.

“Americans simply don’t want Congress to break Google’s products or harm the free services they use every day,” stated Google. “Google’s free products like Search, Maps and Gmail help millions of Americans and we’ve invested billions of dollars in research and development to build and improve them. We compete fairly in a fast-moving and highly competitive industry. We disagree with today’s reports, which feature outdated and inaccurate allegations from commercial rivals about Search and other services.”

Antitrust law is meant “to protect consumers, not help commercial rivals,” it added. Yet “many of the proposals bandied about in today’s reports—whether breaking up companies or undercutting Section 230—would cause real harm to consumers, America’s technology leadership and the U.S. economy—all for no clear gain.”

Apple responded that it “does not have a dominant market share in any category where we do business” and says that its app store—which features “close to two million apps today”—has “enabled new markets, new services and new products,” with app developers being the primary beneficiaries.

“Last year in the United States alone, the App Store facilitated $138 billion in commerce with over 85% of that amount accruing solely to third-party developers,” Apple stated, adding that its “commission rates are firmly in the mainstream of those charged by other app stores and gaming marketplaces.”

In other tech policy fiascos…

Trump is once again calling for the repeal of Section 230 of federal communications law, which protects internet companies and their users from certain legal liabilities. Here’s Justin Amash with some Section 230 truths:

(See Reason‘s video guide to Section 230 here.)

FREE MINDS

President Donald Trump’s administration is once again trying to make it harder for high-skilled immigrant workers to come here (and once again laying waste to the notion that they’re only interested in stopping illegal immigration). The latest Republican plan to revise the H-1B visa program “will require employers to pay H-1B workers significantly higher wages, narrow the types of degrees that could qualify an applicant and shorten the length of visas for certain contract workers,” The Wall Street Journal reports:

Ken Cuccinelli, the No. 2 official at DHS, said on a news conference call Tuesday that he expects about one-third of H-1B visa applications would be rejected under the new set of rules. […]

The policy changes have been expected since 2017, when the administration first announced intentions to revamp the H-1B visa program. Even before these formal changes were announced, however, the Trump administration tightened issuance of H-1B visas, rejecting 15.1% of applications in 2019 compared with 6.1% in 2016, according to figures from U.S. Citizenship and Immigration Services.

FREE MARKETS

Trump won’t accept the Democrats’ latest stimulus package (known as the HEROES Act), per his tweets yesterday. “Nancy Pelosi is asking for $2.4 Trillion Dollars […] We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith,” Trump tweeted Tuesday afternoon.

“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump continued. (See Eric Boehm for more.) Trump does, however, think that it’s urgent that a new Supreme Court justice is confirmed and that the government give airlines more money:

Yesterday evening, he also tweeted that he wants to send $1,200 stimulus checks to people immediately:

QUICK HITS

• Trump adviser Stephen Miller announced yesterday that he has tested positive for COVID-19.

• In total, around 20 people who work at the White House complex have contracted COVID-19 since August. A viral tweet that announced 123 cases is counting everyone infected at the White House since the start of the pandemic.

• Another “child sex trafficking bust” that wasn’t:

• Reminder:

• Facebook says it’s banning groups dedicated to the conspiracy theory QAnon.

• A grand jury in Texas has indicted Netflix for the publicity of Cuties, a French drama critical of the over-sexualization of tween and teen girls that has been demonized by many prominent conservatives (though many admit they have not seen the film). Sen. Ted Cruz (R–Texas) and others have argued—largely based on a Netflix poster for the film—that Cuties does the opposite of what it actually does. Now, Netflix is being accused of promoting “lewd visual material.”

• Check out Reason‘s new history of cypherpunks:


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