How does U.S. government launch antitrust action against Big Tech?

By Miao Wang

The U.S. government has significantly increased its antitrust crackdown on Internet companies since 2020. The Trump administration launched several investigations and lawsuits against Big Tech for their mismanagement of user data. The Biden administration then further strengthened the action by assigning several professionals critical of the Big Tech companies to lead antitrust legislation and reviews. The Big Tech companies, led by Facebook, Google, Amazon and Apple, are facing a bipartisan attack from federal regulators and Congress.

Biden administration is prohibiting unreasonable mergers in digital market by updating antitrust laws and enhancing the work of antitrust agencies. On the one hand, Biden has appointed several scholars in the field of antitrust to senior government positions, introduced and signed a number of bills and executive orders to split the business lines of giant companies and control their expansion in different markets. U.S. antitrust law gradually abandoned the Chicago School’s assertion of predatory pricing and adjusted the goals of antitrust enforcement from protecting consumer welfare to promoting effective market competition and emphasizing the protection of innovation. By updating competition policy for the digital market and clarifying specific standards for data use, it will effectively prevent Big Tech from using data and algorithmic rules to implement exclusionary and tying actions that damage market fairness. Rather than rewriting comprehensive antitrust laws, introducing multiple bills would not only be easier to get through committee reviews, but would also reduce the huge gap in traditional antitrust laws in the digital marketplace.

On the other hand, the FTC’s workflow has been streamlined by removing restrictive enforcement rules from the FTC Act, and giving antitrust agencies more authority to initiate litigation. At the same time, lawmakers are planning to increase the human and budgetary resources of key agencies. For example, the FTC started a working group with antitrust expertise to regulate U.S. digital market. In addition, the Biden Administration has proposed to increase the budget for the Antitrust Division of the Department of Justice and the FTC in FY 2022 to increase the number of professionals. Once the Build Back Better Plan is fully passed, the FTC will receive $500 million over the next eight years to operate a data security and privacy protection unit. Also, the FTC will have the authority to impose fines when companies violate the law for the first time, strengthening its ability to crack down on data abuse and privacy violations by Big Tech. The improved resources and authority have greatly enhanced the efficiency of the U.S. antitrust agencies, which received twice as many merger filings in 2021 compared to the previous year, but the average length of time to complete their reviews has not increased.

Through the appointment of antitrust professionals, the improvement of legislation for digital markets, and a series of investigations initiated by law enforcement agencies, the new Brandeis School that advocates the regulation of Big Tech companies has gradually took an important position in DC’s policy-making. After several rounds of investigations and lawsuits by antitrust agencies, the U.S. Internet giants had to make adjustments to their business strategies. For example, Apple has allowed users to include other companies’ websites in its applications for the first time, which will prevent Apple’s payment system from taking a cut of sales revenue from users. Amazon has permanently shut down Sold by Amazon to avoid allegations of price fixing. In the face of multiple rounds of lawsuits by the FTC, Facebook may have to sell Instagram and Whatsapp in the future. Antitrust regulation in the United States is strongly countering anticompetitive behavior by Big Tech companies and preventing the pioneers from monopolizing the digital market.

However, the diversification of competition in the digital market has made it difficult for implementing antitrust regulation. Also, the tightening of budget has made the antitrust agencies extremely short of resources, which has limited the ability of the authorities to review merger transactions in digital market. More prominently, no new regulatory agencies have been established and the capture of political power by the “Silicon Valley government” remains a significant impediment to antitrust in digital marketplace. In the face of tightening U.S. government regulation, Silicon Valley’s Big Tech companies have been increasing their lobbying spending to beat the threat from regulators. For example, Facebook has spent $20 million on lobbying in 2020, an 18 percent increase from the previous year and the highest amount ever.

It has also hired 71 professional lobbyists, 61 of whom have “revolving door” experience, to work for a number of members of Congress. Even if there is a broad bipartisan consensus on digital antitrust, the independence of the antitrust enforcement agency is difficult to guarantee with the large lobbying money and close personnel ties, and the Big Tech may still oppose the legislation. The relationship between the U.S. government and Silicon Valley will be complex for quite some time to come, and antitrust attack on digital markets will be a difficult task.

Miao Wang is a PhD Candidate in International Political Economy of Renmin University of China

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Foreign Policy News is a self-financed initiative providing a venue and forum for political analysts and experts to disseminate analysis of major political and business-related events in the world, shed light on particulars of U.S. foreign policy from the perspective of foreign media and present alternative overview on current events affecting the international relations.

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