Antitrust Alone Won’t Save Us From the “Curse of Bigness”
By: Gene Kimmelman, President of Public Knowledge and former Chief Counsel in the Antitrust Division; and Charlotte Slaiman, Public Knowledge Policy Counsel
Tim Wu’s latest book, “The Curse of Bigness: Antitrust in the New Gilded Age,” describes the enormous dangers arising from concentrated economic power and sends a critical clarion call for challenging monopoly and oligopoly to preserve democracy. While Tim acknowledges the need for additional policy solutions, his focus on antitrust overstates its power to eliminate the full array of harms caused by highly concentrated markets. We also need regulation. The excessive market concentration and corporate power we see today resulted not only from conservative jurisprudence and lax antitrust enforcement, but also excessive deregulation. It will take much more than antitrust to rectify this.
I have tried to rein in the power of telecommunications, media and cable giants for more than 30 years. In these important industries, strong antitrust has only worked when paired with equally strong pro-competition market-opening regulations. One need not look further than to the makeup of the Supreme Court over the last few decades to understand how antitrust law’s broad language has been constrained substantially to limit enforcement. But even in the heyday of antitrust, it took the creation of and engagement by regulatory agencies to constrain the abuses of airline, pharmaceutical, and agricultural behemoths.
Antitrust alone is too narrow, often takes too long, and generally only seeks to correct harms after the fact — often long after enforcement can effectively address the competitive damage.
The 1984 breakup of the AT&T monopoly was able to unleash massive innovation only when paired with extensive Federal Communications Commission and state regulation to hold prices in check and create a smooth transition to interoperable phone networks. The newly divested “baby Bells” quickly set to work convincing the American public that the mandated breakup was costing them a fortune, by raising rates to the tune of $20 billion a year. And it almost worked. In 1986 Congress started trying to overturn the case. Had state regulators not blocked the price hikes, and had the FCC not carefully policed the separation of local, long-distance and equipment services for consumers, the Bell System may have been put right back together.
Similarly, cable consolidation in the 1980s would have eliminated nascent satellite competition before antitrust officials could have done much to stop it had Congress in 1992 not swept in to prohibit a broad variety of cable abuses. It is hard to imagine that DirecTV and Dish would exist today if satellite investors had to wait years for antitrust enforcers to catch up with cable industry discriminatory practices.
These experiences are not unique to antitrust and communications. In the same way that past cable and telecom mergers should have been rejected, antitrust should do a better job promoting airline, agricultural and pharmaceutical competition. However, just like with communications, many consumer abuses can only be rectified by a Transportation Department, Agriculture Department, or a Food and Drug Administration. Affordable airline service to small communities, impediments to marketing cheaper generic or bioequivalent drugs, and protections for small family farmers, require specific regulatory protections far different from antitrust concerns.
As today’s digital marketplace has exploded, the tech sector is starting to look a little like the old cable and telecom world, with a few firms growing enormous and facing limited competition. Yet unlike cable and telecom, or virtually any other industry sector, we have no regulatory agency specifically empowered to deal with public interest questions facing tech companies.
The public wants to know how and if a few dominant tech platforms will allow small innovators to compete on their platforms and challenge the platform owner’s services, or how the platforms will expand options for new content owners, journalists, bloggers or just individual speakers. Antitrust alone cannot expand the diversity of media and content ownership that relies upon internet distribution. Antitrust alone cannot protect the integrity of individual speech rights that are essential to democratic discourse. And antitrust alone cannot foster innovation and entrepreneurship.
We need new tech sector-specific guardrails to open the door to new competition, ensure diversity of ownership and viewpoints in our public discourse and prevent dominant companies from abusing their power — both economic and political. In markets dependent upon digital platforms, where the platform also owns services riding on the platform, we may need non-discrimination requirements, rules against exclusive dealing, and obligations to carry independent content to combat integrated firms’ gatekeeper power and harms to small start-ups and innovators.
We can learn from the history of the 1992 Cable Act. Just as Comcast should not favor NBC programming over independent networks like the Discovery Channel, maybe Amazon should not favor Amazon Basics products in its Marketplace and maybe Google should not discriminate against others’ apps. Just as AT&T, the owner of DirecTV, should not charge an inflated price to Dish, DirecTV’s biggest competitor, for its Turner Network programming, maybe Facebook, the owner of Oculus, should not charge extra to HTC for advertising its Vive VR headset.
Whether we are talking about updating the antitrust laws or expanding regulatory authority, it’s obvious that nothing is likely to happen quickly in Congress. While pushing for these important long-term policy changes, we must also demand that the FCC, the Federal Trade Commission and the Department of Justice’s Antitrust Division do a better job of promoting competition and marketplace fairness using the tools they already have. They should also work with sector-specific regulators like DOT, USDA, and FDA to improve the way those regulators consider and promote competition.
If we can galvanize support for stronger antitrust, then surely we can create the additional accountability tools and enforcement practices needed to thoroughly challenge the dangers of economic and political concentration of power. One tool is not enough — we need a full array of public oversight to begin undoing past mistakes and meeting new challenges posed by tech. Achieving more competitive economic markets that expand the marketplace of ideas and protect our democracy requires both antitrust law and regulation working hand in hand.