Resolved: The United States federal government should enforce antitrust regulations on technology giants (Con)

“>Bibliography  Intro Essay Pro Essay
Answering Monopolization
There are a few different approaches one can take to answering the monopolization argument.
First, one can argue that the companies are not monopolies, as they don’t control their entire economic sectors.
Sally Hubbard is a former assistant attorney general in the New York AG Antitrust Bureau who heads up big tech and monopolization for The Capitol Forum, January 2, 2019, , The case for why Big Tech is violating antitrust laws, //
Facebook, for example, doesn’t need to have a monopoly over a market as broad as “all social media.” All social media platforms are not substitutes for Facebook. You can’t see baby pictures on LinkedIn, and you can’t keep in touch with Grandma on Twitter. The closest substitute to Facebook is Instagram, which isn’t much of a choice since Facebook owns it.
And while Amazon may control more than 50% of all online sales, it is only 10% of global commerce.
Google is a dominant search engine (66% of the market), but there are other search engines, and Google is not dominant in all advertising or electric cars, projects that are supported by its advertising revenue.
The release has additional evidence that speaks to minimzing the monopolization argument.
Second, one can minimize any potential monopolization by arguing that the Federal Trade Commission (FTC) will address any extreme instances without needing to break up the entire tech industry.
Devin Coldeway, March, 2019, // FTC creates antitrust task force to monitor tech industry
The field of technology and the business practices within it tend to advance faster than regulators can keep up. But the FTC is making a concerted effort with a new 17-lawyer tech task force dedicated to ensuring “free and fair competition” and watching for anticompetitive conduct among technology companies. This isn’t necessarily a precursor to some big action like breaking up a big company or imposing rules or anything like that. It seems to be more a recognition that the FTC needs to be ready to ascertain quickly and move decisively in tech matters, and a crack team of tech-savvy staff attorneys is the way to do it. The Technology Task Force will live under the competition bureau within the FTC, the director of which, Bruce Hoffman, commented as follows in the agency’s announcement: Technology markets, which are rapidly evolving and touch so many other sectors of the economy, raise distinct challenges for antitrust enforcement. By centralizing our expertise and attention, the new task force will be able to focus on these markets exclusively – ensuring they are operating pursuant to the antitrust laws, and taking action where they are not. That it is under this bureau and not the bureau of consumer protection gives a good indicator of its purpose. This won’t be a way for the FTC to, for instance, more closely scrutinize Google or Facebook’s shady user data practices. That said, the lawyers are stated to have expertise in “advertising, social networking, mobile operating systems and apps, and platform businesses,” which I doubt they mention for no reason. Instead it is likely to be more focused on investigating and reporting on potential anticompetitive practices that are the potential result of M&A deals or quasi-monopolies like Amazon and Facebook. The fascinating Amazon’s Antitrust Paradox paper from a while back noted all kinds of ways that a company slips through loopholes while performing actions that look, walk and talk like monopolistic ones. But just what exactly constitutes such practices legally speaking is a matter of considerable debate. No doubt the lawyers and their tech fellows, with whom they will consult, will spend a great deal of time sifting through old cases and precedents and seeing what does and doesn’t apply. The team will be performing its own investigations of ongoing and completed mergers, and will also supply investigative services to other branches of the agency. Essentially it’s an indication that the FTC will be taking tech antitrust more seriously going forward, and dedicating more and better organized resources to the task of monitoring the sector. That’s probably not the kind of thing big tech companies like to hear.
Third, one can argue that there is no impact to this monopolization, that other companies emerge.
Andy Kessler, March17, 2019, // Warren’s Populist Puritanism
H.L. Mencken defined puritanism as the haunting fear that someone, somewhere, may be happy. Remember that amid the deluge of demands to break up Facebook , Google, Amazon and Apple . Columbia law professor Tim Wu insists that bigness is bad. “We’ve let Facebook have their ride, they’ve made their money and they’ve been very successful,” he told the American Enterprise Institute last month. “I just think there’s a very good track record in tech of trying to put pressure on the monopolist and break things up a little bit.” Basically, Facebook got big and now it’s someone else’s turn. Wannabe president Elizabeth Warren wants to “break up Big Tech” and split the companies into heavily regulated “platform utilities.” She told crowds at South by Southwest: “The monopolist will make fewer monopoly profits. Boohoo.” The politics of envy is the populist playbook. Yet the Sherman Antitrust Act prohibits two specific types of business practices: anticompetitive agreements, or collusion, and conduct to limit competition. Judges define these violations by a consumer-welfare standard, assessing whether consumers are harmed by a lack of competition. “Innocent monopolies” earned by merit are not illegal. Antitrust says nothing about bigness. No matter. The calls are getting louder for Facebook to split off Instagram and WhatsApp. Same for Amazon carving out Whole Foods. Or Google divesting its 2007 acquisition DoubleClick. Or spinning out the App Store from Apple, as Spotify is seeking in the European Union. There’s little sign of consumer harm in any of these cases. Sure, the tech titans have some issues. Google’s searches favored its own sites over others. Facebook sold private information after agreeing not to, and the Federal Trade Commission is set to collect a huge fine. So keep up the pressure. Firms clearly ought to respect property rights better, and pay for news content and user data. But demanding divestitures and regulation is an old trick competitors use to get government to do their bidding. In reality, the moves would freeze innovation without enhancing competition. I lived through the 1982 breakup of the Bell System. Now that was a harmful monopoly, and a government-mandated one. But the market would have done it eventually. Even still, the telecom Humpty Dumpty was put together again as AT&T and Verizon, companies desperately in search of growth business models. On the other hand, IBM didn’t get broken up. It was the ultimate platform in the ’80s: IBM made chips, boards and disk drives, put them in a box with software, and had half of industry sales and 90% of profits. But antitrust wasn’t necessary: Management figured out all by itself how to become irrelevant. When AOL bought messaging company ICQ in 1998, pundits freaked out, scared of AOL’s new dominance. Do you use ICQ today, or AOL? Didn’t think so. Technology progresses along a continuum. Antitrust is a snapshot, ignoring innovation surprises that come out of nowhere and everywhere. New companies will eventually render the existing tech giants passé. A decentralized open-source Facebook is coming someday soon. That plus plateauing usership moved Mark Zuckerberg to announce a pivot to privacy, expanding Facebook’s messaging and private-applications services. The new platform might be much like WeChat in China, and in more direct competition with Amazon in e-commerce and Apple in apps. Will the pivot work? Maybe. But consumers surely will benefit. Why is that wrong? The four tech giants are huge spenders on research and development—some $60 billion in 2018. Add Microsoft and Samsung and it’s $85 billion. But world-wide, according to KPMG, venture capitalists invested $254 billion, meaning focused competition will sprout, like daffodils every spring. Uber and Lyft were enabled by Apple, not invented by it. Airbnb provides travel search and e-commerce beyond what Google and Amazon can deliver. Amazon Prime is competing with Netflix , and its Whole Foods subsidiary wants to reinvent retail. Is that anticompetitive? Quite the opposite.
Fourth, one can argue that the monopolization created by these companies is actually a good thing. “Monopolization” good reasons include:
(a) Lower prices;
(b) Research & Development;
© New products;
(d) Convenience of products;
(e) Enhanced income for workers.
A couple cards are included here. More are in the release.
Straterchy, March 12, 2019, //
Nature: What is Tech?
This mistake by Senator Warren only came into focus with that interview where she included Apple as a target for her proposal. Here’s more from that interview:
<Pulling that apart, the App Store is the method by which Apple keeps the iPhone secure. It’s integrated into the platform. How would you propose that Apple and Google distribute apps if they don’t run the store?
Well, are they in competition with others who are developing the products? That’s the problem all the way through this, and it’s what you have to keep looking for. If you run a platform where others come to sell, then you don’t get to sell your own items on the platform because you have two comparative advantages. One, you’ve sucked up information about every buyer and every seller before you’ve made a decision about what you’re going to sell. And second, you have the capacity — because you run the platform — to prefer your product over anyone else’s product. It gives an enormous comparative advantage to the platform.
This would not be the first time in US history that this kind of arrangement had to be broken up. Back when the railroads were dominant, and you had to get steel or wheat onto the railroad, there was a period of time when the railroads figured out that they could make money not only by selling tickets on the railroad, but also by buying the steel company and then cutting the price of transporting steel for their own company and raising the price of transporting steel for any competitors. And that’s how the giant grows.
The problem is that’s not competition. That’s just using market dominance, not because they had a better product or because they were somehow more customer-friendly or in a better place. It’s just using market dominance. So my principle is exactly the same: what was applied to railroad companies more than a hundred years ago, we need to now look at those tech platforms the same way.>
This is pretty explicitly taking Senator Warren’s critique of Amazon in particular and applying it to Apple, and to be fair, it is not completely without merit: Apple has quite clearly leveraged the fact it owns the platform to compete with Spotify, for example, and has definitely suppressed competition when it comes to built-in apps like Mail and the aforementioned Safari.
At the same time, do consumers not matter at all here? Is Senator Warren seriously proposing that smartphone be sold with no apps at all? Was Apple breaking the law when they shipped the first iPhone with only first-party apps? At what point did delivering an acceptable consumer experience out-of-the-box cross the line into abusing a dominant position? This argument may make sense in theory but it makes zero sense in reality.
What is even more striking, though, is that the App Store does have a massive antitrust problem: it is not Apple unfairly competing with app developers, it is Apple unfairly imposing massive complexity and extracting 30% of revenue with its contractual requirement, enforced by App Review, that developers use Apple’s payment mechanism. I wrote about this extensively last year in Antitrust, the App Store, and Apple (also see this follow-up); I think there is a case Apple’s policies would be found anticompetitive under a Quick Look review, and may even be a per se antitrust tying violation.
The important takeaway for this Article, though, is the degree to which Senator Warren missed the point: there is significant consumer benefit both to having preinstalled apps and also to Apple controlling the installation of apps. There is a big benefit to suppliers (app developers) as well: the app market on PCs died in large part due to security concerns, which Apple obviated with the App Store to the tremendous benefit of every participant in the ecosystem. Senator Warren’s proposal would make the App Store worse for everyone.
That leads to a broader point: “tech” is not simply another category, like railroads or telecom. Tech is a means, not an end, but Senator Warren’s approach presumes the latter. That is why she proposes the same set of rules for the sale of toasters and the sale of apps, and everything in between. The truth is that Amazon is a retailer; Apple a combination of hardware maker and platform makers. Google is a search and advertising company, and Facebook a publishing and advertising company. They all have different value chains and different ways of impacting competition, both fairly and unfairly, and to fail to appreciate just how different they are is a great way to make bad laws that not only fail to fix problems but also create entirely new ones.
Companies support extensive R &D
NICOLAS PETIT, Professor at the University of Liege, Belgium, and Research Fellow at Stanford University, 2018, Technology giants are fiercely competitive monopolies//
Third, FAANGs channel high amounts of financial and human resources into research and development (R&D). More precisely, some FAANGs show unusually high R&D intensity levels (i.e. the ratio of R&D expenses to revenue) in excess of the orders of magnitude observed in other R&D hungry sectors like defense or pharmaceutics.
Although it makes some sense to minimize the link between Big Tech and monopolies, all that the Con will be able to is to minimize it, do adding “monopolies good” to your argument arsenal will be very important.
The Big Data Monopoly Argument
As part of the monopolization bad argument, some will argue that the ability to collect big data and target consumers gives Big Tech overwhelming market advantages.
If a Pro team argues this and you are trying to minimize the link, it is critical that you answer this argument.
A couple answers are here –

Big data does not undermine market competition

Daniel Sokol1 & Roisin Comerford, Professor of Law, 2017, University of Florida and Senior Of Counsel Wilson, Sonisini Goodrich & Rosati, Does Antitrust Have A Role to Play in Regulating Big Data?, //
Andres Lerner (2014) argues that claims of Big Data presenting competitive concerns are unsupported by real world evidence. In particular, Lerner argues that in practice the oft-cited “feedback loops” do not have the strong effects with which they are commonly credited. Lerner discusses the procompetitive rationales for collection and use of consumer data online, including the potential for improved services, and the ability of firms to monetize effectively on the paid side so as to provide better services at lower prices or for free. He dismisses the idea that firms’ may have the incentive or ability to use data to entrench their dominant position (e.g., user data is non-rivalrous and no one firm controls a significant share of data) citing similar attributes of data as Ohlhausen and Okuliar. Lerner maintains that there is a complete lack of evidence that online markets have “tipped” to dominant firms, due in most part to the differentiated nature of online offerings. He concludes that without strong real-world evidence of anticompetitive effects, aggressive antitrust enforcement would hamper competition and chill innovation, injuring consumer welfare in the process. Although policy makers have dipped their toe into the antitrust in Big Data debate,5 antitrust agencies and the courts have not found a Big Data competition problem. In fact, that the FTC and DG Competition have thoroughly considered Big Data as an antitrust problem and completely dismissed it. The agencies in the United States and Europe have moved cautiously so far, which is not only proper, but also serves as a reminder that the distinct issues addressed by antitrust and consumer protection law, and the solutions that may be applied by each set of laws to prohibited behavior, are distinct for good reason, and are complements rather than substitutes (Muris and Zepeda 2012; Averitt and Lande 1997)

Making it more difficult for companies to monetize data means fewer services for consumers

  1. Daniel Sokol1 & Roisin Comerford, Professor of Law, 2017, University of Florida and Senior Of Counsel Wilson, Sonisini Goodrich & Rosati, Does Antitrust Have A Role to Play in Regulating Big Data?, //

Perhaps the most obvious and pervasive benefit to be realized in the Big Data era has been the ability of firms to offer heavily subsidized, often free, services to consumers as consumers give those firms permission to monetize consumer data on the other side of their business (Evans and Schmalensee 2014). In a competition law regime where lower prices for consumers are deemed highly desirable, this is undoubtedly a benefit to consumers. The monetization of the data in the form of targeted advertising sales for antitrust purposes is not suspect or harmful, but rather “economically-rational, profit-maximizing behavior,” that results in obvious consumer benefit (Lerner 2015). Were online platforms prevented or restricted from collecting and monetizing consumer data, competition for users would be inhibited, and harm to consumers would result, in the form of higher prices for services. Indeed switching costs are low regarding data and search (Edlin and Harris 2013).
More answers are in the release.
Answering Privacy
Privacy contentions are like to be popular on this topic.
The argument, as explained in the Pro essay, is that as Big Tech companies get bigger and bigger they are able to collect more data on the individuals on their network, threatening their privacy.
There area couple basic answers to this argument.
First, debaters can argue that even if there were more social networks that there would still be the same number of privacy violations, that those violations would not just be spread across networks.
Second, there is a pretty strong argument to be made that antitrust is about monopolization, not about privacy.
1 D. Daniel Sokol1 & Roisin Comerford, Professor of Law, 2017, University of Florida and Senior Of Counsel Wilson, Sonisini Goodrich & Rosati, Does Antitrust Have A Role to Play in Regulating Big Data?, //
Ohlhausen and Okuliar present a three-part framework for analyzing Big Data concerns. First, they focus on the character of the harm – whether it is commercial, personal or otherwise. They conclude that where there is harm to consumer welfare on the whole or to economic efficiency, antitrust should prevail over consumer protection law as a matter of institutional choice. Second, they examine the nature of the relationship between the user and the data collector, and determine that issues arising from the bargain between a firm and an individual consumer are more likely to fall within the realm of consumer protection law than antitrust. Third, they consider the nature of available remedies and their presumed efficiency in resolving particular violations. Ultimately, the authors advise that trying to fit consumer protection concerns within the antitrust framework is “unnecessary,” “could lead to confusion and doctrinal issues in antitrust,” and would not afford “true gains to consumer protection.” (Ohlhausen and Okuliar 2015 at p. 138) Ohlhausen and Okuliar also note four important features of Big Data that caution against an antitrust application over consumer protection law, which are explored in more detail in Part IV below. First, Big Data creates efficiency gains. Second, an antitrust institutional choice would increase subjectivity into antitrust analysis. Third, using antitrust would create opportunities for strategic gaming by firms of the legal system. Finally, Ohlhausen and Okuliar warn that using an antitrust lens may threaten innovation for new products and services. James Cooper (2013) echoes that antitrust law is an inappropriate tool to regulate Big Data. He writes: [E]ven if one were to accept the analogy between enhanced personal data collection and prices (or equivalently, lower quality) at face value, there is nothing in the antitrust laws to prevent a firm from unilaterally engaging in this conduct. Antitrust’s longstanding aversion to price egulation means that a legal monopolist is free to charge whatever price the market will bear. Cooper also suggests that privacy in Big Data as an antitrust concern would raise certain First Amendment issues, as well as muddle the goal of enforcement, thereby introducing unnecessary subjectivity into the analysis, lending itself to Virginia School styled rent seeking in antitrustproof that such acquisition is likely to substantially lessen competition, prohibit ted under theantitrust laws. Indeed, the potential for such acquisitions incentivizes entry.
In other words, the protection of privacy may be a valuable goal, but it should not be the goal of antitrust law.
Second, debaters can minimize the impact of privacy violations with arguments such as these.
More are included in the release.
General Problems with Enforcing Antitrust
There are number of general problems with enforcing antitrust that Con teams can use to generate offense.

First, regulations tend to increase monopolization because only large companies can afford them

Peter Karmin, Stuart Loren, Managing Partner & Director, Karmin Capital, March 2018, Antitrust in the Internet Age, //
Short of a major regulatory threat or widespread user dissatisfaction, today’s dominant technology and internet firms are likely to remain entrenched in their leadership positions. As investors, we do anticipate that new regulatory compliance costs will eat into these companies’ profit margins over time (particularly for Facebook and Google, which will need to spend more on content oversight and data security). However, we doubt such costs will prove fatal to their monopoly power or long-term earnings power. Rather, if U.S. lawmakers or the E.U. impose costly regulations, it will likely further entrench these companies as market leaders. If smaller competitors lack the capital to build out a competitive service, they surely lack the capital to comply with new (and likely complex) regulations. In the meantime, though, any hint of harsher regulation will likely pressure the stock prices of these firms: indeed, as we are preparing to circulate this letter, Facebook is down over 7% on concerns over the regulatory fallout of its Cambridge Analytica debacle.

Second, innovation happens faster than regulation possibly can

Peter Karmin, Stuart Loren, Managing Partner & Director, Karmin Capital, March 2018, Antitrust in the Internet Age, //
To tie this all back to the concerns of Sir Tim Berners-Lee, businesses often moves faster than the regulatory environments under which they operate. At question is whether today’s dominant technology firms must adapt to existing social and legal norms or whether society and laws must adapt to new ways of doing business. Based on history, our money would be on the former outcome. For that reason, the long-term success of these firms, in part, depends on whether society’s response will be punitive or constructive. In this instance, we’d bet on the latter. The reality is that users largely enjoy these companies’ services and initially turned to them not for a lack of alternatives, but because they were so far superior to any alternatives. Antitrust law in the U.S. has never been about punishing success; rather, it exists to enable it. Accordingly, since antitrust law is not the appropriate avenue for regulatory action, Sir Tim is right that a new legal framework is likely necessary to regulate these companies. Short of requiring their dissolution – which we view as far-fetched – regulation will not be the death knell of these businesses. Better protecting user data will be a costly challenge; however, that pales in comparison to the difficulty of aggregating consumer demand in the first place. The future regulatory environment will be difficult to navigate for both technology firms and their investors. Rather than bemoan that fact, it is far more productive to prepare for it.

Third, breaking up companies would reduce investment in start-ups, prevent cross subsidization of services

Megan McArle, March 8, 2019, Why ‘break up big tech’ will work better as a Warren campaign theme than as an actual policy, Washington Post,
For Warren’s theory to work, you have to believe that both tech firms and antitrust regulators can correctly identify which businesses are likely to pose a threat to big incumbents and force them to stay out of those businesses. But the history of antitrust does not offer much reason to think this is true. Consider the decade-long antitrust case against Microsoft, in which both the firm and regulators obsessed about who was going to control the Web browser, while Google quietly sneaked into the pole position in the race for the Next Big Thing. Too, the venture capitalists who fund all these start-ups want to recoup their investment, if not more, and one of the main ways of doing that is by selling out to one of the FAANGs — Facebook, Apple, Amazon, Netflix or Google. So, ironically, an antitrust move to enhance competition could end up making it harder to finance start-ups in the first place. Meanwhile, Warren’s plan would do approximately nothing to address a subject that voters do actually care about, at least a little: the fear that occupying such dominant market position gives the FAANGs too much power over our day-to-day lives. The problem is, the companies have that power only because we want the services they provide. And since these businesses tend to be characterized by network effects — meaning that sites such as Facebook become more valuable to users as more users join them — you can’t break up their core services without taking away something we really want. Splitting Facebook or Amazon or Google Search in two would create substantially less useful services. But slicing off big tech’s peripheral offerings won’t substantially diminish the power that really bothers people.

Fourth, People want to be on the same social media platform, so breaking it up is useless

Kate Patrick, November 30, 2018, //, Congress is ‘Fed Up’ With Big Tech, But Antitrust Action May Be Impossible
Facebook got to its size because it was pretty good at what it was doing, which was providing all kinds of connectivity for individuals who really liked that connectivity,” White added. “Under current interpretation of antitrust laws, no one thinks that case could be won (to break up Facebook or Google). Even if you could break them up, five years later there will be one big social media company [again] just because people will be gravitating to where all their friends hang out. Facebook has other things, like the Cambridge Analytica scandal, and that is a problem, but not an antitrust problem.”

Fifth, Forcing splits would kills the value of smart phones

Mann & Stapp, March 9, 2019, //, Elizabeth Warren wants to turn the internet into a literal sewer (service)
Smartphones. Imagine how forced neutrality would play out in the context of iPhones. If Apple can’t sell its own apps, it also can’t pre-install its own apps. A brand new iPhone with no apps — and even more importantly, no App Store — would be, well, just a phone, out of the box. How would users even access a site or app store from which to download independent apps? Would Apple be allowed to pre-install someone else’s apps? That’s discriminatory, too. Maybe it will be forced to offer a menu of all available apps in all categories (like the famously useless browser ballot screen demanded by the European Commission in its Microsoft antitrust case)? It’s hard to see how that benefits consumers — or even app developers
Internet Search. Or take search. Calls for “search neutrality” have been bandied about for years. But most proponents of search neutrality fail to recognize that all Google’s search results entail bias in favor of its own offerings. As Geoff Manne and Josh Wright noted in 2011 at the height of the search neutrality debate:
[S]earch engines offer up results in the form not only of typical text results, but also maps, travel information, product pages, books, social media and more. To the extent that alleged bias turns on a search engine favoring its own maps, for example, over another firm’s, the allegation fails to appreciate that text results and maps are variants of the same thing, and efforts to restrain a search engine from offering its own maps is no different than preventing it from offering its own search results.
Nevermind that Google with forced non-discrimination likely means Google offering only the antiquated “ten blue links” search results page it started with in 1998 instead of the far more useful “rich” results it offers today; logically it would also mean Google somehow offering the set of links produced by any and all other search engines’ algorithms, in lieu of its own. If you think Google will continue to invest in and maintain the wealth of services it offers today on the strength of the profits derived from those search results, well, Elizabeth Warren is probably already your favorite politician.
Regulating Big Tech could weaken US international competitiveness
Zachary Karabel, March 9, 2019, //,,Wired, THE LAST PLACE BIG TECH WANTS TO BE IS ON THE DEFENSE
Hence, 2019 might be for tech what 2008 was for the big banks: the inflection point when public attitudes turned aggressively negative and demand for regulation grew. The regulation of banks that followed the financial crisis has in many respects been the worst of all possible outcomes: the big banks have become bigger while simultaneously stifling competition and becoming less profitable and less innovative. Something similar for tech-land, where the pace of change is by nature faster and the need for innovation much greater, could permanently dampen the ability of the US to remain globally competitive. We aren’t yet at a Dodd-Frank moment for Big Tech, with massive new regulatory oversight, but Warren’s manifesto should serve as a warning