Congress is calling in tech giants to testify about antitrust issues. Tomorrow, the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law, will hear from executives at Amazon, Apple, Facebook, and Google. This is an opportunity to address the serious competition issues that have caught the attention of candidates, policy-makers, and the public, both here and globally. Will Congress take advantage?
There are two paths that the hearing could follow, but only one of those will be useful to furthering our understanding of how markets are affected by the presence of powerful tech companies. The unhelpful path is one that focuses on the sheer size of the companies participating in the hearing, because size alone doesn’t tell us about prices, quality, or innovation. The useful path is one that focuses instead on the state of competition.
It is competition, not competitors, that the antitrust laws protect in America. That’s what the Supreme Court has said repeatedly over decades. The rationale is simple: consumers deserve the benefits of competition–a range of high quality, innovative options with varying price points, from which consumers can freely select. The hallmarks of competition are lower prices, higher quality, and fast-paced innovation. Our competition laws protect the competitive process that delivers those benefits.
Members of Congress asking the questions on Tuesday should focus on what the tech companies actually do and how that conduct might impact competition.
It is for that reason that simply being big isn’t bad under our legal system. Big companies often have more resources to invest in R&D, to acquire complementary assets, and to spend on marketing campaigns. But when big companies act in a manner that harms the competitive process itself, that’s what implicates the antitrust laws. Any such harms to competition should be investigated, stopped, and remedied. As Justice Thurgood Marshall wrote back in 1972, antitrust laws “are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms.”
So instead of focusing on how big the tech giants are, or how many companies they have acquired, or how many lines of business they have, or what they pay in taxes (which is a tax issue, not an antitrust issue), Members of Congress asking the questions on Tuesday should focus on what the tech companies actually do and how that conduct might impact competition. Some examples:
- How do they prioritize what listings appear at the top of their results pages, especially when they themselves offer a product that competes with one of a third-party seller?
- Do they accept payments to suppress competitors’ offerings, and if so, will they disclose the details of those payments to Congress and consumers?
- When they are selling products, how do they set their prices, and do they use what they know about each of us to set prices that vary from person to person?
- How much are customers “locked-in” to a particular platform or operating system, and what percentage of customers switch from one to another in a year?
These are the sorts of questions that get at how the competitive process is working, and whether consumers are getting the benefits of a competitive market.