Looking Back, and Forward, on Online Platform Antitrust Reform
As the new Congress is getting underway, this is a good time to look back at the efforts in the last Congress to improve the antitrust laws as they apply in the online marketplace — why those efforts did not ultimately succeed, although they made considerable headway, and what lessons we might take for renewing those efforts.
CDT was among those who were hoping to see legislation cross the finish line and be enacted into law. We recognize that a competitive marketplace and the choice it promotes, for consumers and for all who seek to reach them, is key to fostering the incentives that lead to better value, higher quality, more innovation, and more inclusive economic growth and prosperity.
The current shortcomings in competition throughout our economy are particularly evident in the online marketplace, where a handful of large platforms have a commanding presence, including gatekeeping sway in critical avenues of commerce and communication. The adverse effects on open commerce that stem from this high degree of market concentration have been documented in, among other places, the House Judiciary Committee’s report released in October 2020, which followed an extensive 16-month bipartisan investigation by the Antitrust Subcommittee.
Recognizing these shortcomings — that we need a more competitive marketplace for online services — is in no way inconsistent with acknowledging and valuing the extraordinary contributions these platforms and the technology they have helped develop and improve have made, the benefits of which are widely shared. Reinvigorated antitrust policy should help continue to spur innovation and the wide sharing of its benefits.
CDT was actively engaged in efforts in the last Congress to move legislation forward to address these competition shortcomings. Both S. 2992, the American Innovation and Choice Online Act, and S. 2710, the Open App Markets Act, and their respective House counterparts, H.R. 3816 and H.R. 7030, aimed to clarify prohibitions against specific anticompetitive practices by online platforms with market power — practices described in the House Antitrust Subcommittee report — taking fundamentally sound approaches grounded in antitrust law. In short, the practices the bills would prohibit give preferential treatment to the products and services of the platform or its favored partners, thereby impairing or closing off opportunities for other providers that depend on the platform to reach customers, and denying consumers the benefit of the choices those other providers could offer.
What kept CDT from being able to support these bills in their current form was not their approach to competition policy – which was fundamentally sound, although both bills now have the opportunity to benefit from a fresh review. It was that the bills did not address critical issues created in other, non-competition policy areas clearly enough.
The Need for Antitrust Reform
At the heart of this legislative effort is a well-founded perception, widely shared among many leading antitrust law experts, that the courts have made a number of serious wrong turns in their interpretations of the antitrust laws over the past few decades, with the cumulative effect of weakening the antitrust laws and undermining competition in our economy.
In the face of this development, and the harm it is causing, Congress could have opted to do nothing, and continue waiting to see whether and when the courts might themselves correct these wrong turns and put the ship back on course. The House and Senate Judiciary Committees understandably rejected such an indeterminate wait-and-see approach. Although efforts to persuade the courts to make course corrections on a case-by-case basis should certainly continue, that’s not a solution we can count on in any acceptable timeframe.
Congress could also have opted to correct these wrong turns more broadly, in legislation applying to antitrust enforcement throughout the economy. That has been the traditional approach to amending the antitrust laws. Indeed, there was legislation in the last Congress, S. 225, proposed by Senator Klobuchar and others, that would have taken that broader approach — also in a sound, thoughtful way, grounded in established antitrust principles. Such a broader approach, however, invites scrutiny and resistance from a broader range of affected industry interests throughout the economy. It also invites discussions involving arcane antitrust doctrinal terminology, which lawyers and economists in the antitrust community are familiar and comfortable with, but would impose an additional learning curve on everyone else.
So it was ultimately decided in the last Congress to focus on making more concrete corrections, to address a specific set of competition problems in the online marketplace, as identified in the House Antitrust Subcommittee report. S. 2992 and S. 2710 were simultaneously concrete and well-grounded in established antitrust principles – using, where possible, more accessible terminology as equivalent proxies for the arcane terminology in the antitrust lexicon. Although some antitrust purists may demur, augmenting the antitrust laws in one industrial sector can be a workable legislative approach.
The Need for Clarity in New Industry-Specific Legislation
There are trade-offs with any approach, and this industry-specific approach brings its own set of challenges. One key challenge is the need to write new language, knowing it will be interpreted afresh by the courts.
By design, the Sherman Antitrust Act is written in general language – succinctly prohibiting contracts, combinations, and conspiracies in restraint of trade or commerce, and prohibiting monopolizing or attempting to monopolize any part of trade or commerce. Court decisions have fleshed out the contours of those succinct prohibitions, in case-by-case common-law fashion, over the course of 130 years – including those decisions making wrong turns, but most of which have usefully clarified our understanding. Importantly, the general language of those statutory prohibitions has enabled antitrust principles to adapt to evolving markets and technology and economic thinking over the years, and to take into account the particular characteristics of whatever market sector in which they are being applied, including the technology involved.
A new competition statute does not automatically carry forward that adaptability and accumulated adaptation from antitrust case law. And in some respects it shouldn’t, if the new statute is being written to be sector-specific. But that means it is important to be clear in the statute, in taking into account the particular characteristics of the sector – in how the narrower concrete prohibitions are described and circumscribed. It can’t be assumed that the courts will apply case law from the Sherman Act to make sense of new language in a new statute that is intended to depart from that case law.
We saw two areas in which the language in the two bills was not as clear as it needs to be to avoid uncertainty in some critical areas.
The first area of uncertainty was in how the bills could affect the need to ensure that user privacy and data, and system security, are not jeopardized. Users need to feel safe – and be safe – in using the internet for commerce, communication, and information gathering. The United States is long overdue for a strong, comprehensive privacy law. But until we get one, and even after we do, it is important that the incentives for online platforms to make their systems and their users’ personal information secure are not chilled by legal requirements and prohibitions that needlessly interfere with their ability to do so, even if that interference is not intended.
The second area of uncertainty was in the need to ensure that these antitrust bills are focused on commerce, not ideology. Online platforms, as part of their efforts to make themselves a safe and satisfying place for their users, engage in content moderation: setting policies about what user-generated content is and is not acceptable on their service, and removing content that the platform considers dangerous, fraudulent, harassing, or otherwise not something they want to be hosting. Some believe the platforms need to be more vigilant and restrictive; others believe the platforms are too vigilant and restrictive as it is. There is a vigorous ongoing debate about how to draw the balance, which also has constitutional implications. But important as this issue is, it cannot be resolved in, and does not belong in, our antitrust laws.
New statutory language will be interpreted by the courts on its own terms. Declarations that the bills are focused on competition in the antitrust sense will be relevant, but not determinative. That’s why the drafting details are important.
CDT was actively engaged for many months in an effort to get these critical non-competition issues appropriately addressed. There are straightforward, concrete ways to do so that in no way undermine the purpose and effect of the bills, the central pro-competition objectives of which we share. We gave specific proposals for how to address these issues in S. 2992, in a March 9, 2022 letter to the Senate Judiciary Committee. S. 2710 has some of the same kinds of critical drafting issues that can be similarly addressed.
The Way Forward
These drafting uncertainties are too important to be dismissed, or to be left for the courts to sort out. But the fact that these uncertainties exist cannot be the end of the discussion. Rather, it is a starting point for a constructive discussion in which all should participate – including online platforms that might just as soon see current law left alone. We look forward to having that discussion with all who will join us.
CDT is well-suited to actively participate. Our mission, since our founding more than 25 years ago, has been to promote an internet that is useful, safe, satisfying, and available to all. Protecting user privacy and data and system security, and protecting platforms’ ability to engage in content moderation, have been core parts of that mission. Promoting and protecting competition and choice for consumers online is also a key part. And I personally bring more than three decades of experience dedicated to antitrust and competition policy.
It is our hope that these uncertainties can be addressed, so that effective legislation can be enacted into law. We invite others, who share our interest in making sound, workable improvements to our antitrust laws as they apply in the concentrated tech platform environment, to work with us to that end.
