This summer the CEOs of Google, Apple, Facebook, and Amazon testified remotely at a five-hour hearing before the House Judiciary Committee’s Subcommittee on Antitrust. It was the culminating moment of a more than year long investigation into competition policy and big tech. The Committee held a series of hearings, requested and received millions of pages of documents, and got answers to questions from the four target companies, other companies that compete with or use those platforms, and economists. The output of this massive project is a report that we expect to be released by the end of September.
That report will contain facts about the companies’ size and power, and it will likely give examples of business conduct that the Subcommittee members and their staff find troubling. All of that will be fascinating reading. But the key role for Congress is not whether to bring an enforcement action against one or all of these companies – that’s the purview of the DOJ and the FTC. (Indeed, it has been widely reported that they’re planning to do exactly that.)
Instead, Congress proposes legislative reforms. The Chair of the Subcommittee has indicated that the report will make some legislative proposals. Although those reforms have little chance of being addressed by the current Congress given how close we are to the election, they will be a roadmap for the Members who occupy those seats starting in January.
Here’s what to look for in that all-important legislative proposals section of the Committee’s report:
- Is the legislation specific to the tech companies, or does it apply to the economy broadly? Most of our antitrust laws apply to the entire U.S. economy; we have relatively little sector regulation. There are, of course, some special competition law provisions in the communications, pharmaceutical, and energy sectors, among others. If the Subcommittee’s report suggests that Congress enact special antitrust laws that apply only to tech (or to subsets of tech, like this proposed bill), that would be a significant departure from the norm. If that is the approach that the report takes, we recommend looking closely at how “tech” is defined. Is a retailer that operates both physical and virtual storefronts a “tech” company? Do different rules apply to each of those selling environments?
- Does the legislation apply different legal standards to large tech companies? Most, but not all, of our existing antitrust laws apply to all companies, regardless of their size. There are some antitrust legal burdens that apply to companies with market power. Do the legislative proposals seek to put additional legal burdens on large tech companies (like this one introduced by Sen. Klobuchar)? If so, how does the Subcommittee define large tech companies – by revenue, market share, users, or something else? Are there factual determinations that support additional legal burdens on large tech companies?
- Is the legislation aimed at specific business practices? The Subcommittee’s investigation has focused on a few key areas of business conduct: (a) pricing below cost to drive out rivals, (b) integrating vertically, (c) disadvantaging competitors, and (d) entering other powerful companies’ adjacent markets. Does the proposed legislation take aim at any of these practices (like this proposal from last winter)? If so, how does it define and measure those business circumstances?
- Given the investigation’s emphasis on past mergers, like Facebook acquiring Instagram and Amazon buying Diapers.com, and the subcommittee chair’s call for a ban on mergers during the Covid pandemic, is there a legislative proposal on merger activity? Will the Subcommittee seek legislative solutions that would restrict acquisitions in the tech space? If so, will that apply in special ways to large tech companies, and how are “large tech companies” defined? Will the Subcommittee’s report recommend other changes to our merger system that are not tech-specific, such as shifting burdens of proof, new timelines for merger review, or providing for post-merger studies to better assess the impact of merger settlements?
- Finally, will the report recommend new civil fine authority? In the United States, our system requires the antitrust agencies to pursue court cases and then seek remedies to redress competitive harms. They generally do not have the ability to fine companies for antitrust harms outside the criminal sphere. Other jurisdictions, notably Europe, have taken a different approach. Will the Subcommittee’s report recommend that the U.S. adopt a civil fine approach? If so, will it apply across the economy or only to the tech sector? If it proposes special rules for tech companies, how is that justified?
The Subcommittee’s report will likely be the most comprehensive and fact-based approach to legislative proposals in the antitrust field in years. We will carefully parse the legislative recommendations it makes and ask questions about how any proposed legislation might affect consumers in the digital economy.