Break 'em Up: Big Tech and the Dawning of a New Era in Antitrust
Shrouded by the tumult of 2020, the United States is headlong into a groundbreaking legal battles against today's Tech Giants
Big tech is facing its first substantial legal attack in a generation. Facebook is next to face the firing line. A tandem of lawsuits were launched on the tech giant Wednesday alleging anticompetitive practices. The first, a suit headed by the State of New York and signed on by the Attorney Generals of 46 other states and territories, and a second launched by the Federal Trade Commission fielded alongside the states’ complaints. These come two months after a groundbreaking lawsuit by The U.S. Department of Justice pursuing Google for similar charges. These legal battles emerge nearly two decades after United States v. Microsoft, the last major American antitrust suit, and signals the first steps towards landmark decisions that will likely determine the trajectory of US business for the next generation.
Long Time Coming
Big Tech has been under the magnifying lens for some time now. The 5 major companies in this space (Apple, Alphabet, Amazon, Facebook, and Microsoft) have seen incredible growth in the recent past. The companies that had been evaluated at $2 trillion just 5 years ago have now more than tripled to over $7 Trillion. This growth, questionable business practices, and the dominance of tech in everyday life has garnered scrutiny throughout the government. Tech leaders testified in front of congress in two key hearings in the past 6 months. This includes a hearing specifically on anticompetitive practices held in July, as well as another to do with hate-speech and misinformation in October. A 17 month long investigation by the House Judiciary antitrust subcommittee also came to a conclusion in October. The subcommittee came to find broad reaching anticompetitive practices from the companies involved, and made recommendations to Congress for further legislation needed to reel in these growing giants. This week’s legal challenges represent early action in what is likely to be an important emphasis in the new administration as well as across government.
The Facebook Suit
Both the States’ and FTC’s suits allege Facebook has attained monopoly power through a buy-and-bury strategy launched against competitors in the social media space. Centering on Facebook’s acquisition of Instagram and Whatsapp, they charge Facebook targeted innovative competitors who’s products offered distinct and known advantages over their own. By doing so Facebook has squashed competition and have come to dominate in social networking and advertising . The FTC suit offers an additional complaint alleging separate anti-competitive strategies between Facebook and third party developers. Strategies in which Facebook prevented access to their application programming interface (API) to developers with competing products or networks. Here they cite a specific case involving Twitter’s Vine platform.
The lawsuits look to force Facebook to divest from Instagram and Whatsapp and require further information on new acquisitions in the future. In a press conference Wednesday NY AG Letitia James stated, “... we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior. Instead of competing on the merits, Facebook used its power to suppress competition so it could take advantage of users''
General counsel for Facebook, Jennifer Newstand, rebuked the lawsuits calling them revisionist history, “These transactions were intended to provide better products for the people who use them, and they unquestionably did. Both of these acquisitions were reviewed by relevant antitrust regulators at the time.”
The Google Suit
Facebook was not the first on the receiving end of recent lawsuits. Late October the Department of Justice launched an anti-monopoly suit against Google. The DOJ alleges Google behaved in anti-competitive practices when initiating exclusivity agreements with competing brands as well as self-preferential ordering of search engine results. These exclusivity agreements require Google applications to be both pre-installed and undeletable across multiple platforms, and place Google as the default search engine within multiple web browsers. Those familiar with the 2001 US v. Microsoft case will notice similarities between the “web browser bundling” alleged then to today’s case against Google. Google has offered a similar rebuttal to Facebook stating, “Today’s lawsuit by the Department of Justice is deeply flawed. People use Google because they choose to, not because they’re forced to, or because they can’t find alternatives.”
Bipartisan Agreement(?)
It may feel so foreign to 2020, but these antitrust measures have had bipartisan support within the different executive departments, the separate states involved, and even to a degree within congress. Antitrust action has long been in the wheelhouse of liberals, but with Bill Barr leading the DOJ headlong into the Google suit we certainly see a departure here. Barr, certainly not unfamiliar with partisan accusations, has not been deterred from pursuing this suit which now will be continued under the Biden Administration. The Facebook lawsuits joined both the federal government and state legal departments, and, as NY AG Letitia James boasted, brought wide bipartisan agreement among the 46 separate AG’s who have signed on. Congress is short of this level of agreement, but sure enough have agreement of a kind. Democrats largely are on board with passing new antitrust legislation much of which Republicans disagree with. However, Republicans have remained critical of alleged anti-republican biasing on tech platforms. How this will impact any future legislation is unsure, but big tech is unlikely to find close allies here within the capitol.
Long Way To Go
These lawsuits are unlikely to be decided anytime soon. Set to be landmark cases litigation will go on throughout the Biden administration. The previous Microsoft case began in 1998 and was not settled until 2001. There are significant differences between no and then, but today's cases are no less consequential. The nature of the cases Facebook and Google face respectively differ and may result in distinct rulings. While the FTC are shooting for harsh punishment through divestment there are certainly additional avenues courts may decide to pursue after hearing the cases. This certainly doesn’t rule out additional cases in the future either. Amazon may face similar antitrust lawsuits in the way of Facebook as well as potential workplace safety suits atop that. As stated earlier, and unlike the previous generation’s cases, there is a push among some in congress to pass new antitrust legislation. Of which could add additional intrigue to go along with these sure-to-be landmark cases in a new era in American antitrust.