US hearings signal increased scrutiny of big tech
Federal Trade Commission looks into competition issues in the digital economy
The Federal Trade Commission kicked off a marathon series of hearings on Thursday into competition and consumer protection issues in the latest sign of growing scrutiny of the digital economy by US policymakers and enforcers.
Joseph Simons, chairman of the commission, began the proceedings at Georgetown Law Center, a stone’s throw away from Congress, by warning against the introduction of ideology into antitrust policy and enforcement.
“In my view, basing antitrust policy and enforcement decisions on an ideological viewpoint (from either the left or the right) is a mistake,” he said. “I would rather make policy and enforcement decisions based on the best evidence and analysis.”
His comments came after Donald Trump ramped up his criticisms of technology groups. The US president has raised the question of antitrust action against Amazon and in August, he accused Facebook, Google and Twitter of suppressing rightwing viewpoints. He warned they were “treading on very, very troubled territory”.
The Department of Justice, which shares responsibility for antitrust enforcement with the FTC, said after Mr Trump’s comments that it would hold a summit with state prosecutors to discuss competition and free speech concerns about technology groups.
The FTC hearings are modelled after a similar process it undertook in the mid-1990s to assess whether changes in the economy required it to take a new approach to antitrust enforcement and consumer protection. The hearings on “Competition and Consumer Protection in the 21st century” are set to run through to November.
On Thursday Mr Simons, who was nominated by Mr Trump in 2017 and confirmed this year, noted research that showed the US economy had become more concentrated and less competitive over the past 30 years. He also pointed to the renewed argument by progressive antitrust lawyers that the government should consider inequality and wages when enforcing competition rules.
“These concerns pose a challenge for antitrust agency leadership, the courts, and legislators: to think hard about whether significant adjustments to antitrust doctrine, enforcement decisions, and law would be beneficial to our country,” he said.
The debate has been driven by progressive think-tanks such as the Open Markets Institute and has posed an intellectual challenge to the antitrust consensus in place since the late 1980s, when the likes of Robert Bork argued that mergers should be assessed solely on the basis of consumer welfare, most typically framed in terms of prices.
In the first hearing on Thursday morning, Jason Furman, the former chair of the Council of Economic Advisers in the Obama administration, pointed to aggregate economic trends such as the fall in the share of income going to labour and the increase in mark-ups by companies.
“No single story comes out of this, but, on balance and on average, this does seem to add up to a reduction in competition, a reduction in dynamism, and one that I think we need to be concerned about,” he said.
However, Timothy Muris, the former FTC chairman and now senior counsel at Sidley Austin, warned of the “disastrous consequences” of returning to 1970s thinking.
In a later panel, on Thursday afternoon, Fiona Scott Morton, a professor of economics at Yale School of Management, referenced testimony in 2016 from Bill Baer, who then headed the justice department’s antitrust division, asking why the government was forced to litigate mergers that should “never have made it out of the boardroom”.
She said the swing of the pendulum away from antitrust enforcement had gone too far. “Obviously if you enforce less for 30 years in a row, you’re eventually going to pass the optimum,” she said. “It’s easy for me to see that we well overshot the optimum.”
Joshua Wright, a former FTC commissioner and now professor of law at George Mason University, disagreed, arguing that there was not enough detailed data about competition in the economy. “We know a lot less and probably need to know a lot more before playing much with policy,” he said.
Michael Kades, the director of markets and competition policy at the Washington Center for Equitable Growth, observed the panels on Thursday and said he hoped the FTC hearings would shine attention on new economic research, rather than becoming a forum for relitigating the battles of the past.
“Antitrust may have been wrong in the 1970s, that doesn’t mean it’s right in the 2000s,” he said.