Whats Next for the Campaign to Break Up Big Tech?
On June 28th, a federal judge named James E. Boasberg issued what appeared to be a stunning rebuke of the governments efforts to break up Facebook over alleged antitrust violations. In two opinions of more than fifty pages each, Boasberg seemed to accuse the Federal Trade Commission and a coalition of forty-eight state attorneys generalthe two parties that have filed antitrust cases against Facebookof basic errors and miscalculations that are almost embarrassing, suggesting in the former case that the F.T.C. failed to define the market that Facebook operates in, and in the latter that the states waited too long to act. The Facebook cases were a central part of what has become a bipartisan push to restrain major technology companies, which also include Google, Amazon, and Apple. These companies have, over the last decade, grown into sprawling entities that mediate or control large portions of the media, advertising, retail, social-networking, and communication markets. The Justice Department and dozens of states filed similarly ambitious cases against Google last fall, and some antitrust experts have been predicting that a suit of similar scale will be filed against Amazon in the near future. In Congress, antitrust legislation aimed at the big technology firms is one of the few areas in which Republicans and Democrats have found reasons to coperatealthough often different onesand several draft bills are in development. The collapse of the governments Facebook cases would represent a significant blow to this larger effort. A close reading of Judge Boasbergs opinions, though, suggests that the battle is far from over. Regarding the F.T.C. case, the judge says that hes not dismissing the entire case but merely suggesting that the F.T.C. rework it to address its weaknesses and then file it again within thirty days. One line in particular is likely to cause displeasure within Facebooks executive offices: the agency is on firmer ground in scrutinizing the acquisitions of Instagram and WhatsApp, Boasberg writes. The Court rejects Facebooks argument that the FTC lacks authority to seek injunctive relief against those purchases. The F.T.C. has stated that it wants to force Facebook to undo the acquisitions of Instagram and WhatsApp because they were anti-competitive; Boasberg suggests that the matter is a legitimate one to pursue. After looking over the opinion, George Hay, a law professor at Cornell University and a former antitrust official at the Justice Department, told me, The judge has given them a road map.  A congressional subcommittee spent sixteen months investigating the business practices of Amazon, Apple, Google, and Facebook, amassing a huge cache of documents and evidence. A four-hundred-fifty page report that the committee released on October 6th concluded that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation, and safeguards our democracy. Just two months later, on December 9th, forty-eight attorneys general, led by New Yorks attorney general, Letitia James, filed a lawsuit alleging that Facebook was a monopoly and that it stifled competition in order to protect its position of dominance. The case brought to mind the lawsuits filed against the Big Tobacco companies in the nineteen-nineties, which led to a master settlement in 1998 that required the companies to pay for billions of dollars of smoking-related health-care costs. In rejecting the states case against Facebook, Boasberg raised a valid question, which points to the political and policy failures that unfolded over the last decade or so, when the government did little to stop the companies from ballooning into the giants that they have become. He practically reprimanded the states for not doing something sooner; there were signs of problems as far back as 2012, when Facebook purchased Instagram, which was then its competitor. That takeover, and the purchase of Whatsapp in 2014, were approved by regulators, and the attorneys general did nothing to object until years later, when the political appetite for criticizing the tech companies had changed dramatically. Its like your neighbor is building an extension of their house over your property line, but you sit there and wait until theres a three-story building up and then say, Youve got to take it down,  Hay said. Thats not allowed.  Regarding the F.T.C.s case, the judge suggested that the agency had failed to address a basic question. The agency alleges in its complaint, which was also filed on December 9th, that Facebook has a monopoly in Personal Social Networking Services. But nowhere in the complaint does it clearly define what that market is or how Facebooks share of it is calculated, which Boasberg identifies as a major problem. At the same time, though, he writes, this defect could conceivably be overcome by re-pleadinga remark that will send the F.T.C. lawyers back to fix the issues. Matt Stoller, the director of research at the American Economic Liberties Project, and the author of Goliath, a history of monopoly power in the U.S., told me that the developments arent likely to slow the momentum to reinvigorate antitrust enforcement. I think that some parts of this are helpful, actually, he said of the judges rulings. The judge ruled that the F.T.C. claims were right. If I were Facebook, I wouldnt be particularly happy with this ruling. He also noted that these kinds of cases almost always take many years to play out. The F.T.C. began investigating Microsoft over antitrust abuses in 1992, and then closed the investigation in 1993, after which the Justice Department launched an investigation. That eventually led to a monopolization case that wasnt resolved until 2001, when the D.O.J. and the company reached a settlement that barred Microsoft from restricting computer manufacturers from working with other software developers, and required the company to open up aspects of its source code. I think it really puts pressure on Congress to act, Stoller said. Theres a real political appetite to strengthen these laws.