What does breaking up Big Tech really mean?
This past fall, the Federal Trade Commission and 48 state attorneys general filed suit against Facebook, charging it with illegally maintaining a monopoly over the social-networking space through a years-long course of anticompetitive conduct. Soon after, the US Department of Justice and 11 state attorneys general filed suit against Google, charging it with illegally maintaining a monopoly over the search and search advertising markets. Apple is currently locked in a civil trial with game developer Epic Games, which is challenging Apples control of its App Store on antitrust grounds. Last summer, the US House Judiciary Committee concluded a 19-month investigation into alleged anticompetitive activity by the tech titans. The resulting 450-page report described the companies as the kinds of monopolies we last saw in the era of oil barons and railroad tycoons and recommended that the government take action against them. Its easy, of course, to dismiss anything that comes out of Washington or Brussels as political posturing, but in this case that would be a mistake. President Joe Biden has named some of Big Techs sharpest and most vocal criticsincluding Columbia University professor Tim Wu, author of the book The Curse of Bigness, and Lina Khan, who served as special counsel to the Judiciary Committee during its investigationto important roles in his administration. Europe is putting in place tougher regulations to try to limit Big Techs power. And antitrust action, at least with regard to the tech industry, has become that rarest of things: a bipartisan issue in Congress. Whats arguably more important is that were in the middle of a radical shift in the intellectual discussionone that has made it much easier to go after Big Tech. In many ways, we seem to be going back to the antitrust vision that determined US policy toward big companies for much of the 20th century, a vision thats much more skeptical of the virtues of size and much more willing to be aggressive in keeping companies from exercising monopoly power. Americas key antitrust laws were written around the turn of the 20th century. The Sherman Antitrust Act of 1890 and the Clayton Act of 1914 remain on the books today. They were written in broad, far-reaching (and ill-defined) language, targeting monopolists who engaged in what they called restraint of trade. And they were driven in large part by the desire to curb the giant trusts that had, via a series of mergers and acquisitions, come to dominate Americas industrial economy. The quintessential example was Standard Oil, which had built an empire that gave it essentially complete control over the oil business in the US. But antitrust law wasnt just used to block mergers. It was also used to stop a host of practices that were deemed anticompetitive, including some that nowadays seem routine, like aggressive discounting or tying the purchase of one good to the purchase of another. In reality, the four companies have very different businesses that raise very different antitrust questions and will lend themselves to very different antitrust solutions. This all changed with the Reagan administration in the 1980s. Instead of worrying about big companies impact on competitors or suppliers, regulators and courts started to focus almost entirely on what was called consumer welfare. If a merger, or a companys practices, could be shown to lead to higher prices, then it made sense to step in. If it didnt, antitrust regulators generally took a hands-off approach. Thats why Facebooks acquisitions of Instagram and WhatsApp, Amazons acquisition of Zappos, and Googles acquisitions of DoubleClick, YouTube, Waze, and ITA all sailed through the regulatory approval process without a hitch. No longer, though. Over the past four or five years, scholars, politicians, and public advocates have begun to push a new idea of what antitrust policy should be, arguing that we need to move away from that narrow focus on consumer welfarewhich in practice has usually meant a focus on pricestoward consideration of a much wider range of possible harms from companies exercise of market power: damage to suppliers, workers, competitors, customer choice, and even the political system as a whole. Theyve done so, not surprisingly, with the Big Four squarely in mind. Short answer: It depends very much on which company youre going after. The targets  While antitrust advocates often rhetorically lump Apple, Amazon, Google, and Facebook together, creating a memorable image of four giant gatekeepers collectively controlling access to the digital economy, in reality the four companies have very different businesses that raise very different antitrust questions and will lend themselves to very different antitrust solutions. Take, for a start, Apple. It is the most valuable company in the world, as of this writing worth more than $2 trillion. Its also the most profitable company in the world. And yet, when it comes to discussions of antitrust and Big Tech, Apple often seems like an afterthought. In Wus book, Apple barely makes an appearance, and in Senator Amy Klobuchars new book, Antitrust, which is a ringing call for remaking and enforcing anti-monopolization policy, the discussions of Apple seem more cursory than central to her thesis. That may be in large part because Apple has become a behemoth mostly on its ownwhile it has made plenty of acquisitions, its recent growth is mainly due to the simple fact that it has introduced three of the most successful and lucrative technology products in history, and that it has continued to convince customers to keep upgrading to the next generation of products. Even in this new world, it is not illegal to become hugely successful by building the proverbial better mousetrap. To be sure, Apple has antitrust issues, which center on its requirement that all developers who are making apps for the iPhone and iPad sell their goods through the App Store, with Apple collecting a 30% fee. So its possible Apple will end up having to let developers sell directly to consumers, or even allow independent app stores. Even so, it could still collect a licensing fee from any app that wanted to be on the iPhone. And most users would, in all likelihood, continue to use the App Store regardless, if only out of habit and convenience. So in the grand scheme of things, Apple wouldnt seem to have that much to worry about from increasing antitrust pressures. Amazons situation is more complicated. It, too, has the fact of organic growth going for it; while it has made its share of acquisitions, it has grown mostly on its own, driven by its relentless appetite for selling more, its huge investment in infrastructure, and its willingness to spend huge amounts of money in order to win and keep customers. Its biggest antitrust problem stems, paradoxically, from something it created itself: Amazon Marketplace.