The war on Big Tech is currently stuck between a rock and a hard place.
Policymakers are troubled by a multitude of purported social ills that have been attributed to the emergence of Big Tech — anticonservative bias, lack of platform liability, data surveillance, the downfall of news media and weakened opportunities for small business, to name but a few.
However, assuming these ills are real and have indeed been caused by Big Tech, remedying them is patently outside the narrow remit of the antitrust laws.
This has left policymakers in a bind. Passing new legislation to regulate platform activity is a daunting task, especially given the highly divisive nature of these topics (even within America’s two main political factions, tensions run high).
Conversely, using the antitrust laws to tackle these idiosyncratic harms is like fitting a square peg in a round hole. Potential cases are thus unlikely to hold up in court.
Unfortunately, politicians have responded by obfuscating the almost irreconcilable contradictions that exist between their stated policy goals and the tools that they propose to address them.
Tuesday’s Senate Committee on the Judiciary’s Antitrust Subcommittee hearing — that focused on Google’s online advertising business — offers a perfect illustration of this regulatory flip-flopping. Policymakers’ predicament was made apparent from the moment Sen. Mike Lee (R-Utah) opened the proceedings.
Having at length (and rightly) explained the legal constraints that weigh upon antitrust enforcement, Lee subsequently rebuked Google for excluding The Federalist from its ad platform (a decision upon which antitrust law has absolutely no bearing).
Things went downhill from then on. Senator Josh Hawley (R-Mo.) argued that Google’s clout enabled it to dictate the content moderation policies of firms that use its platform — even though rival platforms with less market power impose similar constraints (like the ad platforms of Apple and Yahoo!, for example).
Likewise, Senator Amy Klobuchar (D-Minn.) suggested that Google’s advertising-related acquisitions, in particular that of an internet ad provider named DoubleClick, should have been blocked by antitrust authorities — but both the FTC and the European Commission did examine the merger (the EU even submitted it to its highest standard of review), and neither perceived any harm to consumers.
The problem for proponents of antitrust enforcement against Google’s ad business is that the display advertising industry is, in fact, highly competitive. Between 2010 and 2019, the price of internet advertising declined by 40 percent. Simultaneously, online ad spending increased by an average 20 percent per year.
As scholars from the International Center for Law & Economics argued: “The combination of increasing quantity, decreasing cost, and increasing total revenues are consistent with a growing and increasingly competitive market.”
More fundamentally, online display advertising (where firms bid to display ads on third-party websites, and where Google’s ad platform is alleged to have a large market share) is but a tiny part of a much vaster industry in which numerous platforms compete.
This notably includes Facebook, Amazon, TikTok, Kayak, etc. Not to mention advertising in “traditional” mediums such as TV, radio and newspapers. Google occupies only a small fraction of this industry, and advertisers can quickly (and frequently do) switch from one medium to another.
Critics know this much. And that likely explains why much of their criticism has focused on “non-price” harms, such as accusations of political bias, or claims that large platforms are both umpires and players on their own platforms.
But these are not actionable antitrust claims. Nothing in the antitrust laws prevents firms from exhibiting political biases (in fact, it has been argued that political bias may be the result of intense competition). Nor are firms that operate platforms prevented from competing on them.
This leaves legislation as the only viable option. But going down that route would force critics to resolve their inner-divisions and to clearly delineate the harms they seek to address.
Until that happens — don’t hold your breath — observers can expect more political hand-waving, as was the case in Tuesday’s hearings.