The Danger of Undisciplined Anti-Trust Suits

Eakinomics: The Danger of Undisciplined Anti-Trust Suits ‘Tis the season for speculating what will be new and different in a Biden Administration. But there is one area that promises to be more of the same: big tech will remain unpopular. That unpopularity has manifested itself with federal antitrust lawsuits by the Federal Trade Commission (FTC) and Department of Justice (DoJ) brought Facebook and Google, respectively. As AAF’s Jennifer Huddleston emphasizes, however, the legal activity is not confined to federal agencies: “Eleven Republican attorneys general joined the DoJ antitrust case against Google and 48 state and district attorneys general filed an antitrust case against Facebook on the same day as the FTC. Additionally, nine other states joined Texas in filing additional antitrust claims against Google concerning advertising, 38 states, districts, and territories have joined a case led by Colorado claiming Google engages in self-dealing to preserve its dominance in search and search ads, and a case filed by Epic Games alleges that Apple is engaging in anticompetitive behavior with its app store practices.” Unfortunately, this not an instance of “the more the merrier.” Let’s start with suits by private competitors (e.g., Epic Games). The emergence of app stores has mutually benefited app developers, platforms, and consumers by enabling discovery, download, and use. The result has been that these markets have enabled a flourishing economy for mobile apps and new markets for developers to connect to consumers. The Epic case is a private business dispute (over payments for the game Fortnite) elevated to the level of “anticompetitive” practice. The obvious danger is that a poorly decided case will tie the hands of app stores in their business practices and damage the further development of the market for apps. A similar concern arises with the states. To begin, the states’ lawsuits are not merely mirror images of the federal lawsuits. Currently, the attorneys general of many states disagree with one another and the federal government regarding the nature of anticompetitive behavior and consumer harm by the tech giants’ actions. Indeed, often the animus behind these claims is not clear evidence of anti-competitive behavior but a desire to solve other concerns regarding tech policy, such as data privacy or alleged anti-conservative bias. This raises the potential for divergent theories of antitrust policy that are inconsistent with one another and not grounded in the traditional consumer welfare standard. Generating confusion around the application of antitrust has implications for more than this dynamic sector of the economy. If a court chooses to embrace the creative and expansive theories at the center of these state-led cases, it could set precedent that changes the application of antitrust law in the future not only for the technology industry, but in many other areas of the economy as well. The uncertainty and broad reach potentially created by these competing state cases would likely stifle economic growth and innovation. Big tech is evidently doomed to a near-term future of unpopularity. It would be more just to big tech, and safer for the rest of the economy, if this animus was grounded in a demonstration of true harm to consumer welfare.