As President Joe Biden fills his Cabinet with prominent anti-monopoly figures, speculation is growing as to what lengths his administration will actually go to rein in the authority of today’s tech tycoons.
On March 9, Politico reported that the president would nominate Lina Khan for a seat on the Federal Trade Commission. Gaining prominence in 2017 with the publication of an article in The Yale Law Journal about Amazon’s anti-competitive business practices, the Columbia University professor has fast come to be viewed as a young, new-age anti-monopoly legal scholar.
Before nominating Khan, the White House also announced that Tim Wu, a professor of law at Columbia University, would serve on the National Economic Council as a special assistant on technology and competition policy. In 2018, Wu authored “The Curse of Bigness: Antitrust in the New Gilded Age,” in which he argued that the world is on course to repeat the same economic and political mistakes of the early twentieth century.
Biden’s nomination of the two figures, popularly known for their enmity toward Big Tech, further indicates that the administration may take a firm stand against Silicon Valley’s moguls.
Though the administration has yet to address concerns about Big Tech with a direct plan of action, these nominations signal an increased belief that the four tech giants — Amazon, Google, Facebook and Apple — will soon have their day in federal court.
Is that the smell of old-fashioned “trust busting” in the spring air?
The Roots of Antitrust
Traveling back to the days of President Benjamin Harrison and the era of a populist-fueled People’s Party, Congress passed the Sherman Antitrust Act of 1890 — a landmark statute devised to protect consumers and markets from anti-competitive and monopolistic business practices.
In the wake of the Gilded Age, the government took an active role in regulating business practices that violated certain principles of laissez-faire economics. In the hopes of diminishing corporate centralization and protecting competition, Congress and the president established a series of laws, institutions and initiatives that aimed to regulate the formation of power trusts.
Presidents Theodore Roosevelt and William Howard Taft played significant roles during this era. Roosevelt sought to promulgate policy initiatives from the executive office, while his successor Taft relied heavily on Congress to devise trust-busting plans. The Supreme Court also took an active role in this period to define the constitutional parameters around which the government could regulate business.
Congress enacted various antitrust laws between 1890 and 1950. These laws sought to restrain unnecessary trade, regulate monopolistic business practices, oversee corporate mergers and set certain price controls.
The Microsoft Precedent
Roughly a century after Congress’ first push to curb monopolism — and before the meteoric rise of Google, Amazon, Facebook and Apple — one company had to test the limits of yesterday’s antitrust laws in today’s high-tech world.
In 1998, then-Microsoft Corporation CEO Bill Gates testified before the Senate Judiciary Committee in an attempt to defend his company’s position within the tech sector, The New York Times reported at the time.
During the testimony, Gates, his allies and his adversaries sought to sway congressional minds by arguing how Microsoft would impact the future of innovation and competition in the tech sphere.
“The computer software industry has produced more new products and services at affordable prices, created more economic opportunity and empowered more people than any other industry at any other time in history,” the tech mogul said.
“Will the United States continue its breathtaking technological advances?” Gates asked members of the committee. “I believe the answer is yes — if innovation is not restricted by government.”
At the time, Gates’ Microsoft was not the pre-eminent internet giant it is today. His company faced ample opposition from Netscape Communications Corp., the creator of Navigator, and Sun Microsystems Inc., which sued Microsoft over changes it made to Sun’s Java programming language.
“The issue is about protecting consumer choice in the marketplace,” said Scott McNealy, chairman of Sun Microsystems Inc.
“It is about protecting innovation. And it is about enforcing the laws of the land.”
Despite Gates’ pleas, the Department of Justice filed an antitrust lawsuit against Microsoft for possessing “monopoly power in the market for personal computer operating systems.” Eighteen states as well as the District of Columbia also filed suit.
As the lengthy lawsuit extended into the new century, Judge Thomas Penfield Jackson of the U.S. District Court the District of Columbia declared that Microsoft had unlawfully tied its internet web browser to its operating system, according to a Microsoft corporate timeline.
Months later, the judge ordered Microsoft to break up into two companies.
After Microsoft appealed the decision and the case extended into 2001, the Department of Justice and Microsoft reached a settlement that effectively untethered Windows from some of the company’s services. The case would continue to unfold for another decade.
The Giants Awake — Obama and Trump
As the Bush years waned and President Barack Obama took the helm, four tech companies started to increase their power within the rapidly developing world of online services.
During the Obama years, Silicon Valley and Washington developed a fairly symbiotic relationship, as most Democrats lauded the innovative changes coming out of the new industry. When Obama’s presidency concluded, a number of his former advisers left to pursue work within the Silicon tech sector.
The Trump years brought a significant change to that relationship. Where Obama hoped to rein in Big Tech authority under the umbrella of the Washington bureaucratic machine, Trump pursued an all-out war-of-words against the tech giants.
“I think that Big Tech is doing a horrible thing for our country and to our country, and I believe it’s going to be a catastrophic mistake for them,” Trump told reporters in January.
“They’re dividing and divisive.”
Trump’s policy toward Big Tech mainly involved rhetorical threats and harsh language directed at online censorship efforts. Despite Trump’s at-times erratic character, his actions compelled Big Tech to show their hand, exposing that a lot of their “objective” practices are based on subjective standards.
Regardless of who holds the executive office and the party to which they pay tribute, the four tech giants are now powerful entities in society, gaining influence over a multitude of online services.
A recent GlobalStats statistical survey estimated that Google controls approximately 92 percent of the world’s internet search engine market share. The company’s parent, Alphabet Inc., contributes over $20 million in national political donations, according to Open Secrets.
A Statista survey similarly shows that Apple controls roughly 23.4 percent of the national smartphone market share. On the world stage, that market share is far greater, with Apple outshipping Samsung and Huawei.
Classic anti-monopoly reformists, however, would likely be eyeing Facebook for immediate action. After the acquisition of its former rival Instagram in 2012 and the mobile messaging application WhatsApp in 2014, the FTC sued Facebook for illegal monopolization, contending the corporation strategically eliminated threats to carve out a monopoly.
Biden’s new pick for the FTC understands the ins and outs of Jeff Bezos’ operation. “Amazon is the titan of twenty-first century commerce,” Khan wrote in The Yale Law Journal.
“In addition to being a retailer, it is now a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space.”
The corporate baron does all of this while generating only meager profit margins, Khan noted.
The Dawning of a New Age?
Roughly a month before last year’s general election, Congress and the Justice Department both issued scathing critiques of Big Tech business practices.
After subpoenaing Google’s Sundar Pichai, Apple’s Tim Cook, Facebook’s Mark Zuckerberg, and Amazon’s Jeff Bezos in October, the House Judiciary Committee accused the companies of “abuses of monopoly power.”
“Although these firms have delivered clear benefits to society, the dominance of Amazon, Apple, Facebook, and Google has come at a price,” the committee’s 449-page report says. “These firms typically run the marketplace while also competing in it — a position that enables them to write one set of rules for others, while they play by another.”
Later that month, the Justice Department and 11 state attorneys general sued Google for engaging in monopolistic business practices by restricting competition in search advertising markets.
“Since my confirmation, I have prioritized the Department’s review of online market-leading platforms to ensure that our technology industries remain competitive,” then-Attorney General William Barr said in a statement.
“This lawsuit strikes at the heart of Google’s grip over the internet for millions of American consumers, advertisers, small businesses and entrepreneurs beholden to an unlawful monopolist.”
The Trump administration set the stage for what could be considered the showdown of the 21st century. These sorts of monumental lawsuits do not occur often. But when they happen, Americans must depend on reason to confront the challenges, as it is the only tool that can overcome the natural tendency to separate into factions.
The Biden administration must understand the gravity of this looming conflict between the state and the tech sector. Not only will these issues entail reconceptualizing how the principles of free speech and free enterprise function on the internet, but recent questions of data collection, data security and online privacy will continue to gain prominence in the debate.
Will free speech and free enterprise continue to flourish? Will Americans finally receive some protection from online privacy violations and data collection schemes that deprive people of their personal property?
Biden’s policy toward Big Tech will impact more than just Google, Apple, Facebook and Amazon. The easy decision will be the shortsighted one. Without a farsighted policy, however, the debate will recur time and again.
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