Antitrust or Bust?
Let me begin by expressing how shocked I was when I came across this graphic a couple of weeks ago.
Suffice it to say, I was simply flabbergasted. Now of course, I had a niggling suspicion that many of these corporations would soon become massive conglomerates. I was just surprised when I discovered that this was, in fact, already the case and that these corporations were moving towards monopolizing their industries.
This brings me to the point of my thoughts today: What’s the deal with our antitrust laws?
The Federal Trade Commission (or FTC) was created in 1914 in response to the Supreme Court’s Standard Oil Co. of New Jersey v. United States case decision. This case was brought up to the Supreme Court after Rockefeller’s oil company began monopolizing the petroleum industry through anticompetitive actions. The FTC was established to uphold newly created antitrust provisions and protect consumers from abusive companies.
By this point in time, everyone should have heard of at least one infamous antitrust lawsuit, from Microsoft’s case in the late 1990’s to more recent ones against AT&T’s TimeWarner acquisition and Google’s antitrust cases in 2020. Each of these lawsuits by the FTC cite either the Sherman Antitrust Act or the Clayton Act which were created over 100 years ago and remain largely unchanged. This seems to be a problem as antitrust lawsuits definitely won’t be slowing down anytime soon, especially with the rise in Big Tech companies.
My question, however, is about where we should draw the line on antitrust laws. Should we tighten these laws to account for all growing conglomerates or should they remain up to the FTC’s interpretation of how consumers are being affected by growing trusts. Is there such a thing as a ‘good trust’ in the modern day? The antitrust lawsuit against Facebook and the growing pressure against Amazon serve as two perfect cases to highlight these issues.
In December of 2020 the Federal Trade Commission, along with 46 states, sued Facebook Inc. because of their belief that Facebook is becoming a social media monopoly. This lawsuit accuses Facebook of buying out key competitors in an effort to neutralize competition in the social media industry. Specifically, the lawsuit names Facebook’s acquisition of WhatsApp and Instagram as a violation of antitrust legislation and the FTC aims to force Facebook to reverse these acquisitions in order to preserve competition in the industry.
Now from a business standpoint, I completely understand the reasoning behind these acquisitions. Facebook gained access to the millions of users on WhatsApp and Instagram and in the same move, eliminated some of its competition. From a consumer standpoint however, I can’t say that I am completely comfortable with Facebook having access to my user data from three major social media platforms. These acquisitions consolidated Facebook’s hold over the social media industry and facilitated data sharing across some of the largest social media platforms in the world. This itself, combined with the fact that Facebook has been less than transparent about its use of this vast ocean of user data, brings to light some of the dangerous consequences of the mergers and acquisitions of Big Tech companies. We can look to Facebook’s Cambridge Analytica scandal during the 2016 presidential election in the United States for proof of what happens when one social media giant controls the data of millions of users. In this case, tightening antitrust laws may actually benefit consumers by protecting privacy rights.
On the other hand, Amazon serves as an example of why legislators may be hesitant to tighten antitrust laws. While antitrust authorities have had Amazon in their sights for a while now, they are reluctant to bring any action against the retail giant for one simple reason: Amazon is able to make a strong case that its rapid growth has helped consumers obtain the goods they want at lower prices. The FTC in general is reluctant to challenge practices which lead to lower, instead of higher, prices. For Amazon to be considered in violation of antitrust laws, the FTC would need to be able to prove that its actions are causing consumers to spend more on the products they need; at this point in time this remains a challenge for the FTC. Tightening antitrust laws may actually prove to be detrimental for consumers on Amazon who would potentially spend more money on products as a result.
Regardless, this discussion reveals a broader perspective — that many of these corporations, especially Big Tech, are becoming too powerful. Researchers have been warning us about the dangers of dominant tech companies such as GAFAM — Google, Apple, Facebook, Amazon, and Microsoft — for years. Props to Senator Klobuchar for introducing her CALERA plan to strengthen antitrust laws, especially since discussion needs to be had about the feasibility of using almost-archaic antitrust laws to deal with modern day giants. But, we also need to think about the consequences of what these actions will entail.
How do we curb the power of these corporations without hurting consumers?