Tech Competition: What Can Biden Learn From The Last Tech-ade Under Obama and Trump?
8:03PM Jan 27, 2021
Challenges is going. Thanks, Jim, thanks for being Danny, Bruce. Rob appreciate it thank you so much. Moving right along to our next topic, a bit of a gear shift. I think a bit. We're gonna our last panel ism antitrust the last decade, and to host that conversation for us and facilitate it is Lee nylund who she's covers the antitrust beat for Politico for the past year or so. But Lee has been, you know, she was a huge background lot of years covering antitrust decades of antitrust experience so we're thrilled that she's agreed to moderate this panel of this, this incredible panel so we're really excited. I would imagine that, when it comes to tech antitrust before the last couple of years, it might have been kind of Sleepy but it is red hot now and we'll gladly, you can you can help us make sense of this.
Thank you so much, Tim. I'm glad to be here. I'm Leanne Island Politico's antitrust reporter. And here with me, are four awesome antitrust experts to talk about antitrust and competition issues in the Biden administration. First let me do a couple quick intros Charlotte's Lehmann is the competition policy director at public knowledge of public interest advocacy nonprofit, she was previously an enforcer at the FTC, and a legislative aide to Senator Al Franken on the Senate Judiciary Committee. Jennifer Huddleston is the director of technology and innovation policy at the American Action Forum, a nonprofit focused on economic domestic and fiscal policy issues Jennifer's research focuses on the intersection of emergency outside sorry, the intersection of emerging technology and the law. Sara Miller guides the American economic liberties projects organizational strategy and is recognized as, quote, one of the primary architects of the modern antitrust movement. She is an alum of open markets Institute, the Center for American Progress, and the US Treasury Department. And last but not least we have Ashley Baker, is the Director of Public Policy at the committee for justice, where she focuses on the Supreme Court technology and regulatory policy antitrust and judicial nominations. She's also the founder of the Alliance on antitrust a coalition of groups that advocates for maintaining the consumer welfare standard. So I'd like to get right into this. Let's start first Where are we right now on antitrust and do you think it needs to change in your view, Ashley Why don't we go ahead and start with you.
Thank you. Leanne thank you to our hosts here it's been a great state of the net conference this year. I think one, so one key theme that a lot of panelists throughout the day have been heading is the need to kind of stop the hyper politicization of these issues and bring things you know back down to earth and engage in more substantive debate, and on antitrust we've seen kind of acceleration the opposite direction. I think on that. And that kind of underscores, some of the points, I'd like to make about, you know, the state of antitrust law and whether or not we should change it as you know what goal should achieve. And there are a lot of people who will use it for political and for non competition purposes right now. And it's become a useful regulatory cool in some people's eyes. So we. So our position really is that we should maintain Robert's consumer welfare standard that it gives us you know predictable results against the same neutral underlying standard to go by that's not to say that there aren't other proposals such as you know, the way agencies operate. There are other competition related policies that we would support or that I would support. Speaking on my own behalf only obviously, um, but we think that that has served us pretty well over the past 40 years. Overall, and it has led to some predictable outcomes that make us consider the competitive process itself. So some of the proposals that would like shift the burden of proof and make all these other broader changes the way that the wall functions that's kind of an end run around against that set of standards that has governed Vandross law for so long, so I'll stop there, so that we can leave more time for the actual discussion. Great.
Sarah, what do you think. Sure,
I think we're going for like the opposite ends of the spectrum. And, you know, I think our organization really advocates for a kind of return to an approach to antitrust that has a power analysis and that prioritizes democratizing markets decentralizing economic power and recognizes that as really central to the democratic project. I think over the last few years, there has been growing recognition that monopolization is a systemic problem across the economy thanks to borked consumer welfare standard and the kind of adjusted version that progressives have used that still largely hues towards an efficiency based model that I think contrary to the current standard is really rather arbitrary and tends to defend to depend on what one judge called competing crystal balls that are produced by extremely expensive economists and largely has benefited if I think we look around us. The largest corporations that tend to structure markets now in our economy today thanks to the failure of the antitrust enforcement agencies to do that. I think also, you know, just to push back against this political argument like we've seen a tremendous amount of research for the first time, particularly into how digital markets, operate and the anti anti competitive elements of those markets and the consequences of that I just happen to have on my desk 484 pages that were produced by the house antitrust subcommittee. That's I think one of the most rigorous pieces of research that Congress has ever done to study a marketplace and I'm sure we'll get into the solutions, presented by that but you know I think it just takes kind of opening your eyes and looking around, not just in tech where I think the problem is most obvious particularly after the attacks on the capital, but across the economy where you know you have markets that are largely structured by a handful of incumbents at the top that tend to disproportionately harm not only consumers who are paying higher prices and a host of industries, I don't know if you've, you know, had to fill a prescription or, you know, bought an airplane airline ticket in a while but I think consumer welfare has largely failed on its own standards in many cases. And in addition to having a host of other ill effects. But, you know, I think we see problems with monopsony and workers, obviously problems with entrepreneurship and innovation which is that kind of lowest levels we've seen in four years. And then obviously there are real implications for not enforcing antitrust to democracy itself.
Jennifer and Charlotte let's bring you in here What are you guys thinking right now about antitrust and does it need to change. So
like Ashley I also believe that the consumer welfare standard serves an important purpose and that it provides an objective standard that focuses on consumers and their experience of the market. It focuses on that question of consumer harm, rather than just presuming that big automatically equals bad at the same time it has really enabled us to see kind of the way, dynamic markets are changing. We framed this of what can we learn from the last decade, about what these battles over big tech means, and so let's take a step back for a minute and remember that if we were having this conversation 10 years ago, we would have been asking questions of was my space a natural monopoly. What about how y'all who had won the search wars with AOL and Time Warner the merger that was going to end everything. But what we've seen time and time again, is that often. This is a very dynamic market and that innovation can be our best competition policy that new things come about that completely change our view of technology and revolutionize our, our lives and bring about new markets that change everything as we might have not seen it before. Charlie.
Do you have some thoughts.
Yes, so just touching on on that last point Jennifer I think we've really seen a lack of innovation in some of these most important markets and the reason for that is the lack of competition. I think competition is really what will push these companies to be more innovative. Right now the types of innovations we're seeing are those that support the existing structure and the existing power of these companies, and what we really need to see is innovation that disrupts that power. I think Sarah has done a great job of laying out some of the problems that we see as a result of corporate power. I think in part that's because of a lack of antitrust enforcement in part that's because the antitrust laws have been so heavily narrowed by court decisions that we're really frustrated by. But I think in part it's because we are asking antitrust to do too much. We have other tools in our toolkit that are also supposed to help us address corporate power. And I think those tools have been being forgotten during this time as well, to really open up these markets for competition to thrive. I think we also need structural regulation that is targeted at particular sectors I'm especially interested in tech I think you guys are too. This is not necessarily right regulation or utility style regulation but pro competition structural regulation that can really open up the markets, I think we need that, not just antitrust enforcement here.
Great. So as Sarah had mentioned the House Judiciary Committee in October released a pretty major report on major technology platforms antitrust and competition issues, and they recommended a number of pretty major changes to the NHS law. Some of the republicans on that panel offered their own report, which embraced a few of the proposals and said some of the others are non starters. Let's start with you, Jennifer I mean what do you think of some of those proposals.
I think it's important to recognize that the House Judiciary report would be an incredible change to the way antitrust law operates in the United States, and it's not a change that would be able to be retained just in the tech sphere. This is something that would impact wide swaths of the economy, numerous other industries. I also think some of the particular proposals are concerning we've seen calls for things along the lines of a Glass Steagall for technology, involving separating business's ability to sell a product and also provide a platform for that product. This has been largely targeted at things like Apple having its own apps in the app store or Amazon and its house brand, but their, this would also impact plenty of the retail industry so I mean many people love the Costco Kirkland brand, but if you take this to his full extreme that would make it difficult for some of these store based generics to play out. It would also involve a lot of government intervention into the decisions made by these companies in terms of what products to carry or where to place things on the shelves, so to speak. So I think it's really important to recognize how big of a change in antitrust law. This would potentially represent, and that it's not just about technology at the end of the day, while there may be concerns about the big tech players today, changing these laws could impact farm or industries, and that could really change the nature of how we've seen antitrust laws used in our economy.
Surely, how about you jump in here. What did you think of the House Judiciary report.
I was so impressed. The level of detail that we saw there in the, you know, over a year that they spent on researching this industry in depth I think it has really laid the groundwork for the legislation that we need to see here. So I'm so glad to see the report and I'm really proud of the work that they did. One of the things that was so helpful about the report. In addition to outlining the the very clear problems that we see here as a result of the power of these dominant digital platforms, is the remedies that they talk about so they've, they've listed a number of remedies so one that I'm especially excited about to talk about here is interoperability. So folks who have been paying attention to this conversation for a long time are probably familiar with this but it's a it's a complicated concept I think examples are the easiest way to explain it type of interoperability that's really important in social networking is cross posting. So Facebook offers this, it's very easy to cross post between Facebook and Instagram. Companies that they own. It's really important for competition that a social media company would offer cross posting for companies that they don't own, so that I could easily cross post from Facebook to another network or vice versa. Another really important part of interoperability is a find friends feature. This is a way of sharing the all important social graph. And it looks like this is something where Facebook actually really targeted a potential competitor vine, where they used to offer this find friends feature sharing the social graph, and then withdrew it. So interoperability I think can be really important to competition, allowing a new and innovative competitor to enter the market successfully and making it easier for consumers to actually choose an alternative. So that's a really important remedy. There's also Oh, go ahead. No, no, no, no.
I was gonna say I know that this, this didn't necessarily come up in the House Judiciary report but I know public knowledge has advocated a little bit for creating a digital regulator, specifically focused on tech I wondered if you would talk about why you think that's necessary. Yes,
absolutely. So I think a regulatory agency could be really powerful here, a regulatory agency can be more nimble than Congress. Congress should be setting out guidelines they should not be figuring out exactly you know how the cross posting audit work in order to facilitate competition. That's a level of detail that I don't think Congress wants to be in the market of doing. So an agency is great. The other important thing about having an agency, making these decisions, is that they can build the detailed industry expertise that we need. There is a great deal of complexity that we as Policy Advocates are constantly trying to keep up with another powerful way that the regulator can help is learning that level of detail. I have been so impressed with the level of debate that we have seen in Congress. Excuse me, improving so much over time, where they are really starting to understand those details, but I think we often see at hearings how difficult it is for generalists legislators to really dig into the weeds of these difficult questions and so an agency isn't a great way to handle that.
Great Ashley. What was your take on some of the judiciary proposals and if you don't agree with that. Are there any that you think that might be able to get Republican support.
Sure, to cover the ones and I think we could get support on first. I somewhat agree regarding interoperability and data portability. I think it can be appropriate in specific cases as a revenue, um, sometimes it doesn't make much sense, depending on what technology we're talking about before you get there you have to approve them introduced by Lisa. First, but I have no objection to that being a remedy when appropriate. That could be a good idea in specific cases, um, but and also increasing agency funding. I'm not one to really advocate for that at all, really, um, in any other areas of regulation, but I think you know we, in order to properly enforce it interesting the DOJ antitrust division for example needs to be paying its interest attorneys, uh, you know, somewhat competitive as close as it gets for a government role rate compared to you know the private sector and there needs to be a retention of talent there and more ability to enforce I do think it's important that we enforce the antitrust laws that we have so I'm not arguing for non enforcement certainly. I'm not arguing that we shouldn't have antitrust laws I am concerned about some of the broader recommendations regarding the litigation and also the under the arguments underlying them. And the biggest example I guess is shifting the burden of proof. And that really relies on the, kind of, it's based in a rational litigation crisis that doesn't really entirely exist the government's not having any problems, winning cases, you know, if you count this number of cases maybe where they haven't brought as many cases and murder challenges or specific areas but I think that would really kind of fundamentally offend our ecosystem of fairness and how our industry works.
Sorry I left you for last because I know AARP put out its own major report a couple weeks ago on things you think the Biden administration should do in regard to amending the antitrust laws so I wondered if you could talk a little bit about what you guys liked in the House Judiciary report and what you guys recommend sort of beyond that. Yeah.
Thanks, I appreciate that, you know, I think in the House Judiciary report there was very little for us not to like, I think it focused on the key priorities that need to be advanced. It included the need to structurally separate and prohibit dominant platforms from from kind of occupying adjacent lines of businesses. And I think in doing that it acknowledged kind of power as a force here, I think, you know, sometimes we kind of get caught up in the policy and the technicality of these issues and, and we kind of strip out the conversation about power and I think it is actually really dangerous for a variety of ways to have a handful of platforms kind of controlling key arteries of commerce so I think there's one thing that you know the the tech corporations themselves are most afraid of and that is anti trust and breakups I think we know that well and you probably know that through your reporting, and there's a reason for that. It's because that is kind of the root of the solution and has to ground that solution and then as Charlotte says there's a whole, you know that that is not a silver bullet there's a whole plethora of regulations and rules that need to be built up around that, that the last 40 years not only of kind of the consumer welfare standard but kind of neoliberal orientation towards business has caused. But, you know, in general, the House Judiciary report, I think lays out exactly the right track here on how we need to deal with this problem, and it also talks about how we need to adjust kind of anti trust laws to, to, you know, this is not a reform This is restoring them to their original intent, which was to democratize markets, make sure that large corporations couldn't occupy a monopoly position that allowed them to basically steal from other people in the marketplace whether that was other businesses consumers or workers, and that is ultimately the goal of the original antitrust laws and what we need to get back to, to restore So, in general, the report laid out a number of recommendations to do that that I think are important and acknowledge the fact that, you know, the court kind of embraced the kind of work and approach and that that needs to be cleared away and that would kind of help. And it all. It also acknowledged, I think the severe institutional failure at the enforcement agencies, and the opportunities that were missed and, and the fact that in general up until about a year or a year and a half ago, you know, in the kind of enforcement community everyone generally thought that they did a great job until it kind of other people started looking and figuring out that this was a big problem. So, I think it, it really should be the broad framework. One of the things that our report points out, is kind of the much broader suite of authority around competition policy that is embedded within the federal government so at other types of agencies, it's not just a problem of at the enforcement agencies, it's a it's a reorientation I think of how we need to think about government. Government authority visa v monopolistic corporations and structuring markets and its needs to be kind of a paradigm shift I think from the last 40 years. Thanks,
I'd like to go back to something that Ashley mentioned which is senator Amy Klobuchar in the Senate who will hear from it in a little bit, and Macon del Rahim, who was the most recent Assistant Attorney General for antitrust republican have both suggested that perhaps we should change the burden on enforcers that have what they need to prove in court at least when we're dealing with a dominant company. I'm curious what what all of you guys think about that. So
I think this would be a really important and valuable change. I think heart. There are so many reasons that the antitrust laws are not able to solve the many problems that we want them to but I think part of it is that with dominant digital platforms, a nascent competitor can sometimes be the only competition that that can happen. And those situations are ones where there's great uncertainty. It's a brand new competitor maybe it's very small. It's difficult to say with the level of certainty that antitrust enforcers like to have this will become the biggest competitor to the dominant platform that's trying to buy it. And so in those situations of uncertainty I think the way that antitrust has looked at it for a long time is really problematic, which has been that we should err on the side of under enforcement. When we're uncertain. And so those cases are not brought or if those cases are brought the agency would often lose that case. And that's, I think, been shown to be mistaken. The more economics is coming out about these industries, the more and more clear it has become that really under enforcement is a problem, and over enforcement is not as as huge a risk as we thought. So we really should be arriving on the side of enforcing stopping those mergers, when there is a situation of uncertainty such as this nascent competition situation that we, that is often common and its dominant digital platforms.
Jennifer. Do you have any thoughts.
So I want to pick up on this kind of question of acquiring nascent competitors and I think it's important to remember that there are a lot of different reasons that innovative companies exist particularly or that new ideas get put into the market and there are different exit strategies out there, and one exit strategy in Silicon Valley is to get acquired by one of these larger companies, by making an existing product better. And I think we want to be cautious about eliminating that exit strategy, too much. At the same time, I do think it's important that we have a competitive marketplace that we continue to allow innovative ideas to flourish and that we never know who that next great idea who that next giant that starts in a dorm room or garage is going to be, but with that in mind, is really hard to predict, either in the moment, or even in hindsight when we look at some of these mergers like a Facebook and Instagram to think what it was like when that acquisition actually happened, versus what we're seeing now. And sometimes it's hard to know whether Instagram became big because it was acquired by Facebook, or if this was a case of a company acquiring somebody that could have been a competitor.
So I'm actually. Go ahead.
So regarding exit strategies I agree with Jennifer I think too that it's the government sending the message to entrepreneurs you know your only exit strategy is to fight your competitor to the death. Then, you know, that kind of has a chilling effect on startups. That's a pretty big deterrent right there. I don't think the government's only lost four or five cases in the past decade, I believe that or in this area. The FTC and DOJ combined. They're not really. They're not having a hard time winning in court, and also are also supposed to have a deterrent effect as well. So you can't measure this just purely in the number of pieces that are brought but also we don't the number of deals that are not made because they know that they will be pursued. And the deterrent effect they are into and just because, you know, it doesn't mean that our laws are not working just because of the number of cases that you can count on your fingers.
So I think that's a good point actually about the number of cases, the way you know I think the explanation for that is that the agencies have gotten very good at knowing what the law is and so they see that they're unlikely to win this case and they don't bring it. I think that's actually a problem as well I would like for them to bring more difficult cases to say that they're only losing four cases seems to me a problem, part of what I'd like the agencies to be doing is trying to improve the law by by bringing difficult cases and that might mean they lose some and that's okay. I know that's a slow way of changing the law that's why we also need to be improving the antitrust laws, through Congress through statute as well. So you're you've described this theoretical future where the government has said the only option for exit is to fight your competitor to the death I think the problem is we have the opposite right now where the only option for exit is to be purchased by your competitor competitor because you're not going to create a startup that is a real competitor to Facebook or Google, if you know that your only exit option is to be purchased by those companies. Instead I think we're seeing strong incentives to just create things that can be purchased as a feature to Facebook or Google, and we really need that sort of real competition to be an option right now it's not much of an option.
Yeah, I agree with, I agree with Strauss point there. I think that's pretty clear and if you kind of talk to anyone in Silicon Valley who's trying to find something new to finance, you better be able to make the case that you can sell to Facebook or Google in order to get that financing. I think on on the point that Jennifer made about Instagram, you know, we do know that Instagram was purchased because of competitive concerns because Mark wrote that in an email so you know i think that that's kind of been been shown to have been the case and kind of these hypotheticals aren't particularly so you know I do think also, just to make one other quick point. When you look back at this kind of 40 year experiment that we've been running and in not enforcing the antitrust laws essentially or actually encouraging bigness, you know, you see this gradual degradation of dynamism in markets all across the economy, and you can look back 10 or 15 years and say, Look, there was a MySpace then and there was competition and the social media landscape was more robust and that's that's generally right Facebook came in, you know, making the case that they would compete with my speed up space on privacy and they gained a dominant position in the market in the marketplace because they did that initially they did compete on privacy they made a compelling case that they were kind of a community where you could connect with your friends and family, but now they've gained such a massively dominant position in the marketplace that it's simply impossible for any other startup to do the same thing that they did in that case the dynamic is different than the comparison does not does not work because the problem has been has become worse and worse over the last 40 years and now you know we have two giant digital advertising corporations that are basically manipulating everything that Americans tend to read online with pretty disastrous consequences I'd say.
I could. Okay, go ahead and just
jump in and disagree a little bit, I see the marketplace differently. First off these companies often compete with each other. So I think, to just look at the even just looking at the large companies as a whole, it's not a choice of one company in one sector they're often competing with each other. And it's often hard for us to see who that next big thing will be from the outside until it becomes the next big thing So Sarah mentioned you know the idea that Facebook overtook MySpace tik tok is rapidly gaining popularity with Gen Z, or you don't know if perhaps DuckDuckGo is positioning itself as a more privacy privacy sensitive option to Google will hit a certain segment of the population that then gained massive popularity so I think some of the question is do we want the government intervening to decide who are the winners and losers, or do we want to allow the market to continue to pick the winners and losers.
And I wanted to shift gears a little bit and talk a little bit beyond legislation you know we've had some of our biggest antitrust monopolization cases in the past 20 years were filed in December. There are now three cases by the DOJ and state attorneys general against Google and two cases that were brought by the FTC and the state agencies and Facebook. What are you guys think about those case are they enough. Do we need more Charlotte. Let's start with you.
Great. Well, I think it's huge progress that these cases have been brought, it's it's really such a step forward from where we were a year ago. The other thing that I find really important about these cases is the bipartisan support. So at the Federal Trade Commission we saw the Republican chairman together with the democratic commissioners supporting this case against Facebook as well as state attorneys general from across the nation of both parties. Similarly in Google, we saw the republican DOJ, you know, bringing this case, and it's fully expected that the Biden administration will continue, and the state cases are, you know, there are Democratic and Republican state ag springing cases against Google as well. So I think it's, it's huge to see that there's bipartisan concern about the power of these platforms, and I'm hopeful that that can translate into bipartisan support for broader solutions because as he suggests. I do think these cases will not be enough on their own. We have seen themes of anti competitive discrimination and interoperability throughout the five cases that have been recently brought. And I think it's important to keep in mind these antitrust cases will move slowly. They will probably be appealed which will, you know take even more time before we have a final judgment, and it's going to be difficult to to have the types of remedies that I think we really need to see the antitrust laws, you know, will allow remedies that are targeted at undoing and fixing the harm that was caused by the conduct at issue in the case. But there is so much more that is wrong with this market than just the specific conduct that these cases are being brought against and even just the specific companies that these cases are being brought against. So I think we cannot sit back and wait for the antitrust cases to resolve themselves, we need to keep working on congressional process and on improving the antitrust laws. And the regulatory ideas that I discussed before, in order to have a real more comprehensive way to address the power that is really messing with this industry right now.
Ashley How about you.
So I mean, a lot of us I think we just wait and see how it plays out in court which will take a while. I have all the cases but I think the one that's kind of most problematic is sort of course she was the case against Facebook, and that's because it's challenging to consummated murders, and threatening to unwind those and I think that that could have a large effect too, if we're in the practice of challenging these murders that took place you know a decade ago. But then we have this ex post system of enforcement, and that's going to be very harmful to I think the other cases you know it's hard to comment on the the Texas and Colorado cases because there are a lot of documents that are under seal and I don't want to get into some of the specifics there. But I think it'll be interesting to see how these plays play out and I think the, you know, we have the laws in place to handle these and I think that's what we will see.
So I want to go Ashley and Charlotte and say it is important to remember these cases will take a long time. Probably and and that it may be a while before we have answers to what things mean and before we even are fully aware as Ashley indicated of what some of these documents, being discussed, are. I also want to echo something that Charlotte said about how these cases may impact companies beyond the companies that are actually involved that this may impact the way we see other companies, thinking about businesses but it also may ask that question of what innovations might we not see as companies spend their time battling antitrust, as opposed to perhaps focusing on building better products. We saw some conversation around this after the Microsoft case with regards to what's come out about how close they were to the Windows Phone. Being a potential competitor to the iPhone so there's kind of that question of, you know, get depending on the merits of the case what happens in the interim while these cases are going on. One thing I'm really interested to see what these cases are the debates that will emerge around the definition of the market. This is going to be a key element in any tech policy related antitrust case, you're going to see the enforcers trying to find the market very narrowly to show more dominance and to show more potential violations that way you're going to see the companies trying to find the, the market more broadly. And the question is what more accurately represents the consumer experience and I'm guessing the four of us on this panel we'd probably all disagree about what what exactly the market definition would be. And so that'll be very interesting to see what case gets made in court by both sides and what the judge ends up deciding in that Sarah.
Now I just want to note kind of a fascinating political dynamic that I don't think has come up entirely that touches on a little bit of which honor for mention. We're seeing two big splits and really important constituencies so one is a big split among Republicans, where I think particularly after Trump and Facebook d platformed Twitter, there is, I think a crescendoing of outrage towards the platform's over their control of speech online and the effects that has that has on political discourse and that is, while I agree with the decision to do that, that has, that's a that's a serious concern we should have like a democratic process that governs these sorts of decisions, not one that a few CEOs in Silicon Valley make so yesterday a poll came out that showed 60% of Republican voters approve of breaking up big tech platforms. And the other split and of course you'll remember that there were key republicans that supported the majority of the recommendations in the house anti trust report. and I think today, you know, given the change political dynamic there are probably even more that are coming out for aggressive policy reforms including breakups on this front so there is a, an interesting kind of split among Republicans it's not, I think represented on this panel. The other thing to note is that the business community is not at all unified around kind of antitrust enforcement being bad In fact, you see large corporations that are have just had it with Facebook and Google, you see small startups that have had it with Facebook and Google, you know, there are like a handful of pretty narrow corporations that have dominated their markets that want you to trust law to continue to be poorly enforced. But you see, epic bringing cases, you see other kind of large corporations stepping out to kind of fight, fight with these guys using antitrust and so this is a really pro business, I think agenda and when you kind of talk to people who are in business, who are trying to compete against these platforms on an unfair playing field, whether they're larger competitors that need to get through their gates to reach their customers or smaller startups. It's quite evident that you know the status quo is not good for for the vast majority of businesses in this country either
segues nicely into the thing I wanted to talk about next which is app stores. So, you know, everyone, pretty much knows right now there are only really two big pathways to reach smart phone consumers and those are Apple's App Store, and Google's Play Store. And, as you mentioned, Sarah Epic Games, which is the maker of fortnight. I've never played but I hear it's popular. They filed a major antitrust suit against both of those companies over some of the restrictions they placed on the store. But those are far from the only people who have been concerned we also have people like parler who've spoken out about being de platformed by Google and Apple and Amazon. So, I mean, do we need to do something about app stores, and if so, what should we be, what should we be doing here, and Ashley, why don't we start with you.
Um sleep needling, specifically in light of perlite I mean, that's you know that's private litigation I, that seems to be more of a contract dispute and you know there were cntrl so that's kind of a little bit, I think, off course from our conversation here. Okay,
so you think that private litigation that can pretty much sort of deal with problems that people have with the App Store it doesn't necessarily need to be something done within legislation.
It is more of a contract law issue than it is an antitrust issue and that specific case.
Okay. How about Charlotte.
I do think, If an app store owns an app or offers a feature that is competing against an app in the in their app store. We want them to be extra careful to make sure that they're treating those competitors and potential competitors fairly. So a few avenues that I'd be concerned about access to important data streams and device functionality I think those are tools that the App Store could use because these both of the big app stores are also the big operating systems and a lot of those features are intertwined between the App Store and the operating system. So that device functionality can really make it a lot harder for an app to compete. If they are competing against the dominant platforms feature or app. I think the payment structure can be really important that's something that we've heard a lot of concerns about that people feel, you know, there, there are not really alternatives to these app stores and so setting that payment structure is not really the result of any kind of negotiation. And just opt not being allowed into the app store at all. I think that has a huge impact a little bit of a bigger impact on the Apple App Store side because they don't allow side loading. At least if Google is denying your app, access to the App Store users can still download it using sideloading. That's not a huge avenue to market so we don't want to. We should take seriously that sideloading isn't isn't a great solution but it is better than in the apple system where there's no sideloading at all. So those are some of the concerns I think are important to think about around app stores.
Sarah or Jennifer.
Sure, I'll just say kind of at a high level, I think particularly in the digital marketplace conflicts of interests are rife where you have a dominant kind of gatekeeping platform that's competing against the people that need to rely on that platform, in order to reach their customers and this is true for Apple it's true for Amazon. It's true across the board and I think part of what the, the House Intelligence Report does is it acknowledges that these conflicts of interest need to be kind of yanked out of these businesses and that's why some of these structural separations are important. By understanding the reasons why, you know, there are there are strategic advantages for monopoly to move into additional lines of business to kind of capture that gatekeeping power and be able to leverage that advantage over competitors is really important so I think just looking at some of these businesses through the lens of identifying where there are conflicts of interests that are disadvantaged and competitors, is one of the kind of guiding ways that we should understand how we need to regulate them. I think just understanding the financial incentives that are underpinning some of this behavior and making sure that we change those incentives so that they don't disadvantage other competitors through self referencing, and other techniques is kind of important underlying principle here
to echo Ashley I think in many cases when we're concerned about who is or isn't in an app store how Terms of Service were enforced those are going to be contract disputes. I do think this is an interesting example though of what I was mentioning earlier about the question of market definition of when you look at what does it mean to provide an app to someone Are you able to access that same product through a website are you able to sideload it as was mentioned earlier, I think we're going to see that there are a lot of different ways to reach consumers beyond just the App Store, and that there's also this question of again. Where is the consumer harm and what are the benefits so we're seeing this provide a new marketplace in some ways that hadn't existed before. What does that mean in terms of the way that we view the overall market for.
we wanted to find it access to providing consumers games on their phone versus, you know something very narrowly tailored, such as access to Apple's App Store.
A quick clarification. Sorry, your sound cut out for a minute on my ends and I thought for a second you were talking about the Amazon case and not apple. But I could hear you for a second. But I incorporate by reference what Jennifer,
and agree, regarding consumer harm.
Great for our audience I'm gonna, I have a couple of good Q and A's here but if you have any questions you want to ask our panelists please do submit them in the q&a box down at the bottom. And one question, how should we focus on innovation, should we focus on innovation that disrupts big players or innovation that benefits consumers How is the best way to measure it. Any thoughts on this.
Go ahead, Jonathan,
I say I think that innovation can encompass both a major disruption that can be industry changing or industry creating, but I think there's also this element of dynamic innovation that provides benefits to consumers by providing small improvements along the way, and also late. As a result, laying the stepping stones that may later give rise to a more disruptive product that does create a new industry or completely changes the market and changes the nature of the competition in the tech space. So we talked a little bit about this before but I think that's fine Jennifer it's also, I agree that it's also important to have those small innovations that are product improvements, rather than only disruptive innovation, although I think disruptive innovation is more important, but even that small innovation those product improvements I think the pressure to do that comes from competition. We may see some product improvements and I know that the company spend a lot of money on what they call research and development. So that's sometimes used as a marker of innovation I don't think that's a good marker of innovation. But I think the way that we should get companies to make those product improvements and do those smaller innovations is also the fact that consumers could leave and choose an alternative, and if we don't have that sort of competitive pressure. I think that we're not going to see even great small product improvements like that.
I think we actually have a great example right now of something that's not just a small product improvement but it's a different user experience which is clubhouse. In Andreessen Horowitz has made a massive investment in clubhouse and that is one you know example of a competitor entering the market.
Okay, great. I mean, sorry I was looking at some of our questions, um, I would like each of you guys you know obviously one of the biggest questions facing the Biden administration is who to appoint to the two open spots on the FTC and as the assistant attorney general for antitrust, what sort of person do you think is the best for those roles.
Well, I would highlight that you know the role of anyone on an agency is not to change the law but to enforce it. So I think it's pretty straightforward and in terms of who should be enforcing it. It's just those who adhere to the law I don't think that's what they would like to change the law to is, what should be the factor there.
So, I would actually disagree with that a little bit. I do think it is the job of these enforcers to be improving the law by bringing impact litigation that will, you know, achieve great decisions to sort of address some of the very difficult to antitrust decisions that we've seen recently that have really narrowed the law, but what I think is particularly important for the nominees at both agencies, is we're going to need a lot of change to how these agencies have been functioning. They really need to view their mandate differently, they they need to take responsibility for competition in these markets, rather than what I think what has been going on in the past is like a very narrow interpretation of bringing the very clear cases. So we really need someone who is going to take on that fight of making big changes and that I think that means someone who really understands the agency process and agency culture and and how to make those types of changes which is not everyone that's that's a tough task. I think, you know,
I just note that, you know, nowhere is can the consumer welfare standard and statute that is judge made law, it's not written in any of the original antitrust statutes. So I think in some ways I would agree that we do need someone in enforcement positions that will enforce the law and seek to move away from this judge made law, and uphold the original goals of the anti trust laws. And that means to me explicitly fighting kind of against this consumer welfare first frame which i think you know has clearly failed, if you kind of just look outside at the world around us that knows how to bring aggressive cases. And that is not afraid to lose. So I think we're at the beginning of a real shift in how our anti trusted hopefully, and how the Oriente trust and enforcement agencies operate. There are a whole host of latent tools for example, the FTC in terms of rulemaking authority that can be used to structure markets aggressively and tried. You know those authorities have not been used for the last several decades. So we wrote in our report a whole kind of suite of things that the enforcement agencies could do that have not been considered to start digging us out of the hole that we're in, in terms of the systemic monopolization that's kind of rife throughout the entire economy. But to start I think we need an enforcer who recognizes that that ideological framework has only served to concentrate power in ways that are not only bad for businesses bad for consumers and bad for workers but also really pose a risk to democracy itself.
I want to take a little bit of a step back and just from a kind of broader point of view say someone who looks not only at harms but benefits of particularly technology but of the marketplace to consumers in general. Additionally, I think it's important to look at the benefits that the regulatory approach we have taken has had when it comes to allowing innovation to flourish and to really weigh trade offs of what changes might make so I certainly hope that whoever fills those roles is willing to take a broader look as opposed to just looking at the situation as it is today. And look, both at our history as well as with an optimistic view of what the future may bring.
Oh, you're actually getting a lot of questions about the consumer welfare. If consumer welfare is the proper primary focus of antitrust law doesn't matter that advertisers rather than users are often the actual customers of most tech platforms.
So, the consumer welfare standard really is. Even today supposed to be about more than just the end user consumers. It's really supposed to be about stakeholders at every part of the stack at every part of the industry. Sellers buyers workers competitors, it's it's about competition writ large and, and that is not just about consumers and it is not just about prices. The problem is, we have seen, it's easier to bring a case that is about consumer prices, and so there has been this sort of limiting impact that the consumer welfare standard is having, but that is not what the law says the law definitely incorporates advertisers as an important stakeholder in these markets.
I actually so I think consumer is actually a broader, more inclusive term that maybe, maybe you're thinking it is i mean i think that that can include that can include other stakeholders such as advertisers but the consumer well first and resulting not concerned with price effects alone and like for decades the courts interpreting the Sherman and Clayton Act says recognize that harms have recognized different harms to competition in the forms of like decrease innovation and reduce quality and consumer choice, so it hasn't always been the price of Exelon. So, go ahead.
I'm going to say, I
would, I would just say even within this kind of consumer welfare frame, and you know when we see Democratic administrations bring cases Republican administration administrations bring cases, they operate within that kind of narrow consumer price frame and that really does I think animate what people believe as possible and kind of put in place, where priorities set. So I do think that it's centering the kind of original goals of antitrust which is decentralizing markets is, is important and I think that ideological distinction is important and to just kind of throw everything under the consumer welfare standard and say well that's what it's supposed to do, just doesn't really jive I think with how it's been instrumentalized at the FTC and DOJ both under republicans and under democrats I think this is I'm glad we're talking about this is part debate, because I think the ideology that animates and instrumentalized is how antitrust enforcement has been carried out. You know, is, is, is something that I think we just wrote about 130 pages on. But that we really do need to analyze and overturn and not kind of say that everything actually fits into that because in practice, that's not the case.
This is an a sort of interesting question and in the Google case, the Texas one. They put some allegations about how they colluded allegedly colluded with Facebook. In the ad market, the other Google case has some allegations about contracts with Apple. What does this sort of tell us about how much competition there is between some of the major platforms.
I'll just note quickly before others jump in here that generally when you have a few major players in a market, you will see a dynamic that we tend to call equilibrium collusion where you know they they tend to divide up turf make strategic decisions about where to compete where not to compete. It's obviously quite easy as we see with their Facebook and Google obligations to make arrangements to protect their interests in ways that you could not do in a much more dynamic market so I think that is one of the risks of being kind of comfortable with having a few major players in any market. It makes it much easier to collude without explicitly colluding, if that makes sense. And it makes it much easier to collude explicitly and kind of shave off different portions of the market and say okay, you'll get your piece and I'll get my piece and, you know, then you have the Google dynamic with Apple where they're just able to write a massive check to them, and cut a deal and get prime, prime real estate that's something that DuckDuckGo cannot likely do and will not likely be able to do not inhibit their ability to name one example, to get a kind of true competitor with Google.
I think when it comes to the Apple, Google element I mean competition is only a few clicks away it is only a little bit of an effort to change what that default setting is one can also point to being being the default on other search engines that people may use I think that's probably a more dynamic market than just the Google's shows up on safari as the default, or on your iPhone as the default may initially appear when it comes to the Facebook and Google collusion allegations and the Texas Attorney General's complaint I think it's very important to note that when we're talking about collusion in an antitrust scenario. That's a very specific allegation. And without having seen the documents that the Texas Attorney General is relying on that something that it's hard to really make a statement that,
it is or isn't happening. I would also add that it's important to recognize that these companies are also often responding to similar pressures, whether it's market pressures or consumer demands, or even competing with one another so things that maybe similar decisions or similar business practices may occur because they are best practices, not because of collusion with one another.
I would also add, and I, you know, as I expressed earlier, there are a lot of documents that we have not seen but the Texas case was brought under section two of the Sherman act and not section one. I mean I think that's a pretty significant thing to point out as well and that question becomes a lot less relevant.
Great. We have just a couple more minutes so I wanted to give you guys all an opportunity to just sort of offer some closing thoughts. Why don't we start with you, Charlotte.
Great. Well I think we've had a great discussion today. I think some of the sort of key themes that I'm hearing come out of this are the importance of innovation. And we have a difference of opinion about what is the best way to promote that innovation. I really think that competition is, is the way that we are going to make these companies actually respond to what we want. And it's not. We need to be using all of the tools at our disposal in order to build that competition, it's not going to be easy. We have seen how their power has persisted for such a long time and that we have are only now starting to really make progress towards a real system of accountability. So I think what we need to be doing improving the antitrust laws, improving our antitrust enforcement under current law, and really, you know, the House Judiciary Committee has already built that record for legislation we really need new legislation, new laws and rules that are going to really open up this marketplace so that we can see some real dynamic competition here and I think that's how we're going to make these companies behave better in all of the important ways
that we want.
What is a let's wrap up this way, what is the one thing that you wish. The Biden team does on antitrust. Sarah.
That's for me. Yeah,
for all of you. At
this moment, obviously I hope he enforces he appoints kind of enforcers that make their primary goal decentralizing markets, kind of all across the economy starting with tech so I think like I said there is tremendous room to use, I needed to use kind of authorities that have fallen by the wayside. And I think, you know, starting with a very aggressive approach to restructuring digital markets is hopefully going to be a top priority and he has kind of teed up for him both an incredible report out of the house antitrust subcommittee, and five cases from the DOJ FTC and state attorneys general to get started on so i, i, this is kind of a political moment unlike any that I've seen and if you asked me two years ago, three years ago if I would have thought we'd kind of be at this point really grappling with the power of the platform's the negative externalities of their kind of advertising based business model I wouldn't have believed you but I'm feeling very optimistic, seeing the bipartisan kind of consensus around the problem, some real cooperation around figuring out the right solutions. You know, I think, I think we're moving aggressively in a direction that's very good for democracy and very good for business. Great.
How about Jennifer Ashley.
I mean I would say that I hope he doesn't appoint someone who gets too innovative with the law itself I know that maybe is an impossible ask, but I just don't see someone who gets too creative with their methods of enforcement away that diverges from history or statutory attacks.
I hope that we see a principled approach to antitrust one that really looks at antitrust purpose and preserving competitive markets rather than views it as a silver bullet for any policy concern or for anger against a particular industry that may emerge so I think antitrust does play an important role in maintaining a competitive market, but we need to make sure that it's used for that purpose and not just to go after industries that may find themselves unpopular. Great.
So thank you guys all for joining us today I'm going to pass this back to Amy stanovich the executive director of silicon, iron, flat iron center.
No, I was on mute.
It had to happen at some point.
Good afternoon everybody
said I'm Amy. I'm the executive director for the silicon flat iron Center for Law technology and partnership at Colorado law. I'm also a board member of the internet Education Foundation. I hope you've all really enjoyed.