The government antitrust lawsuits against Google and Facebook: what it all means for tech businesses

2020 ended with a whirlwind of US antitrust activity against the tech industry. In a three-month span, state and federal authorities shook off nearly two decades of inaction by filing five separate lawsuits alleging wide-scale violations of the antitrust laws by Google and Facebook. The historic cases go to the heart of what online platforms can and cannot do in dealings with their business users, competitors, and partners. Antitrust now stands front and center in the US debate over how to regulate Big Tech, and the entire industry should take heed.

This first in a series of articles about the landmark antitrust lawsuits against Google and Facebook looks at how the mere filing of these cases signals a reshaping of the legal landscape and what it means for tech businesses, big and small.

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Risks and opportunities in the coming era of online platform regulation

The unregulated era for the digital economy is coming to an end. Governments around the world are done studying digital markets and have moved on to crafting new antitrust laws and regulations that will reshape the relationship that exists between large online platforms and their business users, trading partners, and competitors. The big online platforms will face new legal risks, while the tech companies operating in their spheres of influence will see new legal protections and business opportunities. Everyone will need to keep up with a fast-changing legal landscape.

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Antitrust After American Express: Down a Competitive Effects Rabbit Hole

In 2018, the Supreme Court affirmed a decision throwing out a major antitrust case that the Department of Justice and seventeen States Attorneys General had brought against American Express. The case concerned contractual restrictions the company imposes on merchants accepting its credit cards that prevent them from steering shoppers to other credit cards. The Supreme Court concluded that the government had failed to prove that these restrictions eliminated competition on both sides of a “two-sided” market because its case focused on harm imposed on merchants without giving enough attention to what it meant for cardholders.

American Express accelerated a half-century trend in modern antitrust orthodoxy that has disarmed enforcers by imposing impossibly high burdens on them to analyze and predict the competitive conditions of complex markets in order to make out a case. It also ensured that conditions supporting lax antitrust enforcement in the analog era would persist in the digital one. The consequences have already played out in two major tech cases that the government saw tossed out by courts following the precedent of American Express: the review of the Sabre/Farelogix merger, and the monopolization case against Qualcomm.

The trio of cases exemplifies the failings of basing the antitrust laws on predictions of “actual competitive effects” using economic theories, and highlights the need for a different approach that can take on the challenges of regulating a complex modern economy.

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Why industry regulation of tech is coming, and what it will look like

Shortcomings in antitrust enforcement are causing jurisdictions around the world to consider industry regulation of tech. But instead of sweeping utility-like regulation, so far those efforts are targeting specific sectors such as digital platforms and particular conduct that is outside the reach of traditional competition laws.  

After years of analysis, debate, and enforcement efforts, policymakers are realizing that competition laws cannot deal with many of the social and economic problems created by the proliferation of digital platforms. The EU, UK, Australia, and Japan are taking a hard look at sector-specific regulation to deal with issues related to data access and unfair business practices that overlap with antitrust issues but cannot be clearly regulated by those laws. These new rules will redefine the legal landscape for online platforms and be a testing ground for industry regulation in other tech sectors.

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What an elusive remedy in the Google Shopping case says about the future of regulating big tech

The absence of an effective remedy in Europe’s seminal Google Shopping case nearly three years since the decision reveals much about the limits of antitrust laws and the need for a new frontier in tech regulation.

While the European Commission and Google fight it out on appeal over whether the company violated antitrust laws by using Google Search to promote its own comparison shopping service, a debate outside the courtroom focuses on the appropriate remedy in the case. The relief to date is not working the way it was expected to, raising serious questions about the underlying theory of the case and the limits of competition laws. Much is at stake as the rest of the world watches to see whether Europe’s quagmire means that antitrust laws need to be pushed further in order to deal with digital platforms, or if their limits reveal the need for new forms of tech regulation.

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