Tag: Competition & Antitrust

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.

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.