After China, The US Calls For Tougher Scrutiny Of Big Tech Over Undermining Competition

After China, The US Calls For Tougher Scrutiny Of Big Tech Over Undermining Competition
Jonathan Kanter (Image source: Americans for Tax Reform)

Earlier this week, the White House announced that the Biden administration plans to nominate Jonathan Kanter as head of the Justice Department’s antitrust division. The latest announcement is another step taken in line with the US preparing for a broad crackdown on large technology companies.

Kanter has “been a leading advocate and expert in the effort to promote strong and meaningful antitrust enforcement and competition policy,” the White House said in a statement. The 47-year old lawyer has represented companies that have pushed antitrust enforcers to sue Alphabet Inc.’s Google. Kanter has been labeled as Google’s long-time foe, who left one of the country’s biggest law firms last year to start his own firm.

The nomination awaits Senate approval. If approved, Kanter will oversee a monopoly lawsuit filed in October 2020 against Google, and an investigation of Apple Inc. over its App Store practices.

Experts believe that Kanter is the favoured candidate for a faction of lawmakers, as both Democrats and Republicans have been targeting the dominance of these platforms. The US economy is plagued by monopolistic powers across industries, which has put pressure on the Justice Department and the Federal Trade Commission (FTC) to police mergers and anticompetitive conduct more aggressively. 

President Biden recently nominated Lina Khan, another critic of big tech platforms, to lead the FTC. The FTC is investigating Amazon’s planned purchase of Metro-Goldwyn-Mayer Studios Inc. (MGM).

Biden Cracks Down With New Executive Order

Earlier this month, President Joe Biden made headlines with the signing of a new executive order that aimed at cracking down on big tech firms and promoting competition. The American government published a fact sheet of the latest executive order that included 72 actions and recommendations involving ten agencies.

The government has suggested that the collection of large amounts of personal information by big tech has led to a wide range of unfair practices. Biden is hoping to cut down anti-competitive practices by corporate majors, who have been buying up potential competitors and competing unfairly with small businesses.

During the signing event on July 9, Biden said, “Capitalism without competition isn’t capitalism. It’s exploitation.” The executive order also hopes to improve competition across sectors like travel, agriculture and pharmaceuticals. A large portion of the executive order will focus on the tech sector, as it targets some of the business practices of the large platforms.

Some major recommendations of the order included:

– Greater scrutiny of mergers in the tech sector.

– New rules to be set out by the Federal Trade Commission (FTC) on data collection.

– Barring unfair methods of competition on internet marketplaces.

The executive order “is not just about monopolies,” the White House’s chief economic advisor, Brian Deese, told CNBC, “but it’s about consolidation more generally and the lack of competition when you have a limited set of market players.”

The buyout of smaller companies has been an ongoing trend among big techs like Facebook and Google. The order alleges that such actions offer limited options of products to consumers and the prices they pay, and in terms of finding better jobs as well. The future of upcoming mergers remains unknown. Amazon’s recently proposed acquisition of MGM, and Discovery’s collaboration with WarnerMedia is already under increased scrutiny.

However, critics are sceptical about the impact of these new orders, since the existing laws, statutes and guidelines have remained unchanged over decades. The government cannot have a strong case unless the laws are updated. They need to move beyond guidelines and focus on legislation so that it cannot be reversed easily by the next administration.

Larry Downes, senior industry and innovation fellow at Georgetown University said, “The FTC and the Antitrust Division must follow existing law regardless of aspirational executive orders, introduced legislation that hasn’t been passed, or general anxiety. If they don’t, they will lose in court, as the Trump administration learned all too well in its merger cases.”

He was referring to the Department of Justice’s challenge to AT&T’s merger with Time Warner during the Trump administration, which led to a rare antitrust trial in which the government’s case was soundly rejected. 

In order to avoid this scenario, lawmakers on Capitol Hill are taking steps to revise existing laws and give enforcers more authority to take on America’s biggest tech companies. In June, the House Judiciary Committee advanced five bills aimed at placing significant new constraints on how tech platforms operate. The bills were drafted after a 16-month investigation into the powers of Amazon, Apple, Google and Facebook.

Opposition And Impact On The World

The new Executive Order has received bipartisan support, particularly from consumers and small business owners. The call for restrictions on “self preferencing”, where companies like Amazon can create their own similar products to compete with small rivals who need the Amazon platforms to sell their goods, has largely been praised. 

However, the US Chamber of Commerce, in a statement following the order by President Biden said that it will “vigorously oppose calls for government-set prices, onerous and legally questionable rule-makings, efforts to treat innovative industries as public utilities, and the politicisation of antitrust enforcement.” The move, as the body stated, “smacks of a ‘government knows best’ approach to managing the economy.” 

The US National Association of Manufacturers have alleged that the order is “undermining free markets”, before adding that such a move is essentially a “threat to undo our progress.”

Amazon and Facebook have recently filed petitions for recusal against Lina Khan. Both companies have sought to have her removed from antitrust cases involving their businesses based on past statements she’s made. The companies claim those statements show she’s already made up her mind on their liability. Khan and the FTC have not yet responded to the petitions.

European regulators have already been leaders in terms of cutting down on the monopolistic power of big tech. In India, Facebook lost the right to offer its free mobile internet service after the Telecom Regulatory Authority of India ruled in favour of net neutrality. Amazon, too, faces investigation from the Competition Commission of India. 

China’s recent crackdown on its own tech giants like DiDi has sparked a debate about the thin line between antitrust and anti tech laws being introduced by many countries. The increased pressure by the US government may set a precedent in time. As of now, it is too early to call whether other major markets would adopt a similar framework, at any point.

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