Antitrust Regulations vs. Technology Giants
Current Research for the MLA LD Debate Topic…
TOPIC: Antitrust Regulations vs. Technology Giants
Resolved: The United States federal government should enforce antitrust regulations on technology giants.
CHSSA Rules: http://www.chssa.org/wp-content/uploads/2016/02/11BYLawsDebateRules10_2015.27500052.pdf
BACKGROUND:
[Read This 1-Page Article!] Antitrust Laws and You,
U.S. Department of Justice, Last Accessed: May 2019
https://www.justice.gov/atr/antitrust-laws-and-you [PDF] <– 6 pages
\”Many consumers have never heard of antitrust laws, but enforcement of these laws saves consumers millions and even billions of dollars a year. The Federal Government enforces three major Federal antitrust laws, and most states also have their own. Essentially, these laws prohibit business practices that unreasonably deprive consumers of the benefits of competition, resulting in higher prices for products and services.\”
The three major Federal antitrust laws are:
*The Sherman Antitrust Act
*The Clayton Act
*The Federal Trade Commission Act.\”
Can Antitrust Keep Up?: Competition policy in high-tech markets,
Jonathan B. Baker, Brookings Institution, December 1, 2001
https://www.brookings.edu/articles/can-antitrust-keep-up-competition-policy-in-high-tech-markets/
\”…the Microsoft case has generated an intense nationwide debate among antitrust practitioners and business leaders about the relevance of antitrust to high technology. The critics’ central claim is that the pace of change in high tech is so rapid that antitrust, and the legal machinery within which it must operate, is too slow and potentially counterproductive. Those who defend the applicability of antitrust to high-tech firms and industries, including the federal enforcement agencies, instead see a real potential for promoting innovation and consumer welfare through competition policy.\”
The push to break up Big Tech, explained:
There’s a pervasive feeling that the tech giants are too powerful … but they’re also really good for consumers.
Vox News, May 3, 2019
https://www.vox.com/recode/2019/5/3/18520703/big-tech-break-up-explained
\”Technology companies based in Seattle or Silicon Valley now account for five out of the five most valuable companies in America, leading to a spate of commentary last year from lawyers like Columbia’s Tim Wu to economists like Harvard’s Kenneth Rogoff arguing that Big Tech has, in some sense, gotten “too big.”
Antitrust Remedies for Labor Market Power
Harvard Law Review, May 18, 2019
https://harvardlawreview.org/2018/12/antitrust-remedies-for-labor-market-power/
PDF: https://harvardlawreview.org/wp-content/uploads/2018/12/536-601_Online.pdf
Recent research indicates that labor market power has contributed to wage inequality and economic stagnation. Although the antitrust laws prohibit firms from restricting competition in labor markets as in product markets, the government does little to address the labor market problem, and private litigation has been rare and mostly unsuccessful. One reason is that the analytic methods for evaluating labor market power in antitrust contexts are far less sophisticated than the legal rules used to judge product market power. To remedy this asymmetry, we propose methods for judging the effects of mergers on labor markets. We also extend our approach to other forms of anticompetitive practices undertaken by employers against workers. We highlight some arguments and evidence indicating that market power may be even more important in labor markets than in product markets.
WHITEBOARD PHOTOS (& EVIDENCE PACKETS):
[-] PF Evidence (Final) – Antitrust vs Technology Giants (MLA, 2019-05-15).pdf or DOC
[-] PF Arguments (Final) – Antitrust vs Technology Giants (MLA, 2019-05-15).pdf or DOC
IMPORTANT: Scroll to the bottom for more evidence from THU or FRI.
[-] PF Research – Antitrust vs Technology Giants (Champion Briefs, 2019-05-01).pdf
[-] PF Research – Antitrust vs Technology Giants (Forensics Files, 2019-05-01).pdf
[-] PF Research – Antitrust vs Technology Giants (Victory Briefs, 2019-05-01).pdf
[-] PF Research – Antitrust vs Technology Giants (West Coast Publishing, 2019-05-01).pdf
REQUIRED RESEARCH VIDEOS:
[Optional] Monopolies and Anti-Competitive Markets: Crash Course Economics #25,
Crash Course, February 26, 2016 [10 min]
https://www.youtube.com/watch?v=Sb_-wfmJnHA
Note: Excellent video (educational), but it also uses modern examples from tech giants.
[Optional] Antitrust, Explained,
Competitive Enterprise Institute (CEI), March 12, 2019 [5 min]
https://www.youtube.com/watch?v=71j3ET_spI8
Note: excellent video (educational), it also uses examples from tech giants (there are some cards in here for us!).
How Washington Will Tame Tech’s Behemoths,
Fortune Magazine, March 2019 [3 min]
http://fortune.com/2019/02/25/silicon-valley-tech-washington-politics/
Note: Please review the article (and take a few notes from it).
Should antitrust laws be enforced against the tech giants\’ monopolies?,
Market Watch, March 21, 2019 [3 min]
https://www.youtube.com/watch?v=kiE9Zk0I7J4
Commentary: It’s Time for Washington to Take on the Tech Monopolies,
Fortune Magazine, April 2, 2018 [1 min]
http://fortune.com/2018/04/02/tech-monopolies-small-businesses-competition/
Note: Please review the article (and take a few notes from it).
REQUIRED RESEARCH ARTICLES:
[Background] Antitrust Laws and You,
U.S. Department of Justice, Last Accessed: May 2019,
https://www.justice.gov/atr/antitrust-laws-and-you [PDF] <– PDF is a 6-page version (more details!)
Important: This is a 1-page summary of U.S. antitrust laws. PLEASE read it – it\’s only 1 page!
Should big technology companies break up or break open?,
Tom Wheeler, former FCC Chairman, Brookings Institution, April 11, 2019
https://www.brookings.edu/blog/techtank/2019/04/11/should-big-technology-companies-break-up-or-break-open/
The case for why Big Tech is violating antitrust laws,
Sally Hubbard, former Assistant Attorney General for New York [Antitrust Bureau], CNN Business, January 2, 2019
https://www.cnn.com/2019/01/02/perspectives/big-tech-facebook-google-amazon-microsoft-antitrust/index.html
Critics Are Wary of the FTC\’s New Tech Antitrust Task Force,
Wired Magazine, February 26, 2019
https://www.wired.com/story/ftc-tech-antitrust-task-force/
Don’t Break Up Big Tech Firms: Former Antitrust Regulator,
John Pecman, CFO.com, April 22, 2019
http://www.cfo.com/regulation/2019/04/dont-break-up-big-tech-firms-former-antitrust-regulator/
NOTE: The author is a former Commissioner of Competition for the Canadian Competition Bureau.
ADDITIONAL \”OPTIONAL\” RESEARCH ARTICLES & VIDEOS:
Policing the power of tech giants [pros and cons],
Axios News, June 15, 2017
https://www.axios.com/policing-the-power-of-tech-giants-1513302767-acd31a83-d517-463f-8a97-a3ed645caa36.html
Can Antitrust Keep Up?: Competition policy in high-tech markets,
Jonathan B. Baker, Brookings Institution, December 1, 2001
https://www.brookings.edu/articles/can-antitrust-keep-up-competition-policy-in-high-tech-markets/
Why Were Facebook, Amazon, Apple, and Google Allowed to Get So Big?,
Fortune Magazine, March 16, 2019
http://fortune.com/2019/03/16/google-amazon-antitrust-laws/
Note: The video is mostly irrelevant to the topic (FYI).
The push to break up Big Tech, explained,
Vox News, May 3, 2019
https://www.vox.com/recode/2019/5/3/18520703/big-tech-break-up-explained
U.S. Antitrust Task Force Target Tech Giants,
Bloomberg News, February 26, 2019
https://www.bloomberg.com/news/articles/2019-02-26/tech-deals-conduct-to-be-targeted-by-u-s-antitrust-task-force
Will Elizabeth Warren\’s Antitrust Plan to Break Up Big Tech Work?,
Pacific Standard, March 28, 2019
https://psmag.com/economics/will-elizabeth-warrens-antitrust-plan-to-break-up-big-tech-work
Europe’s antitrust cop lays groundwork for more scrutiny of tech giants,
Los Angeles Times, January 22, 2019
https://www.latimes.com/business/technology/la-fi-tn-europe-antitrust-20190122-story.html
Why a Big Tech Breakup Looks Better to Washington,
New York Times, March 17, 2019
https://www.nytimes.com/2019/03/17/technology/google-facebook-amazon-antitrust.html
British Panel Calls for Stricter Antitrust Rules on Tech Giants,
New York Times, March 12, 2019
https://www.nytimes.com/2019/03/12/business/britain-antitrust-big-tech.html
Competition, not break-up, is the cure for tech giants’ dominance,
The Economist, March 13, 2019
https://www.economist.com/business/2019/03/13/competition-not-break-up-is-the-cure-for-tech-giants-dominance
Amazon, Facebook and Google are all being looked at for antitrust violations, Trump says,
Washington Post, November 5, 2018
https://www.washingtonpost.com/technology/2018/11/05/amazon-facebook-google-are-all-being-looked-antitrust-violations-trump-says/
The evolution of America\’s antitrust laws,
Fox News, December 6, 2017 [3 min]
https://www.youtube.com/watch?v=N5tB_AO05Zg
U.S. Antitrust Task Force Target Tech Giants,
Bloomberg News, February 26, 2019 [7 min]
https://www.bloomberg.com/news/articles/2019-02-26/tech-deals-conduct-to-be-targeted-by-u-s-antitrust-task-force
CONTACT INFORMATION (Coach Bill):
Bill Eddy,
coachbill@magnetacademy.com
714.655.8135 (I prefer text)
When contacting me, please include your name and class information (day/time). Thanks!
Argument(s):
PRO: Antitrust Helps/Protects Companies
They argue that antitrust helps the companies become stronger and give examples of how AT&T got broken up, but it went on to grow and still be powerful. They assert the same for Standard Oil. [both = past examples]
AT (vs. PRO): Antitrust Helps/Protects Companies
1.) Regulations Out of Date (ex. Economy has changed)
This means… what worked in the 1980’s to 90’s will not be effective today due to complexities of the technology market.
2.) Disincentive to Companies (ex. Punishing Success)
This means… companies will have less incentive to grow, because if they become too successful they will be punished.
3.) Stifling Innovation (ex. Investors/Entrepreneurs Leaving)
This means… startups will have fewer investors willing to sponsor innovation because regulation threatens profit.
Ex. Regulations restrict the ability of certain companies to grow and restricts the ability to purchase smaller companies. Mergers are now less profitable and more risky, so fewer investors will be willing to invest and innovation is lost! 🙁
PRO: Stock Market at Risk (ex. Lack of Regulation = Risks)
They argue that antitrust helps companies to avoid problems/scandals and as such their stock price will remain strong. However, when larger companies take unnecessary risks they often cause scandals and their stock price fall.
AT (vs. PRO): Risks to Stock Market
1.) [TURN] Regulations Threaten Profits
(so… stocks fall even more!)
This means… stock prices show the value of a company and investors buy stocks when they think the stock will grow. However, increased regulations makes the tech companies in general less profitable and as such less valuable and the long term stock price will remain lower overall.
- A tech giant taking risks threatens only their own company, yet regulations will impact all tech companies as these regulations will restrict the growth potential for the emerging (large but not yet giant) tech companies.
2.) Stifling Innovation (ex. Investors/Entrepreneurs Leaving)
This means… startups will have fewer investors willing to sponsor innovation because regulation threatens profit.
The Case against Antitrust Law,
Competitive Enterprise Institute, April 17, 2019
https://cei.org/content/the-case-against-antitrust-law
CON [Turn]: Antitrust Regulations Makes Matters Worse
S: According to… the Competitive Enterprise Institute, April 17, 2019
https://cei.org/content/the-case-against-antitrust-law
F: It states… Antitrust regulation harms consumers, competition, and innovation. In addition, the executive branch should decline to prosecute weak or spurious antitrust cases, and courts should reverse bad precedents. A market-based approach to competition would reduce the regulatory uncertainty and chilling of innovation that results from government antitrust regulation.
C: This means… increased enforcement will threaten innovation, hurt competition and harm the people the FTC has sworn to protect. Millions suffer as the costs of regulations are passed on to consumers.
CON: Enforcement Tainted by Political Manipulation
S: According to… the Competitive Enterprise Institute, April 17, 2019
https://cei.org/content/the-case-against-antitrust-law
F: It states… Antitrust has taken on greater urgency, as populist politicians from both left and right push for more aggressive enforcement. Regulators in the United States have expressed an interest in pursuing antitrust actions against tech giants known as the FAANG companies— Facebook, Apple, Amazon, Netflix, and Google. President Trump has specifically singled out Facebook, Google, and Amazon as antitrust targets. Entire business models are at risk from potential antitrust regulation.
C: This means… tech giants are victims of a political \’witch hunt\’ designed to gain take power from successful companies. Increased enforcement means more politically motivated market interference.
CON: Legal Penalties Chill Innovation
S: According to… the Competitive Enterprise Institute, April 17, 2019
https://cei.org/content/the-case-against-antitrust-law
F: It states… The mere threat of legal penalties – and the environment of over-caution it engenders – has a chilling effect on entrepreneurs who want to try new business practices and innovate. Such opportunity costs are impossible to measure.
C: This means… the more strict enforcement becomes, the less likely investors will continue to invest in technology startups, which threatens the future innovation and growth of the tech industry.
CON: Regulations = \”Considerable Economic Harm\”
S: According to… the Competitive Enterprise Institute, April 17, 2019
https://cei.org/content/the-case-against-antitrust-law
F: It states… the approach to antitrust law now prevalent in both the United States and the European Union is misguided and can lead to considerable economic harm. and argues for a market-based approach. antitrust policies are in need of repeal,
C: This means… we should be reducing antitrust enforcement not increasing it otherwise we risk harming our economy and putting millions of jobs at risk!
CON: Current Regulations Ineffective (So Will Be Enforcement!)
S: According to… the Competitive Enterprise Institute, April 17, 2019
https://cei.org/content/the-case-against-antitrust-law
F: It states… As the economy becomes more high-tech, specialized, and global, antitrust policies formed in the smokestack era are becoming progressively less relevant. Aggressive antitrust enforcement can create considerable economic uncertainty, which can have a chilling effect on long-term investment and innovation in both products and in business practices that benefit consumers.
Conclusion
Antitrust regulation began as a populist reaction against big business and industrial concentration. Yet, it has proven ineffective at countering the perceive threat of bigness in business, while causing considerable harm to consumers, competition, and innovation. Moreover, many antitrust policies are based on faulty arguments that bear little relation to how real-world markets work. And throughout its history, U.S. antitrust law has created considerable uncertainty for businesses, as federal antitrust enforcers have tried different regulatory approaches over the last 130 years.
The “rule of reason” standard, which had no set criteria, became the standard for enforcing actions from fines to jail terms to firm breakups. During the New Deal, government policy turned in the opposite direction and actively encouraged cartel behavior. After a postwar change of heart, antitrust enforcement reached its peak in the 1950s and early 1960s. Around this time, economists’ arguments slowly earned mainstream acceptance in the legal profession. By the 1980s, a Chicago-style consumer welfare had become the dominant enforcement standard, and has remained so up to the present day. However, the combination of a populist presidential administration with a growing Neo-Brandeisian antitrust movement on the progressive side threaten to revert antitrust policy to something closer to an arbitrary rule of reason standard, which creates the potential for a sharp upswing in enforcement actions against large or politically disfavored firms.
While the Chicago school and the Neo-Brandeisians prefer different levels of antitrust enforcement, both believe that antitrust regulation is an effective tool for managing competitive market processes. In this, both are in error, for a number of reasons.
First, competition is a spectrum, not an on/off switch. That makes it difficult to set predictable standards that companies can work to avoid violating and plan around.
Second, regulators are prone to fall for the relevant market fallacy, in which a company appears to dominate a narrowly defined market but has little power in the larger market in which it actually competes.
Third, antitrust enforcement standards are so broad that they are useless as a guide to permissible behavior. Allowable behavior changes with the political winds. Cases, especially major ones, are sometimes prosecuted for publicity rather than merit.
Fourth, antitrust regulation creates rent- seeking opportunities for companies seeking favors from government to harm competitors. As a result, antitrust regulation, as actually practiced, has done far more to stifle competition than to protect it or promote it.
Finally, antitrust regulation takes a short-term approach to a long-term competitive process. The IBM case was in play for a dozen years before the government dropped the case. By that time, the technology at the heart of the case had changed and IBM’s competitive position had declined. A case against one of the FAANG companies would likely have similar competitive relevance by the time a major trial would be decided.
As noted, antitrust regulation harms competition, consumers, and innovation, and therefore should be repealed. Congress should repeal the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914, as amended, including the Celler-Kefauver Act of 1950 and the Hart-Scott-Rodino Act of 1976. A market-based approach to competition would enable more powerful market regulation to replace flawed government regulation. This would reduce regulatory uncertainty and its chilling effects on innovation, reduce rent-seeking, and do away with the need for intellectual rabbit holes such as defining relevant markets or permissible levels of firm size or market share.
Aggressive antitrust enforcement can create considerable economic uncertainty, which can have a chilling effect on long term investment and innovation in both products and in business practices that could benefit consumers. Consumers and competition would greatly benefit from the repeal of antitrust regulations regarding restraint of trade and monopolization, horizontal and vertical mergers, collusion such as price fixing and market division, predatory pricing, price discrimination, minimum resale prices, exclusive dealing, tying and bundling, strategic predatory behavior, and technological lock-in. As the economy becomes more high-tech, specialized, and global, antitrust policies formed in the smokestack era are becoming progressively less relevant.