Large Internet platforms face U.S. antitrust threats

The three major Internet “platforms” in North America: Amazon, Alphabet (Google), Meta (Facebook), Continue to face four major challenges from U.S. antitrust. Are these lawsuits good for innovation in the United States and around the world? Research shows that such platforms bring significant benefits to consumers. These lawsuits are likely to be met with judicial skepticism and potentially drag on for years, with no consensus on their legal basis or economic benefits. The platforms also face increasing antitrust litigation and regulatory scrutiny overseas. Taken together, these multiple legal actions will impose significant costs on the platform and may reduce its incentives to innovate. The Hippocratic Oath to “first, do no harm” suggests that U.S. antitrust enforcers should seriously consider dropping lawsuits.

Four major U.S. antitrust lawsuits

The business practices of the three tech giants are facing four major government challenges, brought by two federal “sister” antitrust enforcement agencies, the Federal Trade Commission and the Department of Justice. Each case remains before federal trial courts and could drag on for years, pending appeals.

The U.S. Department of Justice sued Google in October 2020, claiming that the platform collectively locked users’ main channels for accessing search engines and the Internet, thereby illegally maintaining a monopoly on search and search advertising. The case goes to trial in late 2023, with closing arguments scheduled for May 2024 (the judge said he had “no idea” how he would rule).

The FTC sued Facebook in December 2020, accusing Facebook of engaging in a “systemic strategy… including the acquisition of emerging competitor Instagram in 2012, the acquisition of mobile messaging app WhatsApp in 2014, and the imposition of anti-competitive conditions on software developers – to eliminate threats.” to it [social network] monopoly” and “depriving advertisers of the benefits of competition.”

Then in January 2023, the U.S. Department of Justice sued Google again, saying that Google “neutralizes or eliminates advertising technology competitors through acquisitions; exerts its dominance in the digital advertising market to force more publishers and advertisers to use its products; and hinder the ability to use competing products.”

Finally, in September 2023, the Federal Trade Commission sue amazon,think”[b]By suppressing competition on price, product selection, quality, and preventing current or future competitors from attracting large numbers of shoppers and sellers, Amazon ensures that current or future competitors cannot threaten its dominance. “

The specific details of the cases vary, but the big-picture theme is the same: All three platforms have been accused of using a variety of tactics to influence advertisers, retailers and consumers to maintain their dominance in specific areas. The world of the Internet – social networks (Facebook), search engines (Google) and e-commerce (Amazon).

Assessment case

The platforms defend their actions, saying they are designed to improve business efficiency so they can better serve consumers.There is plenty of evidence to support this idea, e.g. A 2019 study By then-MIT professor Erik Brynjolfsson in ” Harvard Business Reviewwhich shows that the free digital goods provided by Internet platforms have brought huge net benefits to consumers.

The platforms’ defenses may resonate well in court. In 1979, the Supreme Court called antitrust a “consumer welfare prescription.” U.S. judges have since ruled that the primary goal of antitrust law is to benefit consumers, not to support competitors.Prior to the Biden administration, both Democratic and Republican administration enforcers agreed that this “consumer welfare standard” should guide U.S. antitrust enforcement policy

However, top antitrust officials in the Biden administration declined to rely on that standard in 2021. They argue that antitrust should advance goals other than consumer welfare, such as small business protection, labor rights, fighting inequality and environmental improvement.

What’s next for platforms like Google and Facebook?

Lower courts, bound by Supreme Court precedent, may rule in favor of the government only if they find that the platform’s conduct undermined the competitive process and threatened to harm consumers. Whether they will do so is most uncertain. It depends on how each court views the law and facts in light of the complex and contradictory arguments before it.

Legal scholars have different views on antitrust prosecutions of platforms. For example, Professor Herbert Hovenkamp, ​​a famous American antitrust paper author, generally supports antitrust challenges to platforms and believes that it is necessary to restore competitive behavior (especially Amazon and Facebook) or deal with “natural monopoly” issues (Google) ). Douglas Melamed, a professor at Stanford University, said Google’s actions “clearly have some legitimate benefits, and the question is how courts will factor that into the overall analysis.” Howard University professor Andrew Gavill said: “[t]In the 2020 case against Google, “his allegations are absolutely serious,” but “[w]Whether the evidence will be corroborated is the big question. Law and economics scholar Geoffrey Manne believes the FTC’s lawsuit against Amazon “will face an uphill battle in court.”

There is at least one outcome for which we should be prepared. Faced with antitrust uncertainty, these platforms may become less competitive and focus more on legal strategy rather than consumer-focused innovation. Additionally, Stanford University professor Riitta Katila said antitrust could have unintended consequences in limiting innovation by limiting opportunities for complementary companies that deal with giants and fill gaps in the market.

Notably, these platforms face lawsuits and new regulations in Europe and other jurisdictions that could threaten their long-term global leadership in key internet areas.

No economic consensus has been reached on dealing with platform issues

There is no consensus among economists on how governments should deal with platforms or the impact of antitrust or regulatory intervention.

Well-known regulatory economists Robert Crandall and Thomas Hazlett explained that overly aggressive antitrust and regulation may lead to less innovation on major U.S. Internet platforms and harm consumer welfare.

Other prominent scholars, Professors Howard Shelanski and William Rogerson, believe that targeted regulation rather than traditional U.S. antitrust enforcement may be better suited to deal with the competition that platforms may bring threaten.

A survey of 80 U.S. and European economists conducted by the University of Chicago showed that there are multiple views on whether platform activities should be subject to antitrust or regulation.

The key consideration should be the Hippocratic Oath, “First, do no harm.”

In deciding whether to proceed with these long-running cases, U.S. government antitrust agencies should be mindful of the possible harm and supposed benefits of antitrust challenges to platforms. Given the clear benefits platforms bring to consumers and business users, the costs of platform litigation, and the uncertainty about the likely impact of antitrust remedies, U.S. law enforcers should take to heart the Hippocratic Oath to “first, do no harm.” This appears to mean an end to existing litigation.