Big technology firms challenge traditional assumptions about antitrust enforcement

While fear that big tech can wield excessive influence in our democracy may reflect broader misgivings outside the realm of antitrust law and enforcement, some political concerns about big tech appropriately fall under the purview of antitrust regulation. As Sally Hubbard, a Senior Editor at the Capitol Forum who covers monopolization issues, recently stated in an interview with Vox’s Sean Illing, “Companies like Facebook and Google have had an outsize effect on political discourse because of the ways their algorithms help to promote and spread fake news and propaganda. Even if it’s not their intent, their business model invariably contributes to this problem.” More competition between rival platforms would have introduced a greater number of algorithms for Russian operatives to navigate, and probably would have mitigated the impact of the fake news that successfully targeted voters during the 2016 U.S. election.

So what can antitrust do when it comes to addressing the challenges posed by big tech? First, it is time to abandon the Chicago School dictum that predatory pricing is “rarely tried” and “rarely successful.” Second, the agencies should update their merger review guidelines (the vertical merger guidelines have not been updated since 1984) to ensure merger review includes an evaluation of the data at stake along with the monetary value of the deal. Third, it is important to recognize that antitrust is just one tool in the broader competition policy toolkit. One of the greatest barriers to entry in the tech sector remains network effects—a marketplace dynamic when greater usage of a product makes it more valuable for all users. Here, success breeds more success. Luigi Zingales and Guy Rolnik advocate a reallocation of property rights to combat the problem. Competition would be encouraged if individuals owned their social network and could easily move over to rival platforms.

Even if antitrust remains focused on economic issues—an approach we question—big tech challenges enforcement agencies to develop an analytical framework suited for the 21st century tech-driven economy.  Consumer welfare is no longer an adequate standard—if it ever was.