June 11, 2021
Big Tech is a rapidly expanding and world-changing industry, but with the growth of mega monopolies there is a case to be had for government intervention.
June 11, 2021
Republican senator Josh Hawley proposed a bill on Monday April 12th that would reform the Sherman and Clayton antitrust acts and block Big Tech firms from acquiring other companies. The legislation, dubbed the ‘Trust-Busting for the Twenty-First Century Act’ would ban all mergers and acquisitions by companies with a market capitalisation of over $100 billion, and empower the Federal Trade Commission to more thoroughly investigate large tech monopolies. These ‘digital dominant firms’ would also be forced to forfeit profits from monopolistic conduct should they lose an antitrust lawsuit.
Nearly 150 companies would fall subject to the ban, including big tech names such as Apple, Amazon, Microsoft, and Google, as well as corporations such as Pfizer, Nike, Costco, and McDonalds. The ban would not break up previous mergers or acquisitions, however, Hawley has signaled that he would like to see companies like Facebook and Amazon broken up and that further legislation is in the works.
This bill comes after a 16-month investigation by members of the U.S. government that found that Apple, Amazon, Google, and Facebook enjoy ‘monopoly power’ in the tech ecosystem. Hawley himself claims that ‘the intent is to try and spur competition, to try and open up the market and to try and make room for new businesses, new startups, fresh competition’. He has long been a fierce opponent of Big Tech and pursued antitrust cases against Facebook and Google while serving as Missouri’s Attorney General. He is also the author of a book titled The Tyranny of Big Tech which describes the threat these companies pose to American democracy.
That being said, there are also very clear political motivations to limit the power of major companies. More than 100 corporations recently banded together to signal their opposition to restrictive voting laws being passed in states such as Georgia, and there have been growing complaints by Republicans that such political bias is outside the remit of companies. It is Hawley’s belief that ‘if you allow corporations to amass significant economic power through market concentration, they are going to have political power, and they're going to use it’. By preventing any one company from claiming market dominance, it is Hawley’s hope that none will amass enough power to begin seriously expressing any political opinions. ‘Monopoly and liberty don’t go together. No corporation should be so big and so powerful that it can override the voice of the people. We need a new trust-busting agenda’.
The predominant opinion is that the bill is unlikely to get far in the Senate due to its democratic control. Hawley was one of the Republican Senators who objected to certifying Biden’s Presidential victory, and has voted against nearly all of Biden’s nominees for cabinet-level posts. This has established him as the Senate’s most unflinching opponent of the Biden administration so gaining democratic support for his bills is unlikely.
That being said, tech monopolies are very much a cross-bench issue and this proposal follows actions taken by both Republican and Democratic parties. For example, a bill proposed in February by Democrat Senator Amy Klobuchar looked to curtail merger and acquisition activity by placing the burden of proof on companies, rather than the government, to prove that an acquisition would not reduce market competition. Hawley has said he is willing to work with her on the issue, and Klobuchar claims there is bipartisan interest in the Senate to push for stronger antitrust law enforcement and increased oversight.
Alternately, there is also the risk of backlash from fellow Republicans. While several Republican lawmakers have alleged that Twitter, Facebook, and other social networks harbor anti-conservative bias, this move is controversial because it pushes for changes to the consumer welfare standard. The standard currently focuses on surplus gains for consumers, but Hawley’s bill would shift it towards focussing on economic competition as a whole. This is not something all Republicans stand for.
One final criticism is that the bill is actually going to affect Big Tech far less compared to smaller companies who no longer have the option to be acquired by the biggest names in the game. Acquisition is one of the main goals for many startup founders, and it is possible that innovation will be stifled when this incentive is removed.
This Bill may not pass, but it is part of a wave of increased focus and scrutiny of the Big Tech companies that have revolutionised the way we live. The status quo is clearly failing to protect consumers, but a solution to this problem has yet to be found.