Hopes for antitrust reform fade after blockbuster tech hearing

Despite the fireworks, U.S. antitrust law’s controversial ‘consumer-welfare standard’ looks safer than ever.

Facebook CEO Mark Zuckerberg testifies remotely during a House Judiciary Antitrust Subcommittee hearing on Wednesday.
(Mandel Ngan/Pool via AP)
July 29, 2020, 8 p.m.

It was supposed to be a chance for Congress to present a united front against a sprawling tech industry increasingly seen as beyond the reach of antitrust law.

But Wednesday’s hearing of the House Judiciary Antitrust Subcommittee, which brought together four of the most powerful technology executives to answer for the anticompetitive behavior Democrats claim they’ve uncovered in the course of a massive investigation, was devoid of nearly any discussion of antitrust law as it’s currently constituted in the United States.

While Democratic lawmakers grilled the heads of Facebook, Google, Apple, and Amazon on the alleged harm their operations have wrought on competing companies, they did little to explain how that harm damages U.S. consumers. They also largely failed to articulate whether, or how, the controversial “consumer welfare standard” of U.S. antitrust law—which predicates any antitrust action on the harm a company’s operations is causing to people’s pocketbooks—should be reformed or scrapped in response to the novel problems posed by the 21st-century digital marketplace.

Most Republicans, meanwhile, glided almost entirely over questions of antitrust law, instead choosing to browbeat the tech CEOs for allegedly silencing conservative voices on their platforms.

“I’ll just cut to the case. Big tech is out to get conservatives,” said Judiciary Committee ranking member Jim Jordan, launching into a screed about Silicon Valley’s alleged bias that was picked up and amplified by many of his colleagues.

The one Republican who did speak at length about antitrust—subcommittee ranking member Jim Sensenbrenner—announced in no uncertain terms his opposition to any major overhaul of existing law.

“I’ve looked over a lot of the material that has been assembled. I’ve been working with the chairman for over a year on this bipartisan investigation,” Sensenbrenner said. “And I have reached the conclusion that we do not need to change our antitrust laws. They have been working just fine.”

Two outside experts said it was the first time they’d heard Sensenbrenner voice his opposition to reforming antitrust in such stark terms. Combined with the obvious disinterest of his colleagues, it bodes poorly for any bipartisan effort to move beyond a probe of big tech and into the hard work of updating the consumer welfare standard for the 21st century.

“I guess my impression is, I disagree with him,” subcommittee chairman David Cicilline said when asked during a brief recess what he thought of Sensenbrenner’s break with Democrats, particularly after repeated claims that the committee was working as a united front.

Cicilline said a report on the subcommittee’s mammoth investigation of the major tech companies—the problems lawmakers see, and potential steps Congress could take to address them—should be released within the next two months.

But it doesn’t appear likely that the report will include a recommendation to reform the consumer welfare standard—at least, not if it is to remain bipartisan.

“I guess I was hoping for at least a couple Republicans who might focus on the competitive effects and on the need to reform antitrust law and look at competition policy,” said Gigi Sohn, a fellow at the Georgetown Law Institute for Technology Law & Policy and a former top Democratic aide at the Federal Communications Commission.

Sohn and other progressives in the tech-policy space believe the consumer welfare standard, a central component of U.S. antitrust law for decades, is fundamentally unfit to police the digital economy.

The standard generally requires evidence of consumer harm—in practice, a substantial increase in prices—before any antitrust action can be brought against a company. But Facebook, Google, and other tech platforms that make their money off of consumer data are free for consumers to use. And it’s hard to bring an antitrust case against a company that doesn’t even charge fees to its users.

Sohn said it didn’t necessarily have to be this way. But with decades of court precedent backing the consumer welfare standard, the ball now sits squarely in Capitol Hill’s court.

“I think Congress has to fix it because the courts have screwed it up,” Sohn said.

Even among Democrats, however, appetite for a major antitrust overhaul appeared to be lacking. On Wednesday, lawmakers repeatedly hit all four executives—and particularly Amazon's Jeff Bezos and Google's Sundar Pichai—over the damage their dominant platforms have wrought against companies looking to compete with the tech giants. Few, however, took the time to explain how damage to competitors worked against actual internet users.

“It was really, really telling in the hearing that every single person that talked about antitrust, which was mostly Democrats, talked about harm to competitors,” said Neil Chilson, senior research fellow for technology and innovation at the Charles Koch Institute and a former Republican official at the Federal Trade Commission. “They didn’t talk about harm to consumers.”

During a break in the hearing, Cicilline told National Journal that any discussion about reforming the consumer welfare standard “is not going to be in the context of interviewing CEOs. That’s a policy question.”

But with so many people tuned in to see how Silicon Valley’s titans of industry would respond to congressional criticism, Chilson said it would have behooved Democrats to make the case for major antitrust overhaul.

“If they want to sell a political change, I would’ve expected them to emphasize a bit more how it’s going to actually benefit people,” he said. “But for the most part, the Democrats just talked about companies, and who’s hurting other companies.”

Sohn said a lack of Republican buy-in may make it difficult for the committee to recommend any major antitrust reforms, at least in a bipartisan fashion. But she also noted that Sensenbrenner is retiring at the end of 2020 and next year’s congressional climate may be significantly more favorable to progressive priorities.

“A lot of this is teeing things up for 2021,” Sohn said.

Chilson said, however, that even if Democrats sweep into power after November’s election, it’s a mistake to assume they can rewrite something as fundamental as antitrust law without some modicum of Republican support.

“You’re talking about a law that affects literally every single industry in the U.S.,” he said. “You’re facing literally every single interest group in the country. So I don’t see how this happens on a purely partisan basis.”

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