Warren applauds these efforts but calls on the next administration to move into much more politically perilous terrain. She's suggesting comprehensive regulatory scrutiny for technology giants — calling out Google by name alongside Apple and Amazon.and more »
In an electric June 29 speech delivered at the New America Foundation, Sen. Elizabeth Warren of Massachusetts threw her rising political weight and prestige behind an idea that’s been bubbling beneath the surface of the Obama-era Democratic Party for several years: The United States needs a revived and reinvigorated antitrust policy.
The Obama administration itself shares — and to some extent has driven, via a Council of Economic Advisers report and some executive actions — the analysis that the American economy suffers from a shortfall of competition.
But Obama has focused his energies in two particular areas, aspects of competition policy that don’t involve antitrust enforcement like occupational licensing and aspects of antitrust policy that apply specifically to stodgy telecom utilities. His administration stopped T-Mobile from merging with either AT&T or Sprint, blocked Comcast from swallowing Time Warner Cable, imposed tough network neutrality rules in broadband providers, and has generally taken the view that the high barriers to entry in these sectors justify a heavy-handed regulatory approach.
These moves are a big deal and mark a real break from the lighter touch of the George W. Bush administration. But in political terms they also involve some of America’s least popular and most politically vulnerable companies, and generally feature Obama weighing in on the side of high-profile, high-tech companies like Google or Netflix.
Warren applauds these efforts but calls on the next administration to move into much more politically perilous terrain. She’s suggesting comprehensive regulatory scrutiny for technology giants — calling out Google by name alongside Apple and Amazon. In the process, she’s clarifying that she belongs to the school of thought that says progressives ought to raise their aspirations for a revived era of big government in response to Donald Trump, rather than trying to position Democrats as a cuddly consensus alternative to Trump’s risky weirdness.
Warren wants a crackdown on Apple, Google, and Amazon
Warren’s core complaint is that America’s high-tech companies are increasingly using their strength in particular product areas to leverage themselves into strong positions in other areas. She offers three specific examples that target three different high-profile companies in unambiguous ways:
Apple uses control over the iPhone platform to advantage Apple Music over other subscription music services.
Amazon uses control over the world’s largest store for e-books to advantage books published by Amazon over books from rival publishers.
Google uses control over the world’s most widely used search engine to promote its own Google-generated content even when a straight implementation of Google’s algorithm would surface content by someone else.
Warren would like the government — in particular the Federal Trade Commission — to intervene in these kinds of matters and act as a champion on behalf of Spotify, book publishers, Yelp, and other large business interests that feel they are being crushed by even larger business interests.
This would be politically riskier than what Obama has done, and would be a decisive break with a generation-long consensus that antitrust policy should be closely linked to consumer welfare rather than simply intervening in companies’ fights with each other. By the standards of contemporary antitrust analysis, for example, the idea of regulating what Apple can do with iOS is absurd on its face, since for all that Apple is a big rich company it doesn’t even hold a majority of the smartphone market. There’s no monopoly to regulate.
Warren’s view is that the economy will be healthier, more competitive, and more consumer-friendly in the long run if we promote a more diverse corporate ecology rather than allowing big technology players to expand into new industries.
Warren also said a bunch of boring stuff that’s more likely to matter
Attacking high-profile tech companies by name was the attention-grabbing aspect of Warren’s speech. And rightly so, as it implies a considerable conceptual revolution in American antitrust policy. But she also put forward a couple of less dramatic propositions that are still important and that, crucially, look to be closer to the center of gravity of where the Democratic Party might plausibly go in the near term.
Warren had three points here:
She wants to alter the Justice Department’s horizontal merger guidelines to reverse the presumption that mergers are good, “placing the burden on merging companies to prove mergers will not harm competition.”
She wants the government to “scrutinize vertical mergers” where a company acquires a supplier or a distributor of its products. Since the 1984 vertical merger guidelines, the government has almost invariably taken the view that when the market embraces vertical mergers it does so for good efficiency reasons, not bad anti-competitive ones. Warren thinks this should change.
Last but by no means least, she wants the government to block mergers that it thinks will be anti-competitive rather than conditionally approving with specific conduct remedies attached. When Comcast bought NBC Universal (one of Vox Media’s investors), for example, the government attached a bunch of strings to the deal curtailing the intermingling of the content and cable businesses. Warren would have the government just say no instead.
This stuff lacks the bright-line clarity of Warren’s company-specific challenges, but it speaks deeply and broadly to how the economy is regulated. These ideas also largely echo a competition policy document put forth earlier this month by the Center for American Progress, indicating that this line of thinking is likely to be influential in a Hillary Clinton administration and that Warren’s spotlight could put it over the top.
Two questions about going big on antitrust
Proponents of a stepped-up approach to competition policy are really raising two separate issues about the status quo.
Dynamic versus static efficiency:
The approach to competition policy that’s prevailed since the 1980s is largely focused on improving the efficiency of the economy viewed as a fairly unchanging system. Mergers that reduce competition to levels that let companies raise prices and gouge consumers are bad. But something like Apple using its control over iOS to favoring Apple Music over Pandora and Spotify doesn’t involve gouging anyone on price. The harm, if there is a harm, is that having a smaller number of bigger technology companies might produce an overall less innovative economy than one in which it’s harder for big players to get even bigger.
The big players themselves would argue that letting Google integrate more services into its already popular web search and letting Apple integrate more services into its already popular smartphone operating system let them create more seamless, better-performing systems at low cost — a more efficient allocation of static resources. Warren’s view is that regulators could create a more dynamic overall economy by blocking this sort of thing, a plausible conjecture but not something that’s easy to quantify or verify.
Trust in government:
It’s fairly easy to imagine that, in principle, the FTC’s professional staff could improve on the social outcomes delivered by profit-maximizing companies looking to expand into as many niches as possible. A somewhat different question is whether we would expect a real-world FTC staffed by actual human beings subject to errors of judgment, lobbying, conflicts of interest, and bureaucratic dysfunctions to actually accomplish this.
Some of Warren’s ideas — especially the ones echoing the Center for American Progress report — largely just involve shifting the rules of review. They would have fairly predictable consequences, whether one likes them or not.
But having a team of government officials operating on a basically discretionary basis to second-guess big technology platform owners would be a leap into a realm of fairly unknown consequences.
Warren is raising the stakes
The timing of the speech is interesting given ongoing speculation about Warren as a possible vice presidential nominee, paired with her aggressive deployment as an anti-Trump surrogate in recent weeks.
One school of thought in present-day Democratic politics is that Hillary Clinton should take advantage of Donald Trump’s erratic behavior to present herself as a consensus, business-friendly option. She’ll stop Republicans from enacting giant new tax cuts for CEOs, but she also won’t rock the boat too much in terms of the fundamental operation of global capitalism, while Trump might destroy the country.
Warren is clearly signaling that she, personally, is not interested in going down that route. Rather than letting some of the anti-finance themes for which she’s famous slide in favor of narrow attacks on Trump, she is expanding the ambitions of her efforts to revive left-wing economic policymaking by tackling iconic technology companies by name.
technology technology definition technology news technology in the classroom technology synonym technology quotes technology articles technology in education technology credit union technology jobs