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TL;DR The First Amendment and Section 230 immunity work together to protect free speech on the Internet. Attempts at Section 230 reform based on how online platforms use their editorial discretion will run into Constitutional limitations.
The First Amendment and Section 230 immunity work together to protect free speech on the Internet. Attempts at Section 230 reform based on how online platforms use their editorial discretion will run into Constitutional limitations.
Complaints of anti-conservative bias by major online platforms have led to proposals to modify Section 230 immunity in ways that target the manner in which platforms moderate user-generated content. Proponents contend that absent some sort of liability these dominant digital “gatekeepers” of news and social opinion will skew their content-moderation practices to reflect their own political preferences, dishonestly labeling conservative views as offensive or otherwise in violation of the platform’s terms of use.
Online platforms have a First Amendment right to adopt whatever content standards they choose. With very few exceptions the government may not mandate speech. But a law requiring online platforms to adopt a particular set of content moderation practices — say, to maintain a “balance” of political views — would do just that. Conditioning Section 230 immunity on online platforms giving up their right to editorial discretion would be unlikely to survive the strict standard of review to which such government regulation of speech would be subjected by the courts.
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TL;DR Vertical integration allows businesses to innovate more. It may be bad for certain competitors, but it is rarely bad for competition.
Vertical integration allows businesses to innovate more. It may be bad for certain competitors, but it is rarely bad for competition.
Vertical integration refers to businesses performing a number of different and important roles in the supply chain for a particular product — for example, a manufacturer that sells its products directly to the public in its own stores. While all businesses are vertically integrated to some extent, some worry that vertical integration in digital markets prevents smaller businesses from competing.
Empirical research has consistently found vertical integration to be good for consumers through a number of mechanisms that allow for reduced costs and better product quality.
Read the full tl;dr explainer here.
TL;DR Competition is strong in digital markets, but traditional antitrust tools may miss competitive nuances in these markets.
Competition is strong in digital markets, but traditional antitrust tools may miss competitive nuances in these markets.
Critics argue that competition is weak in digital platform markets because each market tends to be dominated by a single player: Google in Search, Amazon in online retail, and so on.
Digital platforms overlap significantly and are constantly expanding into each other’s markets, and new entrants are a constant threat. Retrospective market definition, the tool that antitrust agencies use to determine the boundaries of competition, will frequently miss changes in the nature of the products and markets under review, and as a result miss much of the competition taking place. Features of that competition are discussed below.
TL;DR “Self-preferencing” is a normal part of how platforms operate, both to improve the value of their core product and to make money from it so that they have a reason to keep investing in it.
“Self-preferencing” is a normal part of how platforms operate, both to improve the value of their core product and to make money from it so that they have a reason to keep investing in it.
Digital platforms have been accused of unfairly favoring their own products over those of their competitors, most notably in the EU’s case against Google for displaying Google Shopping results in relevant Search result pages.
Platforms’ incentives are to maximise the value of their whole ecosystem, which includes both the core platform and the services they attach to it. Platforms that preference their own products frequently end up increasing the value of the market overall by growing the total share of users of a particular product, and those that preference inferior products end up hurting the attractiveness to users of their ‘core’ product, weakening themselves to competition from rivals.
TL;DR Being acquired is how many startup founders and investors expect to make money. If you make that harder you’ll get fewer startups.
Being acquired is how many startup founders and investors expect to make money. If you make that harder you’ll get fewer startups.
Some allege that large tech companies acquire nascent competitors to prevent certain startups from competing with them later on, effectively “killing” potential competitors before they can be a serious threat to them.
Founders still have an incentive to hold out and compete against incumbents, yet many startups are also founded and invested in only because of the possibility of being acquired by a bigger firm. Acquisitions additionally allow features to be added to benefit large existing user bases.
Download the full tl;dr explainer here.
TL;DR Concentration is a poor measure of competition, because large businesses can be better for consumers than small ones. And concentration isn’t even rising in the ways that would matter.
Concentration is a poor measure of competition, because large businesses can be better for consumers than small ones. And concentration isn’t even rising in the ways that would matter.
Concentration measures the size and number of businesses competing in a market, and is sometimes used as a barometer of competition. Measures of concentration nationally show that in many markets it has been rising, which some point to this as evidence of falling competition.
Concentration has generally been falling in local markets, and inferring anticompetitive effects from market structure can be misleading. Large businesses with economies of scale can offer cheaper products and spread new technology more rapidly, for the benefit of consumers.
TL;DR Data doesn’t create a barrier to entry, but privacy regulations might.
Data doesn’t create a barrier to entry, but privacy regulations might.
Some fear that incumbents’ access to user data gives them the ability to improve and target their products in ways that new entrants cannot replicate, creating a barrier to entry that holds back competition in ways that are harmful to consumers.
While access to data may confer some advantages on incumbents, they are not insurmountable by others, and they are akin to other benefits like reputation that are not considered to be barriers to entry.
Written Testimonies & Filings Pursuant to the House Judiciary Committee’s request for information to aid its inquiry concerning the state of existing antitrust laws, Antitrust Economists, Legal Scholars, and Practitioners offer the following joint submission.
Pursuant to the Committee’s request for information to aid its inquiry concerning the state of existing antitrust laws, we offer the following joint submission:
We are economists, legal scholars, and practitioners—focused on antitrust law, economics, and policy—who believe in maintaining healthy markets and well-functioning antitrust institutions. We value the important role of antitrust as the “Magna Carta of free enterprise,” which sets the rules that govern how firms compete against one another in our modern economy. Many of us have served in antitrust enforcement agencies. Each of us believes it is vital that the antitrust laws promote competitive markets, innovation, and productivity by deterring anticompetitive conduct throughout our economy, including in digital markets.
We write because the modern antitrust debate has become characterized by sustained attacks on the integrity of antitrust institutions and by unsubstantiated dismissals of debate. This atmosphere has led to a variety of proposals for radical changes to the antitrust laws and their enforcement that we believe are unsupported by the evidence, counterproductive to promoting competition and consumer welfare, and offered with an unwarranted degree of certainty.
Vigorous debate and disagreement have long been a hallmark of antitrust scholarship and policy. Competition policy has been formed through an iterative process echoed in the courts’evolving doctrine over more than a century. Today, however, efforts to sidestep the discussion, or to declare it over, and to force hasty and far-reaching changes have come to the fore. These proposals are numerous and include: (1) abandoning the consumer welfare standard; (2) overturning unanimous and supermajority judicial precedents, which are foundational to modern antitrust law; (3) imposing obsolete and arbitrary market share tests to determine the legality of mergers; (4) shifting the burden of proof from plaintiffs to defendants to render large swaths of business behavior presumptively unlawful; (5) creating another federal regulator to oversee competition in digital markets; (6) breaking up major tech companies or their products without evidence of antitrust harm or that the remedy would make consumers better off; and (7) imposing a general prohibition on all mergers either involving specific firms or during the current health crisis.
Such proposals would abandon the legal and political traditions that helped transform antitrust from an unprincipled and incoherent body of law, marred by internal contradictions, into a workable system that contributes positively to American competitiveness and consumer welfare. It should be noted that we use the term “consumer welfare” throughout this letter, consistent with modern parlance about competition policy, to include the benefits of competition to the welfare of workers and other input suppliers, as well as consumers. Thus, the consumer welfare standard is not a narrowly circumscribed objective, but rather a prescription for the general social wellbeing generated by the competitive process. By contrast, many of the current proposals would (1) undermine the rule of law; (2) undo the healthy evolution of antitrust law in the courts over time; (3) require antitrust agencies to micromanage the economy by picking winners and losers; (4) abandon a focus on consumer welfare in favor of vague and politically-oriented goals; and (5) undermine successful American businesses and their competitiveness in the global economy at the worst-imaginable time.
The assertions about the state of antitrust law and policy that purportedly justify these radical changes are not supported by the evidence. A more accurate reading of the evidence supports the following view of the American economy and the role of antitrust law:
We believe open discussion of existing evidence is necessary to advance contemporary debates about the performance of antitrust institutions in the digital economy. We welcome that discussion. We discuss below various dimensions of antitrust law, economics, and institutions that have been the targets of radical reform proposals. The signatories to this letter hold a steadfast belief that antitrust institutions, including the courts, are up to the task of protecting competition, and that the federal antitrust laws as written are effective in accomplishing that goal. While many signatories have offered diverse proposals to improve the functioning of those institutions—a few of which we share in this letter—we hold the common view that the proposed radical reforms would make consumers worse off in the short run and over the long haul by chilling efficient behavior and stymieing innovation.
Read the full submission here.
Scholarship This Article makes the case in support of the current consumer welfare standard and against a sweeping set of unsupported populist antitrust reforms.
Populist antitrust notions suddenly are fashionable again. At their core is the view that antitrust law is responsible for a myriad of purported socio-political problems plaguing society today, including but not limited to rising income inequality, declining wages, and increasing economic and political concentration. Seizing on Americans’ fears about changes to the modern US economy, proponents of populist antitrust policies assert the need to fundamentally reshape how we apply our nation’s competition laws in order to implement a variety of prescriptions necessary to remedy these perceived social ills. The proposals are varied and expansive but have the unifying theme of returning antitrust to the “big-is-bad” enforcement era prevalent in the first half of the twentieth century.
But the criticisms populist antitrust proponents raise are generally unsupported and often dramatized, and the resulting policy proposals are, accordingly, fatally flawed. There is sparse evidence today suggesting that the underlying trends these critics purportedly identify are real or in any way linked to lax antitrust enforcement. Ironically, populist antitrust proponents ignore that antitrust law debated over 50 years ago the same proposals that they are raising anew today. At that time, leading jurists, economists, enforcers, and practitioners from across the political spectrum rejected the use of liability standards that seek to evaluate a variety of vague and often contradictory socio-political goals or that condemn conduct based simply on the size of a company. They recognized that these tests led to incoherent and paradoxical results that often did more to hinder than to promote competition by undermining the rule of law and fostering corporate welfare. Instead, antitrust evolved the elegant “consumer welfare standard” that simplified the core issue of what constitutes harm to competition into a straightforward question: does the conduct at issue harm consumers?
Today, the consumer welfare standard offers a rigorous, objective, and evidence-based framework for antitrust analysis. It leverages developments in modern economics more reliably to predict when conduct is likely to harm consumers as a result of harm to competition. It offers a tractable test that is broad enough to contemplate a variety of evidence related to consumer welfare but also sufficiently objective and clear to cabin discretion and honor the principle of the rule of law. Perhaps most significantly, it is inherently an economic approach to antitrust that benefits from new economic learning and is capable of evaluating an evolving set of commercial practices and business models. These virtues are precisely the target of the new populist antitrust movement, which seeks to reject economics in favor of mere supposition.
This Article makes the case in support of the current consumer welfare standard and against a sweeping set of unsupported populist antitrust reforms. There is significant room for debate within the consumer welfare model for what types of conduct should face antitrust scrutiny, what evidence is relevant, and where liability standards should be drawn. Such debate is healthy and to the benefit of antitrust enforcement. But it does not require abandoning decades of experience and economic learning that would turn back the hands of time and return us to an era where antitrust enforcement was incoherent and deleterious.
