It Came From Silicon Valley

Antitrust Chief Makan Delrahim has been taking some of the edge off the push in D.C. to break up giant edge providers like
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Justice department antitrust chief Makan Delrahim has been taking some of the edge off the push in D.C. to break up giant edge providers like Amazon, Google or Facebook. Because the internet is the most ubiquitous, transformative technology in human history, though, we think it may command a new view of antitrust policy — and a shakeup, if not a breakup.

Justice Department antitrust chief Makan Delrahim

Justice Department antitrust chief Makan Delrahim

Republican appointee Delrahim has talked about big not always being bad when it comes to antitrust. His point: Even if edge giants are, well, giant — and powerful — virtual monopolies, that’s not necessarily an antitrust issue unless those companies obtain that monopoly power through anti-competitive means or use it thusly. Perhaps their size and power should be an issue, though, or at least the commonweal may require a regulatory response to keep that power in check whether ill-gotten or not. There is also the argument that DOJ has been slow to catch on to the power of the edge, which has, in fact, been buying up to monopoly status under the radar, which would put it afoul of traditional antitrust laws.

As to their size, which in financial terms can be comparable to the GDP of small countries, “many of today’s large digital platforms have grown because they provide innovative and disruptive services that consumers seem to like and want to use,” Delrahim has said.

He argues that web users have been found to prefer giving up their data for targeted advertising than having to pay for web content and services. “For now, consumers seem to be willing to provide information about themselves so that they receive the product for free, even recognizing that their information will be sold to advertisers in exchange for a zero price,” he said in February. “Some consumers even may prefer receiving targeted advertisements that are more likely to be relevant to their needs.”

Those arguments are also ones Silicon Valley keeps making. And they may be true, but in this case what consumers don’t know may hurt them.

“The fact that successful companies can reap the benefits of their hard work encourages the next generation of innovators and entrepreneurs and inserts the dynamic competition that best benefits consumers,” he said. “Therefore, as the Supreme Court explained [in Verizon vs. Trinko], ‘[t]o safeguard the incentive to innovate, the possession of monopoly power will not be found unlawful unless it is accompanied by an element of anti-competitive conduct.’”

As for FAANG (Facebook, Apple, Amazon, Netflix, Google) dominance, he said Justice must guard against enforcing away pro-competitive business models, like users willingly providing data as the price of their “free” service. “The question for antitrust enforcement is not how big the platform is, but whether what the platform is doing harms competition,” he said.

We think the question may not be whether “big is bad,” but whether “too big is unacceptable” given the power and reach of the internet, no matter how that dominance was secured.

Think of Google or Facebook or Amazon as one of those ants that got irradiated in a 1950s sci-fi movie and grew to huge proportions. It wasn’t the ant’s fault; it was the technology. But that didn’t mean it could be allowed to roam free, picking up schoolteachers in its serrated pincers and crushing cars. We don’t want to flamethrower it out of existence, either. What’s a government to do?

Perhaps it was a mistake to allow Google to buy YouTube or Facebook to buy WhatsApp, because old, regular-sized ant rules were applied to giants while they were being viewed, as Delrahim does, as innovative and disruptive services, which they were and are.

It doesn’t seem fair to regulate a company just because it is big, penalizing it for its success.

But there is precedent for government action that requires sacrifice from the few in service of the many, even when the few haven’t done anything wrong.

Eminent domain doesn’t seem fair, either, and of course it isn’t in the micro sense. But if we decide the greater good is served by a national park where your great grandparents built their home and descendants have toiled to build a life rooted in land that has been passed on to generations, well, sorry, but you’ve got to go.

It may at least be time to think seriously about whether big, if it involves the kind of scale and share FAANG commands, may be just too big after all.

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