Author Topic: The Goolag, Facebook, Youtube, Amazon, Twitter et al: the Orwellian Tech Octopus  (Read 76838 times)




Crafty_Dog

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Stratfor on the Anti-Trust issues
« Reply #703 on: February 25, 2021, 07:09:38 AM »
With Democrats in Power, the U.S. Push Against Big Tech Grows
12 MIN READFeb 24, 2021 | 22:33 GMT





A picture taken in London on Dec. 18, 2020, shows the logos of Google, Apple, Facebook, Amazon and Microsoft displayed on a mobile phone and laptop screen.
A picture taken in London on Dec. 18, 2020, shows the logos of Google, Apple, Facebook, Amazon and Microsoft displayed on a mobile phone and laptop screen.

(JUSTIN TALLIS/AFP via Getty Images)

As momentum builds in the United States for landmark antitrust legislation and lawsuits on Big Tech companies, potential changes to U.S. mergers law and limits on growth avenues for large tech firms like Google could impact U.S. dominance in the global tech space, increasing competition with Chinese and European firms. On Feb. 4, U.S. Senator Amy Klobuchar, the new chair of the Senate’s Subcommittee on Antitrust, Competition Policy and Consumer Rights, introduced a new bill aimed at updating the United States’ antitrust laws. The so-called Competition and Antitrust Law Enforcement Reform Act (CALERA) proposes giving more resources to antitrust investigators, as well as rewriting the way that mergers and acquisitions (M&As) are reviewed over antitrust concerns. Although it has not yet been presented to U.S. President Joe Biden, the draft bill does give hints about how the new Democratic-led government could treat antitrust law reforms and tackle Big Tech.

CALERA was introduced after U.S. state or federal regulators filed several major suits against Google and Facebook — marking the biggest antitrust salvo against large tech companies since the United States v. Microsoft Corp. case in 2001.
Big Tech’s growing market share, impact on smaller companies, and growing political and social clout have put a bipartisan bullseye on their backs. Google and its parent company Alphabet Inc. have faced the most intense scrutiny due to the fact that it has over 90 percent of the global internet search market, nearly a third of the United States’ online digital advertising market, nearly 70 percent of the internet browser market and nearly 40 percent of the smartphone OS market — making it a monopoly or involved in a duopoly in a number of different areas. Amazon’s dominance in e-commerce and cloud computing has also placed its practices under scrutiny, as has Facebook’s wide-ranging social media presence. Facebook, Amazon and Twitter’s move to ban former U.S. President Donald Trump and/or Parler, a social media site that many of his supporters have flocked to, following the Jan. 6 U.S. Capitol siege have since drawn even more attention to the vast power these companies hold. 

In 2020, both Republicans and Democrats in the Senate and House called on Big Tech executives to testify at a number of hearings on their companies’ practices.
Former President Trump and the Republican Party have been especially critical of Section 230 of the Communications Decency Act, citing the leeway it gives internet companies to self-moderate content without legal liability.
Democrats have also been somewhat critical of Section 230, with Biden’s Commerce Secretary nominee, Gina Raimondo, saying she would back some modifications during her confirmation hearing.
Evolving U.S. Attitudes on Antitrust and Big Business
The intense antitrust scrutiny on Big Tech is a sign that the ideological current in the United States towards enforcement of antitrust rules is undergoing a major transition. The introduction and aggressive enforcement of the 1890 Sherman Antitrust Act made the United States a global pioneer in modern antitrust laws. But for much of the last 40 years, the rise of the Chicago school of thought has dominated the way that antitrust law enforcement has played out. The Chicago school rejected previously aggressive antitrust enforcement and argued that economic analysis should be the only critical test of whether or not a company harmed consumers, rather than solely possessing significant power through market share. This view has since been backed by numerous Supreme Court rulings and has aided the growth of large U.S. multinational corporations, including those in the tech sector. The European Union’s anti-competition rules, by contrast, focus less on damage to consumers and more on abusing market share to limit the entry of rivals.

The current cases filed against Facebook and Google may not be enough to mollify policymakers’ concerns, as any ruling against the two companies would not rewrite the broader U.S. regulatory environment needed to prevent the rise of other large technology firms. Given the high standard that must be proven in order for antitrust enforcement cases to succeed, most of the cases that have been filed against Facebook and Google have been narrowed to something that might be winnable. And even then, regulators might be fighting an uphill battle. Antitrust cases in the United States have also so far focused purely on Google and Facebook, and on not addressing concerns about other large tech firms such as Apple and Amazon.

In a case filed against Google in October, the U.S. Department of Justice (DOJ) is accusing the company of using exclusivity agreements in “unlawfully maintaining monopolies” in the search and advertising search markets. The narrow nature of this case is reminiscent of the 1990s landmark case against Microsoft, in which the DOJ argued that the bundling of Microsoft’s Internet Explorer created an unfair advantage in the web browser market. The ruling did not result in the breakup of Microsoft, but rather a settlement with limited fines and restrictions. The case, in fact, may have helped propel Google and Amazon to become the giants they are today by preventing Microsoft from stopping their rise. 
An ongoing Texas antitrust lawsuit against Google has the potential to have a large impact on the company, but the chances of it succeeding are less likely than other antitrust cases. Texas and nine other states are alleging that Google and Facebook unlawfully rigged ad markets and that Google has maintained a monopoly on both sides by operating as a buyer and seller. But the strongest allegations were heavily redacted in their initial filing, leaving the case’s outlook unclear. The case might also be overly politicized, as no Democratic state attorney general joined the case. It also comes as Texas Attorney General Ken Paxton is under an FBI investigation over abuse of power. Nonetheless, if the case were to succeed, courts across the state would be asked to force Google to sell off some of its businesses. But while this would take a decent hit on Google’s business (as well as potentially Facebook, which was named as a co-conspirator), the ruling would not directly affect other large tech companies.
The changes proposed in the CALERA legislation center on two key pillars: leveling the playing field when it comes to the DOJ and Federal Trade Commission’s ( FTC’s) ability to win cases, and adjusting the United States’ largely archaic antitrust laws to better suit the fast-evolving tech sector. One key shift would be how M&As are reviewed for potential antitrust concerns. A presumption of unlawfulness would be made for any M&As that would increase market concentration above 50 percent, transactions over $5 billion, acquisitions of $50 million or more by companies valued at more than $100 billion, and take over “maverick” companies disrupting an industry. Companies wanting to engage in such M&As would be required to prove that they do not result in increased market concentration and harm competition, shifting the burden away from regulators to the companies themselves.

The legislation would give more resources and oversight power to the DOJ and FTC, which are both severely understaffed and underfunded when it comes to investigations compared with the financial firepower that Alphabet Inc. (Google’s parent company), Amazon and Facebook harness.
The bill also proposes doing away with a standard set in the 1914 Clayton Act, which only prohibits mergers that “substantially” impact competition, and replacing it with a new standard that would prohibit mergers that risk of “materially lessening” competition (with “material” effectively defined as non-trivial). CALERA would also update the Clayton Act by making monopsonies (market dominance by a single buyer) subject to various rules and laws, including M&A oversight.
The Connection Between Monopolies and “Network Goods”
Tech companies frequently deal in what is known as “network goods” — that is, goods that see their value increase the more that they are used by others. Facebook’s value to an individual user, for example, increases as their friends and family also join the network. This dynamic naturally tends to lead to market concentration in a monopolistic fashion. In 2019, an economist at the Massachusetts Institute of Technology, David Autor, published the first empirical data on the impact of amassing market concentration in this fashion. Autor and his colleagues’ academic research suggests that productivity (i.e. innovation) is increasing faster in industries that are experiencing a higher level of concentration. The same research, however, also suggests that there could be a negative impact on job creation and inequality, suggesting a trade-off between the two.

Any final bill that passes may be watered-down, given U.S. tech companies’ vast lobbying power and the fact that any legislative changes would need limited Republican buy-in. Although there is bipartisan support for targeting large tech companies, Democrats and Republicans differ significantly on what to focus on and how aggressive reforms should be. House Democrats finished an investigation into monopolies in digital markets in October 2020, publishing a list of recommendations — some of which are included in Klobuchar’s bill. In response, a group of House Republicans released their own proposal, which they’ve described as the “Third Way” to enforcement.

The House Democrats’ October recommendations proposed “structural separations” in the sector by barring the practice of large platforms operating in “adjacent lines of business.” Proponents of this measure argue that it would help increase competition by prohibiting tech companies from selling their own products on their platforms (i.e. allowing Amazon from selling AmazonBasics products on its own online marketplace).
The CALERA bill proposed by Klobuchar, a moderate in the Democratic Party, does not include the Democrats’ proposed “structural separations,” which would force the break up of some of the companies and limit vertical and horizontal integration. House Democrats have compared this separation of business lines as a Glass-Steagall Act for the tech industry (the 1932 act, which has since largely been repealed, separated investment banking from commercial banking).
Several House Republicans have heavily criticized the proposal to force the separation of business lines. They’ve also criticized the passing of nondiscrimination rules that would require large companies to offer equal terms for equal services, which would stifle small- and medium-sized businesses. But Republicans have also expressed support for increasing resources for the FTC and DOJ, as well as shifting how the burden of proof operates in mergers, and requiring personal user data to be interoperable and portable. They’ve said that common ground could be found on monopoly reform as well, but have expressed reservations about the exact changes proposed in CALERA.
Any legislation that can pass Congress would likely focus on addressing rules governing M&As and increasing the resources available for antitrust enforcement — neither of which would have an immediate impact on the size and scope of Big Tech companies. Shifts in merger law would only have a long-term impact by limiting future potential acquisitions and not retroactively apply to acquisitions already made. Increased resources for antitrust enforcement would probably lead to more cases being filed against Big Tech, but antitrust cases take years to finalize and the five launched last year are unlikely to be fully resolved for several years. There does not appear to be common ground for a Glass-Steagall-like act for the tech sector, which would have a more significant impact on the companies.

In the short term, the growing legal and legislative antitrust push in the United States will only have a limited impact on U.S. competitiveness in the tech industry vis-a-vis China. But in the long term, moves to separate large companies’ business lines or significantly restrict their ability to grow through M&As could ultimately limit the United States’ ability to dominate the international tech market. This would likely aid the global growth of rival Chinese firms and open the door for more non-U.S. competitors in the future. M&As to acquire startups is one way that a large company can quickly scale up a new technology and integrate it into the emerging platform economy. U.S. tech companies also often use such M&As as so-called “acquihires,” where the acquisition is less about the technology and more about a backdoor on hiring talent. A Glass-Steagall-like rule forcing the breakup of the large companies or restricting their ability to operate in future adjacent business lines would have an even greater impact, even if the likelihood of it being implemented through legislation is less likely. If U.S. tech companies’ market share or scope of standards-essential patents declines, so too will the United States’ influence on setting global standards in future emerging technologies, including artificial intelligence and 6G. 

U.S. restrictions on Big Tech would not only aid the European Union’s own crackdowns against the tech sector, but it could also make it easier for European tech companies to emerge and potentially rival the scale and scope of their U.S. counterparts in time. Exacerbated by cultural and language barriers, the fragmented legal and regulatory environment in the European Union has limited the cross-border growth of tech companies in the bloc. The European Union has been trying to remedy this situation through its Digital Single Market policy. Large U.S. companies have the financial power to get around these constraints and have, on a number of occasions, acquired European start-ups. Protecting European tech sovereignty from such acquisitions and stripping down the dominance of U.S. tech companies has become a common refrain in Europe. And any concerted effort by the United States to limit Big Tech’s growth or potential to carry out M&A activity will only aid the European Union.

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