Biden Signals Assault on Big Tech as DOJ Pick Looms
(Bloomberg Businessweek) -- Filling out Joe Biden’s administration was expected to be a contentious process. Every big job would spark a battle between the progressive and centrist camps vying for control of the Democratic Party. It hasn’t turned out that way: For the most part, Biden has managed to navigate intraparty tensions by finding broadly acceptable candidates, such as Secretary of the Treasury Janet Yellen, and to maintain party peace.
But one job looms that can’t elide the progressive-moderate split and carries enormous stakes for the future of Big Tech and American business generally: the Department of Justice’s antitrust chief. Biden’s choice for this role will signal whether his administration is going to try to limit growing corporate consolidation, especially among technology companies, or, as some critics fear, follow the more deferential path of the Obama administration.
“That pick is going to be the most important thing that Biden does on antitrust,” says Daniel Crane, a professor at the University of Michigan Law School.
The president’s appointments to the Federal Trade Commission will be significant as well. Biden plans to nominate Lina Khan, a Columbia University legal scholar and proponent of muscular antitrust enforcement, to serve as a member of the FTC, Politico reported on March 9.
Even before last fall’s landmark antitrust lawsuits against Google and Facebook Inc., brought by Donald Trump’s Justice Department and the Federal Trade Commission, respectively, the question of how aggressively to regulate U.S. corporations had emerged as a major point of contention among Democrats. The biggest fault line is the market power amassed by Amazon, Apple, Facebook, Google, and other marquee tech firms.
Until fairly recently, the size of these companies wasn’t a cause for concern in establishment legal circles, both Democrat or Republican. Since the 1970s, antitrust law has judged anticompetitive behavior mainly by its effect on consumer welfare. Popularized by the libertarian law professor Robert Bork, this approach argues that antitrust law should be concerned only with “price effect”—whether an action lowers consumer prices. By this measure, big isn’t necessarily bad: Amazon may be huge, but its efficiency produces low prices.
Throughout the Obama administration, Democrats tended to share this view. “Under U.S. antitrust law, we don’t punish lawful monopolies,” Renata Hesse, Obama’s last antitrust chief, said in a 2016 speech. “When monopoly profits flow to an entrepreneur because she has made a better product or developed a better service, society still benefits from the competition that produced that better product or service.” This benign outlook on bigness made it easy for officials to cycle, as Hesse did, between working for tech giants (her past clients include Alphabet Inc.’s Google and Amazon.com Inc.) and serving in government. She may soon get another chance. Biden officials have floated her name as a front-runner for the Justice Department’s antitrust job.
Since Obama left office, a new wave of populist reformers has sought to reinvigorate and expand antitrust law in a way that takes direct aim at the tech giants. Rejecting Bork, these reformers embrace former Supreme Court Justice Louis Brandeis, who famously decried “the curse of bigness.” Led by Barry Lynn and the Open Markets Institute, and echoed by liberal politicians such as Senators Elizabeth Warren and Bernie Sanders, the “New Brandeis movement” claims lax antitrust enforcement driven by a narrow consumer welfare approach has allowed monopolies to proliferate across the economy with harmful effects that can’t be measured by price alone.
“We now have a world where antitrust has been narrowed substantially in terms of what it considers,” Jonathan Kanter, a lawyer who represents several companies that sued Big Tech, said at a recent panel discussion at the Center for American Progress. “It’s focused almost singularly on price effect to the exclusion in many instances of competition, innovation, and the effect on our democracy more broadly.”
To reform-minded populists, in other words, the pernicious effects of monopoly power aren’t limited to Google’s domination of the digital ad market or Apple’s steep fees for app developers, but also include Facebook’s role as a vector of misinformation that undermines elections and stokes political violence such as the Jan. 6 insurgency at the U.S. Capitol. And they fault Democratic policymakers as much as their Republican counterparts for producing this state of affairs. “I don’t think there’s any going back to Obama-era-type enforcement,” says Sarah Miller, executive director of the American Economic Liberties Project, which published a scathing report in January documenting what the group claims is the Obama administration’s weak record on antitrust enforcement. “What’s at stake with Biden is how quickly and aggressively we can abandon what I think now is broadly recognized as a failed approach to antitrust.”
To redress these shortcomings, Miller and other reformers want the Biden administration to seek a Google breakup, back congressional efforts to strengthen antitrust laws, reverse some mergers, and split up and police dominant corporations across the economy. They’ll have at least one prominent ally in the White House. On March 5, Biden named Tim Wu, a Columbia law professor and author of The Curse of Bigness: Antitrust in the New Gilded Age, to the National Economic Council. The prominence of Big Tech at the center of the antitrust debate has also made Kanter a candidate for the Justice Department’s antitrust chief, one favored by a number of reform groups. “He’s the strongest, most viable progressive for this position,” says Sean McElwee, co-founder and executive director of the progressive think tank Data for Progress. “His experience in making and winning cases for antitrust enforcement is the key factor. Everyone else has mostly dealt with antitrust from the other side.”
For Biden, this split in the party is new and presents a fork in the road when it comes to setting antitrust policy. “There are very strong disagreements that didn’t exist under Obama that Biden is going to have to resolve,” Crane says.
But the divide among Democrats is only one factor, and it may not be the one that ends up weighing most heavily on Biden’s thinking. After pledging to govern as a unifier, Biden has failed to win much Republican support. This adds significance to his antitrust pick because the issue is one of a dwindling few that could—were he to choose the right sort of candidate—draw the bipartisan support he craves. The Trump Justice Department’s lawsuit against Google drew strong bipartisan approval, as did the FTC’s suit against Facebook. A Data for Progress poll in September found 80% of Democrats and 74% of Republicans concerned about monopoly power, with Republicans even more likely than Democrats to agree that the government should prevent tech giants from dominating the internet.
That skepticism extends to Republicans in Congress. “We’re in a unique moment where there could actually be agreement between a segment of Republicans and progressive Democrats, in that they both want someone who isn’t a shill for Big Tech firms or any other concentrated industry, and who is going to take antitrust enforcement seriously and be aggressive about it,” says Senator Mike Lee of Utah, the top Republican on the Senate Judiciary Antitrust Subcommittee and a leading proponent of stronger action against concentrated market power.
One way Biden’s Justice Department could highlight its commitment to take on tech companies is by expanding the federal case against Google to incorporate a pair of lawsuits brought by coalitions of state attorneys general, one led by Republican Ken Paxton of Texas. Kanter advocated just this approach in October: “Everyone is viewing this as a symphony, not a solo.”
Whether Biden agrees should become clear in the next few weeks, as he moves to fill the Justice Department slot and two open commission seats at the FTC. With multiple government antitrust suits under way, reformers such as Lynn say a reckoning for tech giants could be imminent. “I think there’s an understanding in this White House that we’ve entered a new world,” Lynn says. “But these picks will tell us exactly how Biden is setting the compass.”
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