With public attention focused on the negative powers of Google, Apple and other Big Tech companies, the Department of Justice is telegraphing the road it’s likely going to take to break up the giants.
“The United States has a long history of trustbusting,” said U.S. Assistant Attorney General Makan Delrahim in a speech Tuesday at the Antitrust New Frontiers Conference in Tel Aviv, Israel.
“Early cases against titans of industry offer valuable lessons for today’s antitrust enforcers.”
“We already have in our possession the tools we need to enforce the antitrust laws in cases involving digital technologies. U.S. antitrust law is flexible enough to be applied to markets old and new.
“Those who say we need new or amended antitrust laws to address monopoly concerns should look to history and take heart. It turns out American concerns about monopoly are older than the Constitution itself.”
Delrahim explained that companies don’t usually violate antitrust laws “for merely exercising legitimately gained market power.”
“But even if a company achieves monopoly position through legitimate means, it cannot take actions that do not advance plausible business goals but rather are designed to make it harder for competitors to catch up. In some other contexts, we have referred to this concept as the ‘no economic sense test.’ That test inquires into whether a monopolist’s conduct would make no economic sense but for its tendency to eliminate or lessen competition.”
Delrahim noted that in order to discern what conduct is anticompetitive and thus unlawful, the Antitrust Division has to work hard in becoming expert on the commercial realities of the digital economy.
“Broadly speaking, in some digital markets, the competition is for user attention or clicks,” he explained. “If we see the commercial dynamics of internet search, for example, in terms of the Yellow Pages that were delivered to our doors a generation ago, we cannot properly assess practices and transactions that create, enhance, or entrench market power – and in some cases monopoly power.
“Like the old monopolies, firms operating in digital markets are typically built on proprietary technology. The most successful ones seek to build and leverage networks that drive down costs while amassing a large number of customers. Eventually, the more customers a platform has, the more valuable it may be for each individual user. Economists would refer to this phenomenon as an example of network effects.”
Delrahim said: “Clever positioning should not obscure what is otherwise ordinary evidence of an antitrust violation. Where a company has market power, enforcers should be circumspect about conduct that does not plausibly advance a legitimate business objective and transactions that eliminate competition. Depending on the commercial realities of a given market, enforcers may uncover facts that support taking a longer-than-usual view of entry.”
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