On Tuesday, 47 attorneys general of various US states and territories confirmed their participation in a New York-led antitrust investigation of Facebook.
In a statement, New York Attorney General Letitia James noted, “Facebook may have put consumer data at risk, reduced the quality of consumers’ choices, and increased the price of advertising.”
Innovation in the technology sector moves quickly these days, faster than regulators can often handle. This makes it difficult to define the market and competitors within that market.
Years ago, people feared the growing power of MySpace, Yahoo, and others. These were the “tech giants” of the early 2000s. But these seemingly invincible companies had one serious enemy: time. New innovators created better, more creative products that served consumers better, and they made it to the top.
In Mercatus Center legal expert Jennifer Huddleston’s recent statement for the record to the US House Judiciary Committee’s Subcommittee on Antitrust, Commercial, and Administrative Law, she argued three main points regulators should consider when determining if antitrust is the appropriate tool to handle concerns about technology:
- “The dynamic nature of the technology industry makes it difficult to utilize traditional antitrust tools;”
- “The focus for antitrust should remain on consumer welfare;”
- “There is no guarantee that breaking up technology giants would resolve other technology-related concerns, such as issues surrounding data privacy, and it might even exacerbate these concerns.”
She also commented on the update today as the New York investigation developed:
"As technology continues to evolve and change, sometimes the best competition comes from unexpected sources and unpredicted innovations. Competitors to Facebook, Google, and others will likely emerge. The focus in these debates should remain on consumer welfare or per se anti-competitive behavior rather than broader policy concerns like data privacy for which antitrust is not an appropriate tool."
Why would antitrust not be an appropriate tool for policy concerns? Huddleston addresses this with Mercatus innovation scholar Adam Thierer in a Bridge series. The pair note that a case against Facebook will likely take over a decade to settle, and the lawsuit may never reach a “practical remedy.” They cite past cases against IBM and Microsoft that took 13 and 11 years respectively. In both cases, the “remedies” issued were insignificant with the ever-increasing pace of technological change as new technological powerhouses emerged.
In the end, the court and regulatory agencies at both the federal and state levels, along with the company attorneys, spent a lot of money, time, and regulatory capital on an epic amount of paperwork and an “irrelevant” remedy.
While these investigations into Facebook, Google, and other big tech companies heat up, we must remember the lessons of our old MySpace and Yahoo accounts. Just as before, new, better innovations are likely on the horizon. As Huddleston suggests, the focus for any antitrust cases should remain on consumer welfare and anti-competitive behavior—not as a public policy magic bullet for solving concerns about data privacy.
Photo by Drew Angerer