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How can antitrust lawsuits against Big Tech succeed?

Ailan Evans, DCNF

  • Several major antitrust lawsuits have been filed against Big Tech since October 2020, with three complaints dismissed since May.
  • “Judicial activism has essentially rewritten antitrust laws like the Sherman Antitrust Act and imposed burdens on these plaintiffs that are not actually in the laws themselves. That’s the problem,” Mike Davis, president of the Internet Accountability Project, told the Daily Caller News Foundation.
  • New legislation could make it easier to prove anticompetitive conduct and monopoly power, experts say.
  • Antitrust enforcement agencies need to be better equipped to take on Big Tech in court, and need to be more aggressive in enforcing the law, experts argue.

Recent antitrust lawsuits against major tech companies such as Facebook, Google and Amazon have attracted bipartisan support but have so far failed to achieve results, with three complaints dismissed since May.

The Federal Trade Commission’s (FTC) complaint against Facebook alleging a monopoly in personal social networking, along with a complaint filed by 48 state attorneys general, was dismissed with leave to amend in June, while an antitrust suit alleging Google used its dominance in search results to acquire an illegal digital advertising monopoly was dismissed with leave to amend in May.

“Judicial activism has essentially rewritten antitrust laws like the Sherman Antitrust Act and imposed burdens on these plaintiffs that are not actually in the laws themselves. That’s the problem,” Mike Davis, president of the Internet Accountability Project, told the Daily Caller News Foundation.

In all three recent dismissals, judges ruled the plaintiffs did not sufficiently define the markets in which the tech giants possessed monopoly power. District Judge Beth Labson Freeman agreed with Google’s argument that “plaintiffs fail to adequately plead a single relevant product market,” while District Judge James Boasberg ruled the FTC, by failing to demonstrate the market in which Facebook operated, could not demonstrate Facebook’s market share.

Specifically, Boasberg argued the market in which Facebook was alleged to have a monopoly, personal social networking (PSN), was not adequately defined.

“PSN services are free to use, and the exact metes and bounds of what even constitutes a PSN service — i.e., which features of a company’s mobile app or website are included in that definition and which are excluded — are hardly crystal clear,” Boasberg wrote. “In this unusual context, the FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague “60%-plus” assertion too speculative and conclusory to go forward.”

Boasberg also ruled Facebook’s practice of preventing competitors from interoperating with its software was lawful as forcing companies to cooperate with their competition would be imposing a “duty to deal,” or unlawful obligation to help competitors, on tech companies.

Boasberg argued such impositions “would hinder, rather than advance, consumer welfare,” endorsing a philosophy of antitrust law known as the consumer welfare standard. The consumer welfare standard states that courts should focus on the effects of alleged monopolistic practices on consumers, rather than competitors, to gauge whether a company’s actions are unlawful, according to the International Center for Law and Economics.

Some antitrust experts argue that narrow judicial interpretations of antitrust law have made it difficult for cases alleging anticompetitive practices by Big Tech to succeed, with these recent rulings serving as evidence.

“Judges have warped the laws in ways that make them very difficult to enforce, so aside from putting significant amounts of work into defining markets, enforcers should hope that the judge they get in the case didn’t wake up in a bad mood,” Matt Stoller, director of research at the American Economic Liberties Project, told the Daily Caller News Foundation.

“The problem isn’t partisan,” Stoller said. “Populist Democrats like [Rhode Island Rep.] David Cicilline and [Washington Rep.] Pramila Jayapal agree with conservatives like [Colorado Rep.] Ken Buck, [Florida Rep.] Matt Gaetz, and [Missouri Sen.] Josh Hawley on the need to rein in Big Tech.”

The dismissals are setbacks to a widespread antitrust effort beginning in October 2020, following a 15-month investigation by the House Judiciary Committee into monopolistic practices of Apple, Amazon, Facebook and Google, in which enforcement agencies and state attorneys general filed several antitrust lawsuits against the tech giants.

“Our existing statutes can deal with these issues, but we’ve had tepid interpretations and enforcement actions,” Rachel Bovard, senior director of policy at the Conservative Partnership Institute, told the DCNF. “In some of these recent cases, the state attorneys general are showing some creativity.”

Google currently faces four antitrust complaints. A Department of Justice lawsuit filed in October 2020 alleged the company unlawfully maintained monopolies in online search and search advertising, while a December 2020 complaint led by Texas Attorney General Ken Paxton alleged that the company attempted to monopolize the online-display advertising market.

New York Attorney General Letitia James led 38 state attorneys general in a December 2020 complaint targeting Google’s manipulation of online search results. The newest suit, filed by 36 state attorneys general on Wednesday and led by Utah Attorney General Sean Reyes, alleged anticompetitive practices by Google in its Play Store.

Ohio Attorney General Dave Yost also filed a complaint in June asking for Google to be regulated as a public utility. District of Columbia Attorney General Karl Racine filed a complaint in May alleging Amazon abused its monopoly position in the online retail market to raise prices above competitive levels.

Facebook was recently the defendant in two December 2020 antitrust lawsuits, one filed by the Federal Trade Commission (FTC) and the other by 48 state attorneys general, that targeted the company’s practices of acquiring smaller competitors and preventing other platforms from operating with its software.

Despite the number of legal challenges to Big Tech, the decision in the Facebook case suggests that litigation alone may be insufficient without new enforcement strategies and antitrust law reform.

“While we shouldn’t upend the law, we should have more statutory clarity in defining the markets in which these tech companies operate,” Bovard told the DCNF. “But enforcers still need to put their backs into it when demonstrating these new markets.”

Bovard pointed to the complaint filed July 5 by Utah Attorney General Sean Reyes that attempts to avoid the pitfalls of the Facebook suit by claiming Google holds a monopoly in “Android app distribution”, a market that is easier to define and in which market share can be more easily demonstrated.

Other experts and antitrust advocates have argued new legislation is necessary for antitrust cases to succeed.

“It’s evident that Congress needs to step in and rewrite antitrust laws across the board,” Stoller wrote in his Substack. “That’s not so much to change the law as to bring it back to where it was before 40 years of case law turned judges into pro-monopoly advocates.”

Many lawmakers agreed; following the Facebook decisions, Florida Republican Rep. Matt Gaetz and Washington Democrat Rep. Pramila Jayapal each called for legislation breaking up Big Tech.

“Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct,” Colorado Republican Rep. Ken Buck tweeted in response to the Facebook decisions.

“The six bills that passed under the House Judiciary Committee would fix a lot of these problems and go after Big Tech’s market abuses,” Davis told the DCNF.

The ACCESS Act, one of the six bills Buck helped introduce in June, could avoid the “duty to deal” problem by “imposing data portability and interoperability requirements on covered platforms,” according to Mark MacCarthy, Senior Fellow at the Brookings Institute, writing in a blog post.

“The court’s decision to dismiss the FTC’s Facebook complaint indicates that Congress cannot rely on current antitrust law to do the work of bringing the tech giants under control,” MacCarthy argued.

Ohio Rep. Jim Jordan’s antitrust agenda unveiled last week took a different approach, focusing on expediting antitrust litigation and consolidating enforcement power in the Justice Department rather than the FTC.

Republican Sens. Mike Lee and Chuck Grassley proposed a bill in June that would presume a company was engaging in anticompetitive conduct if it merged with another company to achieve a market share above 33%. It would be incumbent on the merging parties to prove they were acting lawfully.

Bovard and Davis also argued enforcement agencies were not equipped to take on Big Tech in court.

“We need to make sure our federal antitrust enforcement agencies have the resources to do their job,” Davis told the DCNF.

“We can’t put the onus on the consumers to bring lawsuits against Big Tech. Who has the resources to fight them in court? They’re trillion-dollar monopolists,” Davis told the DCNF.

The FTC’s budget for 2021 was roughly $350 million; for reference, Google posted a revenue of $56.9 billion in the fourth quarter of 2020 alone.

“Antitrust isn’t regulatory, it’s law enforcement,” Bovard told the DCNF. “And the question is, do we want our agencies to be able to enforce the laws on the books?”

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Daily Caller News Foundation

Founded by Tucker Carlson, a 25-year veteran of print and broadcast media, and Neil Patel, former chief policy adviser to Vice President Dick Cheney, The Daily Caller News Foundation is a 501(c)(3) non-profit providing original investigative reporting from a team of professional reporters that operates for the public benefit.

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