The word “competition” has a different meaning in Washington and other regulatory hubs around the world than it does in Silicon Valley.
How it works: The same actions that industry leaders see as part of the natural process of corporate competition—acquiring startups, retaining customers in their existing ecosystems, and attempting to dominate new platforms—are raising alarms among regulators and lawmakers.
Today in Washington Experts tell Axios that leaders often start with the assumption that “big is bad.” They view the size of today’s tech giants—the sheer number of customers, the outsized revenue and profits, and the timeshare and mindshare of products—as a problem in itself.
- “We cannot stand by and do nothing while digital giants… engulf more businesses, engulf ever larger portions of our economy. This is our moment now,” said Sen. Amy Klobuchar, a supporter of a bill that would ban big tech companies from prioritizing their own services, in July.
- But within the industry, companies like Amazon, Apple, Meta, Microsoft, and Google don’t see their size as a problem or a sign that competition is gone. They see their massive size as a resource that gives them access to talent, a broad ability to tackle problems like content moderation, and the freedom to take risks with new technologies—all weapons in the competition they wage against one another.
To solve the problems They believe the massive scale of the technology — including user surveillance, the spread of misinformation, labor abuse in the gig economy, and more — has caused DC critics of the industry to turn in part to America’s old antitrust laws.
- They are the most powerful tool our system gives federal agencies to influence business conduct. Their main goal is to protect competition and correct “market failures”.
- But today’s tech industry’s antitrust battles have also become a proxy war over privacy conflicts, political censorship, protection of minors, and many other grievances about the practices of tech giants.
This is something new in the antitrust world. From the 1970s until recently, US competition policy focused primarily on keeping consumer prices down and ensuring that large corporations did not illegally maintain their monopoly status.
- The Biden administration’s Justice Department and Federal Trade Commission want to change the terms of the competition debate.
- The argument is that consumers would be better served if more tech companies competed on issues like privacy and moderation, and antitrust law is a vehicle for using power to control digital platforms.
- Both the FTC and DOJ have prioritized reevaluating competition laws for the digital age, filing lawsuits against companies for takeovers, and investigating the practices of big tech companies and dealings with other companies.
- Meanwhile, Europe and other countries — where antitrust traditions are very different from those in the US — are aggressively pushing for competition rules, lawsuits and fines.
A big area Where lawmakers and tech leaders speak a different language is in acquisitions.
- Bipartisan lawmakers in both the House and Senate have conducted investigations and introduced legislation aimed at increasing competition by, among other things, prohibiting mergers and acquisitions for technology companies over a certain size.
- Industry advocates say it would kill today’s startup world and nullify innovation.
What you say: “I think we’ve all viewed the tech industry as a force for good for a long time, so it hasn’t been touched. And now we’re dealing with the issues,” Matt Kent, a competition policy advocate with the activist group Public Citizens, told Axios.
- “[Our perspective] “We are entering a new era in antitrust law,” said Kent. “Antitrust law is not a single solution to a problem, but it can often achieve many different policy goals by bringing fairness and an open market that is aware of the changing structure of the economy.”
The other side: “People, especially on Capitol Hill, said, ‘We don’t want to have to prove these companies did anything wrong. We’re just going to skip that step and write new legislation to effectively punish them without having to first prove they were guilty,” said Bruce Hoffman, former head of the FTC’s competition bureau who is now a partner at Cleary, Gottlieb. Steen & Hamilton is opposite Axios.
- Hoffman argues that the legislative approach opens “a huge fundamental gap” with both the Silicon Valley perspective and more traditional views of antitrust law.
- On the one hand, the gap separates “people who say, ‘A big company might be breaking the antitrust laws, but first, let’s find out if they’re actually breaking the laws,'” Hoffman said. “And other people say, ‘Look how big they are. We have to do something about it.'”
What’s next: DC’s efforts to rewrite the rules of tech competition will face two tests in the coming months.
- If it passes the Senate — a big “if” — legislation backed by Klobuchar and allies could significantly alter the industry’s competitive dynamics — for better or worse, depending on which side you ask.
- The FTC has launched a major test of its new doctrine by suing Meta to block its attempted takeover of VR fitness company Within.