New antitrust legislation would check the power of tech giants

Arguably, the biggest problem with Big Tech is, well, the bigness. A few giant companies gobble up their competition, own the digital advertising and web hosting markets, control the information ecosystem and sometimes control their own rivals’ distribution. So far, though, these worries haven’t led to regulation.

I spoke with Sen. Amy Klobuchar, D-Minn., who leads the subcommittee on antitrust and has introduced a bill intended to check the power of tech giants. It focuses mostly on acquisitions, aimed at preventing huge companies from buying potential competitors and forcing companies that control more than 50% of a market to prove that an acquisition wouldn’t reduce competition. The following is an edited transcript of our conversation.

Amy Klobuchar: We all know that misinformation has been rampant on social media, and it has greatly set us back. But there’s another much more insidious problem, and that is that any company that was starting to come up and do cool things got bought. And I think maybe you could look at this legislation as basically a reply to Mark Zuckerberg’s email, when he said they’re looking at WhatsApp and Instagram. “These businesses are nascent, but the networks established, the brands are already meaningful, and if they grow to a large scale, they could be very disruptive to us.” Google has 90% market share right now. They are literally taking on a government of a major country, in Australia. When the prime minister says, “Hey, we’re going to start making you guys pay for content,” and they say back, “No, you’re not. We’re going to withdraw from your market and you’ll have no search engine.”

Molly Wood: And a big part of this, it sounds like, is funding these agencies, making sure that the [Federal Trade Commission], which is charged with a lot of this, actually has some teeth?

Klobuchar: Exactly. And the numbers can’t lie. The FTC in 1980 [was] at 1,719 employees; by 2018, down to 1,102. You cannot take on the biggest companies the world has ever known, trillion-dollar companies, with Band-Aids and duct tape. And that’s why Sen. [Chuck] Grassley [R-Iowa] has joined me on a portion of this bill to up the fees on megamergers. So we can put in over $100 million to each agency, so they can actually do their job. And this isn’t just about tech. There’s only two cat-food companies that control most of the market. There’s only two online travel agencies. You think you’re getting other choices, go look at who owns them. And as John Oliver closed in a segment on this, “And if this all makes you want to die, good luck” because the casket market is controlled by three companies, which actually, sadly, now one purchased the other [and] it’s down to two.

Wood: One part of the conversation about Big Tech, specifically, is that some of these companies are so big that they act as gatekeepers for the entire industry. They are both the company and in some cases the distribution network. Would this bill address that at all?

Klobuchar: I guess it would, in that it goes after exclusionary conduct and things that they do to keep their gatekeeper status. It would also, obviously, look at future mergers. But it also looks back, and it makes it easier to look back, allows the FTC to collect industry consolidation data, and then allows them to look back at mergers in an easier way. So there’s many approaches to this, but we just can’t let it be and let it keep going the way it is.

Wood: How would you measure the dominance of companies like this?

Klobuchar: Well, we actually have this in law. I also add a new category, and that is over 50% market share to be a dominant company. And that is a lot. And if you have over 50% market share, and you start purchasing companies, it doesn’t mean there’s anything wrong with it, but at least you got to prove you don’t hurt competition, if it is in your same line of business. We’ve got to really take this anger about what’s happening right now and put it into good use. I’m tired of hearings, frankly, where people are just throwing popcorn at a movie screen and trying to make headlines for the next day. Great, I’m sure we’ll do some of that. But that doesn’t solve it. We have to actually legislate and get things done.

Wood: Well, on that note, how do you feel about the bill’s chances?

Klobuchar: Well, I feel like we’ve just launched it. It couldn’t have gone better. Even The Washington Post, which is a much more moderate editorial board, actually did a very favorable review of the bill this week. And I also know that I already have bipartisan support for portions of it. Sen. Grassley and I carry the funding portion of it. We have got interest on the tech side of it. We’ve got general interest from a number of Republicans about taking on monopolies. So it’s on me to figure out the best way to do this. And it’s not going to be easy. I know that. But some of this may be dividing the bill into portions and getting support and getting that through the committee. Oversight hearings are going to be really important, and just continuing to work with people you don’t always agree with for the betterment of this country. That’s how they got it done in the past.

Wood: When you say that this 50% standard, 50% market share, is that the way to avoid making it harder for all companies to grow bigger? You’re not saying any company has to have its acquisition overseen?

Klobuchar: Oh my goodness, no. First of all, there are a lot of companies, a lot of industries don’t have a company with over 50% market share. Then, No. 2, it would have to be in their same area, where the product is in their same market share. That is an issue about whether or not that applies. Third, all it would do is shift the burden. It doesn’t mean that the merger is thrown out, it just means the agency is going to look at it like they do right now. And it’s just a burden shift that might easily be allowed. There just has to be some kind of check on balance on this or we’re literally in the middle of the Gilded Age of our century, and we’re not doing anything about it. And then we throw our hands up in the air and wonder why is there all this misinformation on vaccines? Why can’t we have more choices when it comes to pharmaceuticals? Why are the prices so high? There’s been major consolidation in that market. How come prices for seed are so high for our farmers? Cable rates — let me, don’t get me started on that. They promised something in one of those major mergers, and it hasn’t come true. So you should be able to look back at what they promised and figure out what do we need to do to change that.

Related links: More insight from Molly Wood

We asked the Silicon Valley Leadership Group, a tech advocacy group, for comment. It said it believes existing antitrust law is sufficient to prevent collusion or monopolies.

Interestingly, Sen. Klobuchar is kind of a giant antitrust nerd, it turns out. She has a book coming out in April called “Antitrust: Taking on Monopoly Power From the Gilded Age to the Digital Age.” Who knew? Here’s more reading about this proposal, including some specifics on the bill from The Washington Post, which also notes that the tech industry spent roughly $65 million on lobbying last year alone. And let’s be real, that is a drop in the bucket for them.

But you heard Sen. Klobuchar mention Australia. The [European Union] has forced dramatic change on the tech industry with its privacy regulations, the GDPR, and it’s possible that true regulation will come from outside the U.S. I know there’s bipartisan support for cracking down on Big Tech, but I’m still skeptical there will be agreement on core places to start. In fact, a Forbes piece notes that the U.S. actually sided with Google and Facebook in Australia on the question of whether the giants should pay news publishers when they link to their content. But Australia is pressing on, and Forbes points out that tech giants are starting to take it seriously. Even if the U.S. can’t govern, there are lots of other fish in the sea happy to take a bite out of the whales.

Also, The New York Times reported Wednesday that Facebook may be trying to build a competitor to Clubhouse, just like it ripped off Stories from Snapchat, tried to copy TikTok with Reels and has absorbed all kinds of other potential competition through copying, which I guess could be kind of a loophole in this antitrust situation. Which is, what about when the companies are big enough to build a clone of every possible competitor that comes along? On the other hand, no one likes Reels. So maybe that’s how competition works.