Antitrust Experts Say Internet 'Platform' Market Complicated, Case-by-Case Review Needed
Concerns about internet "platform" concentration should be addressed case by case under antitrust law, said speakers on a Technology Policy Institute panel Thursday. Defining the relevant market is a major challenge, and antitrust agencies should focus on addressing harms to consumers and competition by parties with market power, they said. On AT&T's proposed buy of Time Warner, George Mason University law professor and ex-FTC Commissioner Josh Wright voiced doubts about DOJ's lawsuit, and American Antitrust Institute President Diana Moss disagreed with claims the government hadn't challenged vertical deals in recent decades. She said it had, and settled mostly.
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Some want to regulate platforms and others say leave them alone, but both views are wrong, said Michael Katz, professor emeritus at the University of California, Berkeley's business school and a former top economist at the FCC and DOJ's Antitrust Division. He said it's a mistake to craft policy for platforms because the label is imprecise. "Look at the facts, not the labels," he said. He said companies often considered to be platforms -- such as Amazon, Facebook and Google -- share certain characteristics, including "network effects," economies of scale and scope, and use of "large-scale analytics" or "big data." Enforcers should target exclusionary practices or predatory pricing that make no economic sense other than to harm rivals, he said: "Go after the specific, anti-competitive conduct."
Moss agreed defining platform "digital markets" is difficult, given the complicated, changing internet ecosystem with artificial intelligence, "self-learning algorithms" and other innovations. She said what matters is "concentration in relevant markets." Amazon, Apple, Facebook and Google all offer "slightly different" services and products, she said. She predicted someday, an antitrust case will be aimed at technologies that "fuse data sets together."
Wright favored sticking with a "consumer welfare standard" for judging market behavior. He disagreed with "populist" calls for adding criteria, such as jobs and income distribution, based on concerns about growing concentration and agencies being "asleep at the wheel." Evidence to substantiate the concerns is weak, he said. Wright said the FTC relies too much on the Supreme Court's 1963 Philadelphia National Bank precedent that mergers and acquisitions creating a 30 percent market share are presumptively anti-competitive, shifting the burden to defendants, though he understood its value as a litigation tool.
Antitrust enforcers should keep the consumer welfare standard, agreed Lawrence White, economics professor at New York University's business school: "Anything else is going to lead to a morass." He backed "vigorous merger enforcement," with remedies focused on structural divestitures, including the appropriate buyer, not behavioral conditions.
Asked about AT&T/TW, Wright voiced skepticism about DOJ's case. He said the vast majority of vertical combinations are either pro-competitive or market-neutral, and the few that are anti-competitive generally exhibit certain well-understood elements that he said were missing in DOJ's complaint. Moss said it's a "myth" pushed by AT&T's "propaganda machine" that government didn't bring vertical integration cases for decades. The argument there's "no precedent" for Justice's challenge is "silly," she said. Wright agreed such cases weren't "unprecedented" but said they're somewhat "rare."