FTC’s Phillips Opposes Antitrust Exemption for Journalism Outlets

"I'm a believer in competition so I don't think legislative carve-outs from our competition laws are generally a good idea,” Phillips said after a Computer and Communications Industry Association event in Washington.

Klobuchar recently told us the bill is gaining “more and more” momentum in both chambers. She’s considering packaging it with other antitrust proposals. Kennedy told us Klobuchar should push for the Senate Judiciary Committee to consider the bill at a hearing. Republicans have made similar calls during recent markups for major pieces of antitrust legislation to get hearings (see 2201200066). Klobuchar noted the Senate Antitrust Subcommittee already had a "very extensive" hearing on the journalism bill (see 2202020068), and Kennedy was “invited to it."

“She's got control of the bill,” said Kennedy, discussing the possibility for a full committee hearing. “It's her call, but you're not going to get people to vote for something if you don't let them have a chance to offer input.”

The News Media Alliance welcomed introduction of a similar bill in Canada Tuesday. The Online News Act would require dominant online platforms to compensate news publishers for content use. “The last few years have demonstrated the international resolve to stand up to big tech, who impose the rules and reap the benefits online, and protect high-quality journalism,” said General Counsel Danielle Coffey, noting efforts in the EU and Australia.

Progressive antitrust activists and Democratic leaders at the FTC and other agencies “exist in the broader orbit” of Sen. Elizabeth Warren, D-Mass., Phillips said during his prepared remarks Tuesday. “Short-term policy changes can have negative consequences that are unintended and unanticipated,” he said.

The Biden administration assumes the agency has the power to replace more than 130 years of antitrust law precedent with regulations promulgated by a bare majority of FTC commissioners, he said. Phillips warned against Chair Lina Khan’s “merger control” policies, which he said kill incentives for startups to be acquired. “This ecosystem relies substantially on exit through acquisition because venture capital is a primary source of financing for early stage startups bringing their innovations to market,” he said: Policymakers should be making it “more attractive” for investors, not less.

Antitrust has never deferred to the venture capitalist model, or any particular business model, said American Antitrust Institute President Diana Moss. Nascent competitors “pose innovative threats,” she said, describing herself as center-left. “They are the firms that keep the incumbents on their toes” and force them to innovate: “The acquisition of nascent rivals poses particularly serious competition concerns.” Antitrust law is due for a “refresh,” but it shouldn’t be dealing in carve-outs or treating any particular phenomenon differently, she added.

There isn't irregular market concentration of power, said Aurelien Portuese, Information Technology and Innovation Foundation director-antitrust and innovation policy, citing 2002-2017 Census Bureau data. The data shows “only 4% of the industries are considered to be highly concentrated,” he said. That number decreased from 10% in that time period, he said.

University of Pennsylvania Law School professor Christopher Yoo backed Phillips’ comments about exit strategy. During the dot com bubble, initial public offering was the goal, and acquisition was the secondary prize, he said. That’s not true anymore, he said: Cutting off options in the exit market changes the economics and expected value of companies.