New antitrust committee chairwoman Sen. Amy Klobuchar has introduced sweeping legislation aimed at Congress’s favorite punching bag: “Big Tech.” While some Democrats and Republicans assert that major technology companies have done something wrong, there has actually been little agreement on what that something is.
But one thing is certain: Punitive measures spurred by political malice will not increase competition in the marketplace. Instead, such measures will stifle innovation at a time when digital evolution is critical to our economy and day-to-day life.
In the midst of this global pandemic, employers, teachers, and workers are more reliant on technology than ever before. Protecting consumer access and the market through even-handed and light-touch antitrust enforcement is thus critical. An overzealous approach by the government would be a stark departure from precedent. The consumer welfare standard has been the bedrock of antitrust law for the past four decades. However, Klobuchar’s legislation would be a major step toward putting the federal government at the center of the decision-making process instead of the consumer. The radical proposals in this latest antitrust legislation seek to punish major technology companies, but it will be consumers and small businesses that feel the pain.
A light-touch approach to antitrust enforcement has unleashed the power of American innovation. Companies founded in garages and dorm rooms are now some of our most successful companies. This is not a symptom of suppressed competition but a feature of what can only be accomplished in a lightly regulated marketplace. But this success will not be replicated if a heavy-handed government puts its finger on the scale.
Klobuchar’s legislation would increase the budgets for the Federal Trade Commission and the Department of Justice by $300 million each. Klobuchar claims, “We can’t take on the biggest companies in the world with just Band-Aids and duct tape.” Aside from the laughable claim that the U.S. government is a David battling these major technology Goliaths with only a slingshot, more taxpayer dollars being used to increase the scope and ferocity of government intervention should alarm us all, especially when these organizations themselves can’t agree on how to work together.
Another problematic goal of this legislation is to raise the bar for mergers and acquisitions significantly.
While Klobuchar sounds the alarm that $10 trillion in acquisitions and mergers have taken place since 2008 (remember, big is bad), this number does not tell the whole story. House Judiciary Republicans’ recent “Third Way Report,” put out by Reps. Ken Buck, Matt Gaetz, Andy Biggs, and Doug Collins, no advocates for protecting technology companies, concedes that “of course, many of these deals were either pro-competitive or competitively benign.” Many mergers and acquisitions can also help startup companies reach and benefit more consumers by integrating data and technology that streamlines the delivery of services. Such was the rationale for Uber’s recent acquisition of Drizly, an alcohol delivery service that can now be incorporated into Uber’s food delivery app.
Opening the door to increased government intervention and oversight could cause significant disruptions to the market. It was not long ago that technology companies enjoyed a close relationship with Capitol Hill. Antitrust laws detached from the consumer welfare standard could be set loose to target oil and gas companies in the name of climate change or any industry that falls from favor with D.C. decision-makers.
Klobuchar boils the problem down to this: “Things are too big.” This generic fear of bigness shouldn’t outweigh the enormous consequences of rogue antitrust laws. The digital economy is still in its infancy, and while there are real concerns about issues such as privacy and content moderation, these are issues that can be addressed without taking a wrecking ball to the economy.
Will Yepez is a policy and government affairs associate with the National Taxpayers Union, a nonprofit group dedicated to advocating for taxpayers at all levels of government.