The House Antitrust report spans 449 pages, 30 of which contain recommendations for antitrust reform. However, one of the most telling aspects of the report is not what is in it but what has been left out.
Some written documents are like a woodcut or a paper silhouette: what is left out defines them as much as what is included. So is the case with a recent report on competition in digital markets by the staff of the House Antitrust Subcommittee, which is chaired by Rep. David Cicilline (D-RI).
It might be hard to believe the report is missing anything. After all, the subcommittee under Cicilline’s leadership spent more than a year investigating digital markets, held seven hearings with 38 witnesses, collected nearly 1.3 million documents, interviewed more than 240 market participants, and received 38 written submission from 60 antitrust experts. At the end, the Democratic staff released 449 pages distilling the results of their investigation and offering 30 pages of recommended changes. What could possibly have been left out? It turns out the Cicilline report has two defining absences.
Missing Legal Analysis
The report is primarily a narrative document, not an argumentative one. It gathers and lays out many factual findings but does not apply the law to those facts to reach any legal conclusions. Even the narrative is circumscribed; for example, the report does not describe the existing state of antitrust law. Part V spends 267 pages—more than half the report—describing the business practices of four specific technology companies: Facebook, Google, Amazon, and Apple. (Speaking of things that are missing, where is the description of Microsoft, the second-largest tech company in the world?)
“The absence of legal analysis or even legal background tells us that the staff see this as a political document, not a legal brief.”
The report’s tone often indicates that staff are critical of a particular business practice. Indeed, one would be hard pressed to find in the report even one business practice that staff considers valuable to consumers. For example, Amazon Prime has made free next-day shipping so commonplace that people barely remember that just 10 years ago, standard shipping took six to eight weeks.
Although they seem to disapprove of these companies, the House Judiciary staff does not explain why the Big Tech practices described are or should be illegal. Google offering world-class mapping software for free or Amazon price-matching competitors’ low prices are treated as suspicious even though the consumer benefits are obvious. The report also criticizes Facebook for copying popular competitor features even though that looks like fierce competition to the average customer. Apple defaulting to its own apps on its devices but allowing customers to substitute third-party apps is another practice that many consumers may find convenient even if competitors dislike it. Part II of the report offers some rudimentary economic theory, but the closest the report gets to legal analysis is its repeated recommendations to overrule nearly every existing Supreme Court antitrust precedent.
The absence of legal analysis or even legal background tells us that the staff see this as a political document, not a legal brief. The facts gathered about the four Big Tech companies aren’t primarily intended to make a case against those companies. Instead, the report seeks to make a case against the existing law, but in a subtle way.
The staff is walking a careful line here. Arguing that the companies’ practices violate current law would undercut the report’s calls for radical revisions to that law. But concluding that current law allows disfavored practices would undercut the DOJ’s, the FTC’s, and state attorneys general’s ongoing investigations of Big Tech companies. By leaving out any legal analysis, they can insinuate that current law is insufficient without expressly undercutting existing cases.
Missing a Digital Regulator
Unlike many other recent reports about Big Tech competition issues, the House report contains no mention of a specialized digital regulator. Reports by the Stigler Center, the Shorenstein Center, and the UK’s Competition and Market Authority and a book by Harold Feld of Public Knowledge have proposed a new digital regulator to address competition problems in Big Tech. (I’ve discussed these four proposals at length in a recent chapter, “Does Big Tech Need its Own Regulator?” of the Global Antitrust Institute’s Report on the Digital Economy.)
Yet despite these prominent left-of-center proposals, the Cicilline report doesn’t even contemplate a new regulator. This omission does not appear to be motivated by a fear of dramatic reforms. Indeed, the report contains other controversial and disruptive proposals, such as mandatory structural separations, government mediation of contracts, statutory presumptions in mergers, making it far easier to sue in private antitrust cases, and legislation to override nearly every major Supreme Court antitrust precedent. Several of these proposals are more radical than creating a new regulator.
“Politicians are reluctant to willingly relinquish oversight authority, especially on active and attention-grabbing issues.”
If it isn’t legislative timidness that led the subcommittee staff to omit a popular proposal, what did? I can think of two reasons. First, creating a new agency would probably mean ceding jurisdiction over these companies to a different congressional committee. Given the likely scope and authority of a new digital regulator would likely be under the oversight of the House Energy and Commerce committee. Politicians are reluctant to willingly relinquish oversight authority, especially on active and attention-grabbing issues.
A second reason seems even more plausible: left-of-center antitrust reformers are very vocally divided on whether to create a new agency. Fordham University law professor Zephyr Teachout, a perennial critic of Big Tech, railed against those promoting a digital regulator, pointing out the likelihood that such an agency would be captured by the regulated companies. She specifically noted that “the brilliant Cicilline Report did not adopt this distraction.” Antitrust provocateur Matt Stoller tweeted that “a new digital regulatory agency is a TERRIBLE idea.” Others, such as Sarah Miller, Executive Director of the American Economic Liberties Project, also praised the House report for focusing on other solutions.
I disagree with Teachout, Stoller, and Miller on nearly every competition and tech policy issue but I share their concern about a specialized agency to regulate tech. As I recently discussed at length, the four major proposals for a new regulator have two substantial flaws. First, they fail to identify what exactly such a new agency would specialize in—business models in tech are widely varying and many of the problems identified are not solely issues of four Big Tech companies. Second, as Teachout and Stoller pointed out, regulatory capture is a significant risk. A captured agency could make things worse than doing nothing. In fact, as I argue in my chapter, specialized agencies are particularly vulnerable to capture by the companies they regulate. The House report was wise to take a new regulatory agency off the table.
In conclusion, while I share many of the concerns about what the House antitrust report contains, I find the omissions detailed above particularly interesting. The lack of legal analysis tells us that the Cicilline report is a political document intended to fire up legislative action rather than specific enforcement action against these companies. And omitting any mention of a new, specialized regulator demonstrates that there are certain legislative actions that even hardcore antitrust reformers in the House do not embrace.
Disclosure: Neil Chilson is the senior research fellow for technology and innovation at Stand Together. The funding for Stand Together is contributed by tens of thousands of supporters—about 700 of whom provide the bulk of the support. Learn more about the Stand Together Chamber of Commerce at https://standtogether.org/
