Will President Trump go after Silicon Valley, or block the AT&T-Time Warner merger? Teddy Downey, CEO and executive editor of The Capitol Forum, explains how antitrust could look like under Trump.
Donald Trump’s election victory this Tuesday has brought with it a lot of uncertainty in regards to America’s economic and foreign policies, not least when it comes to the incoming administration’s policy on antitrust and competition.
On the one hand, as a candidate Trump ran on a populist message of resisting concentration of economic power, especially when it came to big mergers in media. Trump, for instance, has been clear about his intention to block the AT&T-Time Warner merger if elected president. Earlier this year, he said Amazon founder and CEO Jeff Bezos “has got a huge antitrust problem” and promised to go after Amazon if he becomes president, famously saying: “if I become president, oh, do they have problems. They’re going to have such problems.”
Both these cases were widely perceived to be related to the critical coverage of Trump in the Bezos-owned Washington Post (which Trump claimed was being used by Bezos for “political purposes to save Amazon in terms of taxes and in terms of antitrust”), and on Time Warner’s CNN.
On the other hand, despite the populist tone he adopted in his rallies, the Republican platform was much softer on issues of antitrust and competition. Trump’s transition team also reportedly includes many establishment Republicans strongly opposed to Trump’s populist messages. Moreover, despite Trump’s criticisms of several Silicon Valley firms, billionaire venture capitalist Peter Thiel is not only one of his biggest supporters, but will also reportedly take part in his transition team.
All this raises a lot of questions regarding the Trump administration’s antitrust and competition policy. In order to better assess how antitrust might look like under President Trump, we interviewed Teddy Downey, CEO and executive editor of The Capitol Forum, an investigative news and legal analysis publication that provides information for government and industry decision makers.
Q: What are the changes we can look forward to in America’s antitrust and competition policies, once Trump enters the White House on January 20th?
When it comes to antitrust, people tend to focus on the Federal Trade Commission and the Department of Justice, because that’s where the mergers are reviewed and where the conduct cases come from.
There have been rumors already that in the FTC, Trump could appoint Commissioner Maureen Ohlhausen, who is the only Republican at the FTC right now, to become the chair on an interim basis—and that could happen right away, within the first couple of weeks of the inauguration. It’s not exactly clear what that would change, because there would still be a Democratic majority at the FTC, and so there wouldn’t be a really good way to drive decisions.
You would still need an appointment or two to get the majority back to being in the hands of the new president’s party. That could take several months. A rough timeline would be closer to the middle of fall even of next year, in terms of getting FTC appointees through. That timeline could be accelerated, because Republicans control Congress and maybe Trump wants to make that a priority, but anyway you’re looking at an extended timeframe of getting the votes in the hands of the Republicans at the FTC.
At the DOJ, when it comes to antitrust and big decisions, it could take a while to get some of the lower-down appointees in place, but the Attorney General is typically one of the first and biggest priorities of a new administration, so within a couple of months you’ll have a new AG in place, and that person can really exert a lot of influence over big merger decisions.
So in the DOJ, Trump’s people could have an influence in the first couple of months after inauguration. At the FTC the timeframe might be longer. If you also look at all the other agencies, it is going to be a case by case basis in terms of getting those appointees in.
But I don’t expect competition policy to be nearly as much of a priority in the Trump administration. Under Obama and Clinton there was a lot of talk about competition policy, and having an eye on concentration when rules were going through, and having an agenda that specifically addresses concentration. I don’t think you’ll have that.
What you will have under Trump, if you want to keep a broad definition of competition policy, is more trade policy. WTO and USTR policy will be back in use and very controversial. That is one aspect of competition policy where we see a lot of attention. I think it’s too early to say when it will happen, but it’s a top priority so he’s going have to talk about it right when he takes office.
Q: Last month, Trump said he will block the AT&T-Time Warner deal. Do you think he will block it, or will he let it go through, albeit with some restraints? And does his position on the AT&T-Time Warner merger tell us anything about his position regarding other antitrust issues?
I think it’s fair to say it would be a big surprise if Trump somehow allowed for the AT&T-Time Warner deal to go through.
Once all the Trump people are in, and if he continues to appoint establishment Republicans, there certainly will be an intellectual path to clearing a lot of deals, specifically vertical mergers. However, Trump does seem to have a very personal opposition to concentration of power when it involves big media. So that vertical connection between a big industry player and a big media company seems like something that he is personally interested in addressing.
We talked about this as a kind of revenge-driven antitrust, where you could see him going after the companies that own CNN and NBC, which happen to be these big telecom players. I think it would be hard for the people who work for him not to pursue an aggressive stance against those types of deals. Going after the AT&T-Time Warner deal and litigating it is probably the most likely thing we’re going to see.
I also wouldn’t put it past him going after NBC as part of Comcast, and looking into the practices that we were worried about when that merger was cleared.
I take him at his word. There is a lot of influence that can come down from the president at these very high level decisions, so I think those types of deals are in jeopardy.
However, in the grander scheme of things, certainly the Republican conservative establishment is much more pro-merger, so I think there’s going to be a big wave of mergers, with people thinking they can get their deals done. There will be complications that run up, and uncertainties with how Trump does antitrust: if it is revenge driven, or really skeptical of concentrated power. I think there’s a lot of uncertainty but a lot of optimism from the business community.
Q: Can we say if Trump will be more of a pro-business or a pro-market president?
I don’t know yet. It’s really hard to say what kind of president Trump will be, mainly because he ran with this tension between populism on the one hand—anti big banks, anti mergers, anti big media, anti Silicon Valley—but for his transition team he has picked all of these establishment conservative Republicans, with establishment views, not populist views.
I think it remains to be seen which one will win out, who will actually get appointed, and whether or not there will be tension. Is he going to give up completely on these populist ideas, or make good on some of them? It remains to be seen.
When it comes to some of the things that really go all the way up to the presidential level, I do think he is going to have a strategy there, or some desire to guide or weaponize the antitrust laws to be implemented in a way that he wants. If you’re big media and you want to consolidate, you’re in trouble. If you’re Silicon Valley, from an antitrust standpoint you’re in trouble. Who else is going to be viewed as a problem? I think that remains to be seen.
Q: During the campaign, Trump mentioned on several occasions that when he becomes president, he will go after Amazon, especially in relation to Jeff Bezos’ ownership of the Washington Post. The Obama administration maintained close ties with the big platforms, and refrained from pursuing antitrust cases against them. Will Trump be different?
I do think that he is going to pursue an antitrust agenda that is focused on Silicon Valley. You can already see this, as his Federal Communications Commission transition staffer, Jeffrey Eisenach, has ties to Verizon and was an advocate for breaking up Microsoft into four pieces.
You can see that his transition team is very pro-cable. Maybe not pro-cable from the standpoint of letting them buy a bunch of media companies, but pro-cable in maybe rolling back net neutrality, not having problems with price increases on broadband. The Trump people could design a very proactive agenda targeting Silicon Valley.
Another thing to keep in mind is that Silicon Valley really got behind the Clinton campaign. Google really has had significant ties with the Clinton campaign. Amazon, through Jeff Bezos’ ownership of the Washington Post, was extraordinarily critical of the Trump campaign. I am not saying that’s good or bad, what I am saying is that you’ve got a president who has revenge as a priority and has articulated not just a more personal agenda, but also I think a philosophical concept that big media and who owns it is a really big problem. And they are willing to attack that control with the government tools, the main one being antitrust.
You can see this playing out by going after AT&T-Time Warner and Comcast-NBC Universal, by addressing Facebook’s control of news in their industry, or Google’s influence over news and information in search. If they want to go after Amazon they can go after it in the book market or their marketplace, how they favor or disfavor certain re-sellers, or go after them for their AWS [Amazon Web Services] business.
Silicon Valley is kind of checking two boxes for Trump. One is this personal, visceral opposition to what they’re doing, whether it’s Facebook picking out anti-Trump or Democratic-friendly news and prioritizing that in their feeds. And the same goes for Google. The other is this more philosophical thing with how big business and media is controlled.
So it’s likely that Trump will put people in place who are willing to go after them.
Q: In a recent newsletter, you mentioned that venture capitalist Peter Thiel, who is very much opposed to antitrust and competition regulation, might be a strong voice in the Trump administration. Doesn’t that contradict your assessment that Trump will be aggressive toward Silicon Valley firms?
There’s going to be a conflict. Peter Thiel’s influence is certainly in contrast to the other instinct I talked about. Maybe they won’t go after Facebook, but will go after Google and Amazon.
We’ll have to see if Thiel has the ability to stop the antitrust mechanism that will be set up to go after Silicon Valley. Maybe he can protect Facebook —it’s possible. But once you’ve established this portfolio of ideas of how you’re going to enforce antitrust, you certainly could pick and choose your priorities, but it’s not like Facebook’s practices are that different from Google’s. In many ways, they sort of use the same tools. Also, Thiel was a supporter of Trump, but Facebook certainly wasn’t.
How can Thiel stem the Trump administration’s effort to punish the supporters of Democrats during the presidential election is an open question. I think there’s an overriding effort to target Silicon Valley. Thiel on the margins may be able to help, but can’t the stop the whole effort.
There’s going to be tension between the more populist approach and the revenge-driven approach, and Thiel fits into that. I put Thiel into the establishment Republican bucket, and a lot of establishment conservative antitrust thinking is a very narrow laissez-faire approach. But that just doesn’t line up with what Trump stands for or ran on. So I don’t think the Thiel vision fits well at all with how Trump ran for president. It would be a big surprise if he somehow exerts an outsized influence on the administration.
Q: You mentioned that Trump’s transition team includes many people from the Republican establishment and lobbyists. What does that tell us about Trump’s intentions of fulfilling his campaign promises?
I think you have to assess what the presidency is going to look like by the transition team, because they have a good amount of influence on how the government gets started. On the flip side of this, I don’t think anyone in the Trump campaign really expected that he would win. I think it was a big surprise for them, while the Clinton campaign was very organized and thoughtful about the transition. I think there’s more of an opportunity for a president Trump to decide that he doesn’t agree with where the transition is going.
Obviously, the lobbyists are running the transition, promising things that the Republican establishment said they’ll deliver, like repealing Obamacare. Again, because you have this tension between populist or unorthodox Trump values that aren’t always in alignment with the establishment, it’s possible that the populist instincts, or the unorthodox Trump view of the world, show themselves with appointments down the road.
Another important thing is who he cuts deal with in Congress. There are currently five different factions in Congress: Tea Party Republicans, establishment Republicans, and Trump—all of them with different world views—and on the Democratic side you’ve got the neoliberal left and the populist left. Those five factions all want to pass legislation, and whatever coalition forms could have an influence on how Trump governs.
Disclaimer: The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.