What is antitrust and can it break up ‘Big Tech’?

20 Jun 2019

Image: alexeynovikov/Depositphotos

Antitrust laws are being lauded as the sword that could come down hard on tech goliaths such as Facebook and Amazon. Yet what are they, and are they all they’re cracked up to be?

US senator Elizabeth Warren has had ‘Big Tech’ in her crosshairs since early in her 2020 presidential campaign, and the most potentially explosive weapon in her arsenal are laws that have been on the books since the 19th century: antitrust legislation.

“I believe the central question in America today is who the government works for,” she begins in an interview with The American Prospect. “Is it just going to work for the rich and the powerful, or is it going to work for everyone else? Antitrust cuts right to the heart of that.”

Big Tech loves to move fast and break things, as was once Facebook’s motto. These firms – Google, Amazon, Facebook and Apple – have been, for years, scaling and scaling into the stratosphere, past the stars, like Icarus. Will antitrust be what brings them back down to Earth?

What is antitrust?

Antitrust law has existed for a long time, with the first restrictions being enacted in the US in the 19th century. It’s designed to ensure companies don’t become monopolies, don’t stifle competitiveness – which many economists believe is necessary for a well-functioning economy – and don’t leverage that position to drive up prices, which hurts consumers.

‘Big Tech are so big that any of their platform misbehaviours have serious consequences on society’

Versions of antitrust laws, also called competition laws, exist in most jurisdictions including the EU, the UK and the US. All have different enforcers – the EU Commission for Competition, the UK Competition and Markets Authority, and the Antitrust Division of the US Department of Justice respectively.

Private companies can also, should they want to, sue other companies for anticompetitive behaviour – however, they would have to absorb the legal costs themselves, as opposed to them being absorbed by these governing bodies.

The cornerstone of the US law is the Sherman Antitrust Act of 1890, which Karl Foster, legal director with Blake Morgan, tells me has been applied to a number of different massive organisations over the years. One notable application was to Standard Oil, a Rockefeller company that had an unhealthy monopoly on oil in the early 20th century and was reported to have frequently engaged in anticompetitive conduct. For its sins, the US supreme court broke the company up into 36 smaller firms such as Exxon and Mobil (the two of which have since merged). The Sherman Act has also been applied to IBM in the 1970s and then AT&T in the 1980s.

Microsoft’s woes

In 1999, Simon Latham tells me, Microsoft came under fire for its pre-installed software and effects on its competitors in what became a “hard-fought battle”. Latham is head of antitrust and competition at UK litigation funder sam Augusta Ventures. He points out that had Microsoft behaved too anticompetitively, it may have prevented people from using Google browsers and the search engine may not be what it is today, however you may feel about that.

The case proved to be long, drawn out, highly public and, overall, highly embarrassing for Microsoft and its co-founder, Bill Gates. According to Bloomberg, footage of his depositions showed him barbing at investigators and twisting their words ad nauseam to avoid giving straight answers.

Microsoft was initially ordered by a federal judge to be split in two. It successfully appealed the decision, but nevertheless existed for years under intense supervision. Hence, it is now one of the only big tech companies not currently under the microscope.

A social and moral imperative

The reasons for calling for Big Tech to be broken up aren’t isolated to legal or economic, either. Many have also noted that the companies have gotten so large that their actions send shockwaves through our society.

Dr Zoetanya Sujon is a senior lecturer for communications and media, and acting programme director at the London College of Communication at University of the Arts London. Her work frequently addresses the relationship between emerging technologies and media practices, and the possible sociopolitical implications therein.

“Big tech – specifically Google, Amazon, Facebook and Apple – are so big that any of their platform misbehaviours have serious consequences on society,” Sujon explains. “They all make public promises about privacy, technological solutionism and innovation, but their size and economic power means no one can make them accountable for the consequences of their actions.”

She has particular concerns about Facebook, and she is not alone – Facebook co-founder Chris Hughes wrote in a searing New York Times op-ed last month that the company had ballooned into a behemoth that threatens democracy and has unfettered and unprecedented control over global communication, as most notably evidenced by the infamous Cambridge Analytica scandal.

“Following [this], Mark Zuckerberg refused to attend investigatory sessions with UK parliament – an act officially considered to demonstrate contempt for national regulation,” says Sujon.

‘The principle of getting large companies to behave appropriately is the right sentiment’

Sujon thinks the only way to see any significant inroads be made in Facebook’s regulation is to take it out of Zuckerberg’s hands. “Breaking up Facebook’s platform might make it more possible to regulate and to ensure more honest transparency.”

Will it actually come to pass?

Sujon would ideally like to see major tech firms such as Facebook and Amazon become not-for-profits, yet she concedes that this is unlikely in the current market.

Foster, meanwhile, points out the potential difficulty in established wrongdoing. “As a great deal of the value of tech is centred on data that is often freely given, it may be difficult to prove the harm as this model does not fit into the traditional analysis, and theoretical harm or restriction of theoretical competition is difficult to prove.”

Yet by the looks of it, Foster continues, companies such as Amazon are already bracing themselves to ward off attempts to break them up. “[Amazon] appears to be lining up a defence, which the others seem to be rallying around, around the concept of consumer harm.

“They argue that consumers, by using Amazon, achieve prices for the products that are lower than they would get otherwise, so by breaking up Amazon the consumer would be paying a higher price and therefore causing greater harm to the consumer than the status quo. Traditionally, antitrust has been focused on pricing and consumer harm.”

Not to mention, he adds, that Big Tech is incredibly well resourced and has extensive lobbying support. Also, consumers enjoy the benefits it brings, which can garner their sympathies.

Latham points out that, ultimately, determining what could be defined as anticompetitive behaviour isn’t an exact science. “It’s a very challenging and nuanced calculation in terms of identifying the size of the market, or what the relevant market is; the effect on consumers versus the effect on competitors.

“I can’t necessarily say that they have always got it right but, that being said, the principle of getting large companies to behave appropriately is the right sentiment.”

These companies, as it seems, aren’t as invincible as their figureheads may believe and, if history is anything to go by, they could find themselves being forced to get their behaviour in line.

Street signage board with Facebook inscription. Image: alexeynovikov/Depositphotos

Eva Short was a journalist at Silicon Republic