DOJ Playing A Dangerous Game By Politicizing Antitrust
Experts agree that the politicization of antitrust could have unintended, harmful consequences for consumers and businesses alike. Beyond these immediate consequences, it has the potential to inflict harm for future companies and consumers as well—altering today’s effective, consumer-driven enforcement framework. As you assess the DOJ’s lawsuit against Google, keep these evidence-based insights in mind:
— Experts across the political spectrum are saying this week’s Department of Justice case is the embodiment of the politicization of antitrust.
— As has long been argued, this very politicization can have wide-reaching negative implications for antitrust enforcement.
Experts across the political spectrum are saying this week’s Department of Justice case is the embodiment of the politicization of antitrust.
The claims made by the DOJ lack proof of consumer harm, the bedrock of antitrust enforcement in the United States, as discussed by the Wall Street Journal Editorial Board. “The government cites the D.C. Circuit Court of Appeals ruling in U.S. v. Microsoft (2001), which held that Microsoft’s practice of bundling its web operating system and browser violated the Sherman Act. Justice says Google uses similar exclusionary practices to maintain its search monopoly. But consumers can easily download other browsers and search engines if they don’t like Google’s, unlike in the 1990s when they had to buy special software or jump through hoops to use an alternative to Microsoft’s. Now most general search engines and web browsers are free. Microsoft’s Bing even pays consumers rewards for using it. Where is the consumer harm?”
As noted by the Bloomberg Editorial Board, the elements of the DOJ case are a “recipe for the kind of incoherent and politicized antitrust doctrine” that previously had a foothold in enforcement. “The problem is that these are not mainly competition issues, and competition law is the wrong instrument for addressing them. Re-engineering it for that purpose is a recipe for the kind of incoherent and politicized antitrust doctrine that prevailed in the U.S. for decades before courts adopted the relatively clear and narrow standard of avoiding harm to consumers… Reformers need to be mindful of what’s at stake, and in less of a hurry to extend antitrust enforcement beyond its proper scope. For the past 50years, U.S. antitrust doctrine has successfully protected both consumers and competition, thereby advancing innovation and economic growth. America’s success in technology is itself a proof of this approach. It shouldn’t be discarded lightly.”
The timing and challenges presented in the DOJ case suggest unnecessary politicization, highlights Bill Baer, the former Assistant Attorney General in charge of the DOJ’s Antitrust Division. “The timing of the case—less than two weeks before the election—invites speculation about the manipulation of law enforcement to serve political ends. And we have seen that movie before. I suspect this likely explains why many state attorneys general chose not to join the case, at least for now. The timing is exquisitely problematic. And unnecessarily so.”
Arguments set forth in the lawsuit mirror those from previous cases—including the Microsoft Internet Explorer case—and will not withstand today’s antitrust framework, notes George Priest of Yale University and the Bork Foundation. “The basic argument of the lawsuit is that Google possesses a monopoly over search engines and search advertising, which it maintains by entering agreements to make its search engine the default on many devices. This resembles one of the claims made 20 years ago against Microsoft’s Internet Explorer. Yet the argument rests on a misconception about the creation and operation of network industries, which will condemn this case—and future ones like it—to failure under sensible interpretations of U.S. antitrust laws.”
The DOJ case is “heavy on the politics, weak on the merits“, according to Ryan Young in National Review. “The classic legal test of monopoly power is whether a company can raise prices while restricting output. Online ad prices went down by more than half from 2009–19, and Google was a major reason why. Meanwhile, prices for print advertisements — which compete with Google for advertising dollars — rose, and in some cases doubled. Monopolists do not cut prices. They raise prices while slashing output, because they have the market power to get away with it. The Justice Department would not have to use fancy phrasing if it had a better case… If the initial complaint is any guide, the Justice Department’s case is weak. But in antitrust law, the merits of a case are not as important as the politics behind it.”
The DOJ case—and the “overbearing” antitrust enforcement it calls for—could harm consumers, as R Street’s Jeffrey Westling spotlights. “To successfully bring this case, the DOJ must prove two difficult elements: First, that general search is a distinct market without competing products like Yelp!, Amazon or Expedia, or even general search rivals such as Bing, DuckDuckGo or Yahoo!, providing meaningful constraints on behavior. Second, that Google’s actions are anticompetitive and the harms from that conduct outweigh significant procompetitive benefits such as more accurate results and easy access to search features. If both elements exist in a given case, then regulators can and should act. However, if we aren’t careful, overbearing antitrust enforcement could stifle further innovation, leaving consumers worse off.”
Google remains highly valued by consumers, reminds Jim Pethokoukis of AEI, and the DOJ allegations against the important company are inherently political. “When the federal government files an antitrust lawsuit against one of America’s most important companies — one valued at a trillion dollars by investors — it’s inherently a political issue as well as a legal one… Odds are most American don’t view Google in [such a] hostile and partisan way. More typically, Americans see Google much as they do Amazon or Apple: companies effectively supplying a product they greatly value. (The companies annually battle for the position as America’s most loved brand.) Indeed, one analysis finds consumers would require compensation of nearly $20,000 a year to forego their use of the Google search engine.”
As has long been argued, this very politicization can have wide-reaching negative implications for antitrust enforcement.
FTC Commissioner Noah Phillips underscores that antitrust legal decisions should not—and are not—used to achieve ulterior motives aside from protecting competition. “American courts have taken welfare maximization as their magnetic north, rejecting attempts to use competition law to achieve or protect ends beyond guarding the competitive process.”
Former FTC Commissioner Terrell McSweeny makes the important distinction between the FTC’s privacy and competition enforcement mandates, saying antitrust analysis should not be leveraged to advance issues unrelated to competition. “Even if data privacy does play a meaningful role in our antitrust analysis, the focus of a merger investigation is always on the effect of the transaction on competition–and thus privacy protection as a quality dimension of non-price competition. I believe it will continue to be important that competition enforcers not use their power over a transaction to exact privacy or data protection concessions unrelated to the underlying competition analysis.”
Antitrust law should not be stretched politically beyond its intended purposes, reminds Former FTC Commissioner Maureen Ohlhausen. “Antitrust law is not designed for, nor intended to, correct a ‘problem’ in the market wholly divorced from the competitive process. In other words, concerns over fairness, consumer privacy, or the protection of small business should be addressed by regulatory actions or consumer protection laws, not antitrust. Using antitrust law to address non-competition factors, which may reduce competition or conflict with each other, reduces certainty and increases the risk of antitrust being used for industrial policy or political purposes.”
ITIF’s Joe Kennedy notes that tech critics’ attacks on bigness “would launch government on an ill-defined mission to shape markets to its liking.” “A number of experts argue for stronger enforcement, especially against mergers. But even they agree that consumer welfare, broadly defined, should remain the focus of debate. In contrast, the neo-Brandeisian attack against bigness in all its forms would launch the government on an ill-defined mission to shape markets to its liking. The result would be a greater shift in antitrust enforcement whenever a new administration assumes power. This would invite more uncertainty and greater partisanship at a time when the nation clearly needs less of each.”