DOJ Letter Ignores Harms Of Anti-Tech Bills And Decades Of U.S. Competition Policy
The Department of Justice’s (DOJ) recent endorsement of the anti-tech American Innovation and Choice Online Act (AICOA) and its House companion ignores the bills’ real-world harms. This letter focused on protecting competitors rather than consumers, while suggesting antitrust should be used as a vehicle to promote a particular ideology, contradicting the White House’s stated competition goals and decades of U.S. competition policy. Politicizing antitrust with ideological goals leads to the kind of legislation that picks winners and losers, which we’re seeing today, undermining the sound economic policies that have powered this country’s innovation and success.
With the DOJ’s ongoing antitrust litigation and investigations against leading technology companies under existing law, it’s surprising the Department has now also chosen to intervene in the legislative process targeting these same companies.
Here’s what you need to know:
President Biden has discussed the need for lower prices on numerous occasions including during last July’s Executive Order on competition and during the State of the Union address. But the DOJ letter overlooks that the anti-tech bills would not fix inflation, but instead raise prices for consumers and small businesses.
Former Treasury Secretary Larry Summers underscores that antitrust as an anti-inflation policy reflects “science denial” and is more likely to raise than lower prices. “The emerging claim that antitrust can combat inflation reflects ‘science denial’. There are many areas like transitory inflation where serious economists differ. Antitrust as an anti-inflation strategy is not one of them.”
— Summers continues: “However, as described, hipster Brandesian antitrust, with which the Admin and its appointees flirt, is more likely to raise than lower prices.”
So-called antitrust reformers in Washington are too focused on corporate size and outdated ideas that punish low prices and embrace higher prices for their preferred cartel, explain FTC Commissioner Noah Joshua Phillips and Former Commissioner Josh D. Wright. “Antitrust laws protect competition. Competition benefits society—and consumers—by spurring innovation, improving quality and lowering prices. Companies and industries rise and fall, but the competitive process ensures that American consumers benefit. That is why antitrust focuses on whether a merger or other business conduct harms consumers. Yet some argue for jettisoning ‘consumer welfare’—the lodestar of U.S. antitrust laws—to promote other interests like protecting less efficient competitors and organized labor and reducing income inequality.”
Digital inflation is low and growth in the tech sector is rapid, yet Sen. Klobuchar’s AICOA would hurt this vital industry, explains Progressive Policy Institute’s economist Michael Mandel. “It can’t be denied: The anti-tech antitrust legislation led by Senator Klobuchar will hurt American consumers and American middle-class jobs, and impede American technological leadership. The digital economy should be a source of pride for Democrats. Digital inflation is low, wage growth in the tech-ecommerce sector is extremely rapid, and digital job creation is strong – especially in pivotal swing states. Instead, if this bill is passed, it will undercut the tech and ecommerce industries – which are vital to our 21st century economy – and give China the edge in leadership and the digital economy.”
Even when endorsing the legislation, the DOJ agreed with bipartisan, bicameral policymakers that the anti-tech bills are still a work in progress.
The DOJ urged Congress to “work to finalize” both bills and would “provide under separate cover additional assistance to ensure that the bills achieve their goals,” writes the DOJ’s Office of the Assistant Attorney General.
Similarly, 13 senators and more than 20 representatives have stated that they are not ready to vote on anti-tech bills, which were rushed out of the Judiciary committees of both chambers without full-committee legislative hearings.
The DOJ letter ignores that the anti-tech bills would undermine U.S. global competitiveness and security.
Anti-tech legislation would potentially put American data in the hands of Chinese rivals, warn 12 former top U.S. national security officials in a joint letter to Congress. “Recent congressional antitrust proposals that target specific American technology firms would degrade critical R&D priorities, allow foreign competitors to displace leaders in the U.S. tech sector both at home and abroad, and potentially put sensitive U.S. data and IP in the hands of Beijing.”
Sen. Klobuchar’s anti-tech legislation would endanger national security and harm America’s global competitiveness, highlights Don’t Break What Works.