ICYMI: Former DOJ, White House, & FTC Economists Express Deep Concern With Proposed Package of Anti-Tech Legislation
Last month a panel of five Berkeley professors–each a former Chief Economist–raised deep concerns with Congress’s anti-tech legislation.
Moderated by D. Daniel Sokol, Carolyn Craig Franklin Chair in Law and Business, the panel discussion included:
— Professor Carl Shapiro, who previously served as Chief Economist at the DOJ and member of the Council of Economic Advisors under President Barack Obama
— Professor Michael Katz, who served as Chief Economist at both the FCC and DOJ under Presidents Bill Clinton and George W. Bush, respectively
— Professor Joseph Farrell, who served as Chief Economist at the DOJ, FTC, and FCC under the Obama and Clinton administrations
— Professor Daniel Rubinfeld, who served as Chief Economist at the DOJ under President Clinton
— Professor Richard Gilbert, who served as Chief Economist at the DOJ under President Clinton
— Anti-tech legislation ignores reality and its broad language will present significant challenges with implementation.
— Bright-line rules do not advance antitrust laws or promote more competition.
— Antitrust should not be used to address the policy issues like privacy and content.
Anti-tech legislation ignores reality and its broad language will present significant challenges with implementation.
“[B]ill drafters have no clue what policies would mean in practice,” explains Professor Michael Katz. “I think [anti-tech] bills are disturbing sort of two broad levels, one that the targeting is not actually based on what I would think economics says are the things that matter, so again, looking at absolute size, as opposed to something like market share. I think that’s a big problem. And then that they think of themselves as highly prescriptive but as other people have said, [the bills] are calling for policies that, frankly, the bill drafters have no clue what those policies would mean in practice, and I think more problematically neither does anybody else.
— Professor Katz noted that the bill’s framework “seems crazy” and untethered to economic reality: “You can have broad principles that then have different implications for different industries. I certainly think, for example, in doing antitrust analysis, you should take into account the presence of network effects but you should look at any industry that has them. It just seems crazy to do these things like, for example, saying that a law applies [to a certain company] if your corporate parent has a certain dollar revenue regardless of whether those revenues are in the market that is issuing the case or somewhere else.”
The proposed legislation faces “significant obstacles,” including how to implement interoperability and data portability effectively, notes Professor Richard Gilbert. “Asking me what my favorite bill is in all these different proposals is a little bit like asking what is my favorite flavor of COVID-19. I think they all have some issues. They span a very wide range; from bills that pretty much stay within existing antitrust law but change presumptions, all the way to bills that really bring antitrust into areas it has not been before. For example, the Access Act, which mandates interoperability and data portability. Now that is a great objective and I applaud the goal of that act. What it doesn’t do is it doesn’t tell us how we actually implement interoperability and data portability, those are very significant obstacles that need a lot of design, a lot of thought. And that’s an area where I think some sort of intervention could be productive to help bring about that kind of change. But simply writing a bill that says ‘we’re going to have data interoperability,’ I don’t think that does the trick.”
The proposed legislation “fail[s] to appreciate the complexities of the products involved and how they’re constantly evolving,” underscores Professor Katz. “I think the bills just across the board fail to appreciate the complexity of the products involved and how they’re constantly evolving.”
Bright-line rules do not advance antitrust laws or promote more competition.
Bright-line rules exemplify the Neo-Brandesian push to “significantly reduce the role of economics,” states Professor Carl Shapiro. “I think it’s not a coincidence that Neo-Brandeisians today both want to significantly reduce the role of economists and they like to attack economists, and at the same time, they call for various per se bright-line rules.”
The proposed legislation “prohibits discrimination and self preferencing without saying exactly what that means,” notes Professor Gilbert. “An example is the American Innovation and Online Choice Act which prohibits discrimination and self preferencing without saying exactly what that means. I think the interpretation can effectively be a public utility-style regulation which really is a per se rule about how different customers can be treated or different business partners can be treated. I find it surprising that the DOJ came out and supported that rule.”
AICOA risks “moving the needle too far” and may enshrine harmful rulings like those in the Vons Grocery and Brown Shoe cases, argues Professor Richard Gilbert (something he has also noted previously.) “Because antitrust and antitrust statutes are very broad, they’re open to a lot of interpretation but presumptions are very important. Bills that change presumptions, their objective can be to move the needle a little bit in ways that can really be productive. I mean, I think there is a view that merger enforcement could be invigorated productively, but there is a risk that they’ll wind up bringing us back to the days of Vons Grocery and Brown Shoe, which might be moving the needle too far.”
Antitrust should not be used to address the policy issues like privacy and content.
Pushing antitrust-style laws to address problems like privacy and disinformation is like “sweep[ing] the problem under the rug” and it would not solve the problem, warns Professor Katz. “There’s some areas where I think we need regulation because they are outside of antitrust and there’s no reason to think that promoting competition will solve the problems. What I worry about, though, is a bunch of the calls for regulation are: “well, it was too hard to win an antitrust case so let’s just make it regulation.” I think that’s the wrong reason to do it. I think we need to reform antitrust rather than, say, we can somehow sweep the problems under the rug by calling it regulation.”