The landmark antitrust case against Facebook, filed last week by states and the federal government, is powerful and welcome.
Strong measures to end Facebook’s unfair, anti-competitive behavior were overdue in the United States.
The lawsuit, and another federal antitrust case filed against Google in October, should start a new era of regulation of digital platforms with extraordinary influence over daily life, commerce and democracy.
These platforms’ dominance, opacity and anti-competitive behavior have continued in plain sight for years. Unhindered by oversight or rules affecting traditional advertisers, they stifled new competitors and suffocated established ones, particularly the free press.
Facebook “for many years, continued to engage in a course of anticompetitive conduct with the aim of suppressing, neutralizing, and deterring serious competitive threats,” according to the case filed by the Federal Trade Commission and attorneys general for 46 states including Washington, Guam and the District of Columbia.
In quashing potential rivals, Facebook suppressed competition in the sale of advertising, the case states. That hurts all manner of companies and leads to higher prices for consumers.
The situation demands more than a single lawsuit, however. It also calls for revisions to federal antitrust law, to reverse a decades-long trend toward overly cautious enforcement that’s created a small handful of unassailable winners at great cost to everyone else.
Because digital platforms and their business models are so complex and fast-moving, the U.S. also needs to update its regulatory infrastructure to be more agile and better equipped to examine and monitor these titans.
One promising suggestion is to create a new digital competition authority, with dedicated expertise. Because of limited bandwidth at existing regulatory agencies, the initial push to crack down on these U.S. companies drew heavily on research done by the United Kingdom’s competition authority.
While bold and necessary, the antitrust lawsuit has limitations. It won’t directly address other big Facebook problems, such as the proliferation of false and harmful information it distributes. If the case results in more competition, Facebook will be pressured to improve. But more immediate, direct intervention is still needed …
Legislative reforms and antitrust enforcement are both needed. Those responses are “mutually reinforcing,” as seen during the breakup of the Bell system, said Charlotte Slaiman, an FTC veteran now directing competition policy at Public Knowledge.
“The process of the case brings forward information, highlights the problems in the industry, and that can influence Congress to take up the issue in a broader and more comprehensive fashion,” Slaiman said.
The Facebook case focuses on two key acquisitions, mobile and photo-centric social app Instagram and messaging app WhatsApp. It also calls out unfair restrictions placed on programming interfaces, which other apps need to access Facebook’s platform.
It seeks divestment of Instagram and WhatsApp, requiring prior approval of any future mergers, and prohibiting anticompetitive restrictions on programming interfaces.
Facebook said the government is wrongly seeking a “do over” after previously approving the mergers.
There are legitimate concerns about preserving certainty for companies given government approval to proceed with costly investments. A key issue is whether Facebook lived up to commitments made during the merger review process.
Government must also protect consumers from anti-competitive behavior without causing undue harm to companies and sectors that provide great value to the public and the economy. Because U.S. government has done little to rein in dominant digital platforms, the harms are now clear, as documented by the federal cases, a recent House investigation and regulatory actions in other countries … It is especially welcome that FTC commissioners and attorneys general pursuing the case are a strongly bipartisan group, reflecting widespread concern about Facebook and how it’s harming competitors and the country.
President-elect Joe Biden should ensure that his administration and regulatory appointees enthusiastically support this overdue enforcement regime. He also needs to work with Congress to update antitrust law and improve regulation of digital platforms to preserve competition and prevent further harm.
— The Seattle Times, Dec. 11; Online: https://www.seattletimes.com