Opinion

The US was clearly unhappy when it had conducted a long investigation into digital services taxes imposed by Austria, India, Italy, Spain, Turkey, and the UK, stating that they are against tech companies like Apple, Amazon, Google, and Facebook. Understandably, the US would like to protect their big companies’ interests in global business.

But, there’s every sign that the business models of these big companies are under pressure even within the US. It’s not limited to Mark Zuckerberg or Sundar Pichai’s testimonies. In mid-June, US President Joe Biden appointed 32-year-old Lina Khan, an Associate Professor of Law at Columbia Law School, as a commissioner at the Federal Trade Commission (FTC).

In a rare moment of bipartisanship, 48 Democrats and 21 Republicans supported her confirmation! Senator Elizabeth Warren of Massachusetts who ran on breaking up Big Tech in her 2020 presidential campaign, described Khan’s appointment as “tremendous news.” And Financial Times exclaimed “Lina Khan, the New Antitrust Chief taking on Big Tech!”

In the late 19th century, a handful of companies, or ‘trusts’, owned key parts of the infrastructure like railroads of the US. The Clayton Antitrust Act, passed in 1914 — as an amendment of The Sherman Antitrust Act of 1890 — prohibits anticompetitive mergers, predatory and discriminatory pricing, and other forms of unethical corporate behaviour.

In a 2017 paper in the Antitrust Law Journal, Eric Posner of the University of Chicago and Fiona Scott Morton and Glen Weyl of Yale University contended that “the concentration of markets through large institutional investors is the major new antitrust challenge of our time.”

Well, in end-June, Judge James E Boasberg of district court for DC – an Obama appointee – ruled that the FTC had failed to demonstrate with sufficient evidence that Facebook had violated the law merely by getting so big and powerful and by buying Instagram in 2012 and WhatsApp in 2014.

Would the US move beyond the Sherman Act and the Clayton Act in the present regime? There are parallel efforts in Congress to modernise the century-old laws.

“[We need] a grassroots, bottom-up movement that understands the challenge in front of us, and then organises against monopoly power in communities across this country,” Bernie Sanders wrote in the foreword of the 2020 book ‘Break ‘Em Up: Recovering Our Freedom from Big Ag, Big Tech, and Big Money’, written by anti-corruption scholar and activist Zephyr Teachout.

This book is a passionate attack on Facebook, Google, and Bayer that are throttling US democracy, according to the author. Teachout thinks that, through a greater concentration of wealth and power than we’ve seen since the Gilded Age of late 19th century, they are evolving into political entities that often have more influence than the actual government.

Then, within two months of his tenure, President Biden had appointed Tim Wu, Lina Khan’s colleague at Columbia and an outspoken critic of Big Tech, as Special Assistant to the President for Technology and Competition Policy. Wu is known for coining the term ‘net neutrality’.

In his 2018 book ‘The Curse of Bigness: Antitrust in the New Gilded Age’, Wu envisaged the dangers of Big Tech getting bigger and the potential consequences of “too much power” in the hands of a small number of companies.

The Amazon paradox

Very few academic publications, however, can catapult the author to prominence like Lina Khan’s 2017 paper in the Yale Law Journal titled “Amazon’s Antitrust Paradox” did. This paper states that besides being a retailer, Amazon had progressively transformed itself into “a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space”.

The paper argued that “the current framework in antitrust — specifically its pegging competition to ‘consumer welfare’, defined as short-term price effects — is unequipped to capture the architecture of market power in the modern economy”.

Khan proposed “restoring traditional antitrust and competition policy principles or applying common carrier obligations and duties”. The New York Times described the paper as “reframing decades of monopoly law”. “Even when services are good for consumers, they can hurt a whole set of other interests — be it workers, be it business formation, be it democracy at large,” Khan told the BBC.

The effect of Khan might already be visible in the US. In early July, Biden had signed an executive order targeting anti-competitive practices across the economy that could have major ramifications for US’s largest tech companies.

“Let me be clear: capitalism without competition isn’t capitalism. It’s exploitation,” Biden said. The messages are clear: the Big Tech should not expect a continuation of the cordial relationship with White House that it enjoyed during Obama’s tenure, and these companies could face some serious regulatory scrutiny in the coming months. Is an intense battle brewing in the power-corridor of Washington? The tumbling die is still rolling at the moment.

The writer is Professor of Statistics, Indian Statistical Institute, Kolkata