The US Department of Justice’s anti-trust chief laid out the case against big tech companies in a speech he delivered at Tel Aviv on Tuesday. Makan Delrahim laid out some of the possible arguments the US government will make against tech giants. Delrahim argued that existing antitrust laws are strong enough to regulate tech companies and that “the Antitrust Division does not take a myopic view of competition.”…”Many recent calls for antitrust reform, or more radical change, are premised on the incorrect notion that antitrust policy is only concerned with keeping prices low.” +Earlier this month, the Federal Trade Commission agreed to handle any potential investigations into Amazon and Facebook, while the Department of Justice said it would handle Apple and Google parent Alphabet. Spotify has reportedly criticized Apple’s practices, describing the company as anti-competitive in a complaint to the EU’s antitrust regulators.
Here are arguments that the US government could use to probe antitrust cases against Big Tech:
1. The US sued Microsoft for anti-trust in 1998
Delrahim explained that the US government’s had sued Microsoft its monopoly on personal computers. Microsoft had placed restrictions on the ability of OEMs and consumers to install the Internet Explorer browser and use other browsers such as Netscape. The successful anti-trust case against Microsoft in 1998 has enabled current tech giants like Google, Apple, and Facebook to enter the market with their own desktop and mobile products.
2. Coordinated behaviour
Delrahim said the antitrust division may look into “coordinated conduct that creates or enhances market power” referring to a Yahoo! and Google advertising agreement of 2008, which would have enabled “Yahoo! to replace a significant portion of its own internet search advertisements with advertisements sold by Google”. The anti-trust’s division into the case found that the agreement would have harmed the internet search advertising market and internet search syndication since both companies accounted for 90% of each market.
2. Exclusivity agreements
“An exclusivity agreement is an agreement in which a firm requires its customers to buy exclusively from it, or its suppliers to sell exclusively to it. There are variations of this restraint, such as requirements contracts or volume discounts,” Delrahim explained. He further explained that Microsoft’s (19980 exclusive agreement to tie its Windows OS to internet explorer and discouraging OEMs and users from uninstalling the browser and was “to the detriment of competition” and that “this theory is broadly applicable to other technology markets”.
4. Anti-competitive acquisitions
“…but I will note the potential for mischief if the purpose and effect of an acquisition is to block potential competitors, protect a monopoly, or otherwise harm competition by reducing consumer choice, increasing prices, diminishing or slowing innovation, or reducing quality. Such circumstances may raise the Antitrust Division’s suspicions.”
5. Competition and network effects on Big tech
Delrahim explains that the competition among tech firms – which is for user attention or clicks – may be difficult to assess. “Firms operating in digital markets are typically built on proprietary technology.” Talking about network affects, he says, “The most successful ones seek to build and leverage networks that drive down costs while amassing a large number of customers. Eventually, the more customers a platform has, the more valuable it may be for each individual user” … “In many ways, AT&T and Microsoft leveraged network effects to create or heighten barriers to entry.”