The lawyer who helped launch the antitrust case against Microsoft is worried the government doesn't have the right personnel or strategy to take on Big Tech
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Antitrust seems to be back in fashion as a topic of concern in Washington, DC, particularly after Congress harangued the heads of four leading tech companies earlier this summer about their alleged anticompetitive moves. But any real effort to promote competition and constrain monopolies is going to require a major reassessment — and quite possibly a revamping — of laws, policies, and personnel, said antitrust law expert Gary Reback. Federal judges, under the influence of conservative, pro-market academics, have significantly restricted what counts as anticompetitive behavior. Meanwhile, it's unclear after years of bringing few antitrust cases whether the Department of Justice and Federal Trade Commission have the personnel they need to step up enforcement, Reback said. The next Congress and whichever administration is in office next year are "going to have to figure out almost from scratch how they're going to enforce the antitrust laws," Reback told Business Insider in a recent interview. Antitrust enforcement appears to be coming to a head. Federal enforcement officials and state attorneys general have been investigating four of the tech giants — Apple, Amazon, Facebook, and Alphabet — for more than a year. The Department of Justice reportedly is gearing up to file a suit against Alphabet — the parent company of Google — by the end of this month. But US enforcement authorities could run into trouble prosecuting those cases due to a lack of qualified personnel and skeptical federal judges, said Reback, who represents companies that have made antitrust complaints with the FTC about some of the tech giants. The government lacked litigators when it took on Microsoft The personnel problem is not a new one. As far back as the Microsoft trial 20 years ago, it was apparent that the federal government was lacking litigators who could prosecute antitrust cases, said Reback, whose work with companies harmed by the software giant's anticompetitive actions helped prepare the ground for the government's case. The Justice Department tapped an outside litigator — David Bois — to lead its prosecution of the case. Meanwhile, the team of in-house layers the agency assembled to put together the case was based in San Francisco, even though the trial took place in Washington, D.C. "I'm telling you, even back then it was a struggle within the Antitrust Division to find ... a good team to support Bois," Reback said. "You might logically argue," he continued, "'well, weren't there lawyers in Washington in the Justice Department that could have done this?' And the answer is no." The Department of Justice seems to have the ability to conduct a thorough antitrust investigation, Reback said. But it's unclear whether it has the personnel in place to litigate a case against Alphabet or any of the other tech giants, he said. It may well have to bring in outside attorneys, just like it did with the Microsoft case, he said. But personnel isn't the only thing antitrust enforcement officials need to evaluate — and not the only reason why they might conclude they need to hire private attorneys to litigate cases, Reback said. They also need to think long and hard about strategy. Antitrust officials are going to need to convince a skeptical judiciary The federal judiciary, under the influence of pro-laissez faire economists, has constrained the definition of what counts as illegal anticompetitive behavior. Over the last 40 years, judges and federal enforcement officials have largely discarded other competitive concerns and refocused antitrust enforcement on the issue of whether consumers have been harmed by having to pay higher prices. If they're going to be at all successful in taking on the Big Tech companies, antitrust officials are going to have to figure out how to combat that mindset, Reback said. One tactic the heads of the Antitrust Division and the FTC should take is to become "evangelists" to the judiciary about the need to constrain these companies, he said. "Somebody has to try to explain to Republican judges that we're in an unprecedented situation here," Reback said. He continued: "Even if you come from the position that you don't like government intervention in the economy ... we have here a set of circumstances that is different than anything that we've experienced before and that really does need your attention." But that need to convince conservative judges could be another reason for the DoJ to bring in outside litigators. Given the anti-government, anti-regulatory mindset of many federal judges, it's quite possible that a government attorney could make a solid case against one of the Big Tech companies and essentially be ignored because the attorney works for the Justice Department, Reback said. Antitrust officials need to consider "would a judge be more likely o listen to an outside litigator like David Bois representing the government than they would somebody from the DoJ," Reback said. "They shouldn't, but is it likely that they would?" New legislation could be needed Government policymakers are also going to have to figure out whether and what kind of legislation might be needed to redirect the judiciary and better address the anticompetitive actions being taken by the giants in tech and other industries, he said. Even with the way the judiciary has limited the laws, it's still possible even today to go to court and win an antitrust case, he said. But it's difficult, and it's pretty clear to Reback, at least, that legislation is needed to address areas where judges have "gone off the rails" in terms of allowing anti-competitive behavior. What's more debatable is just how much farther legislators should go in trying to curb today's monopolists. For his part, Reback favors legislation such as that put forward by Sen. Amy Klobuchar, D-Minn., that would essentially define a monopoly as a company that has more than 50% share of a particular market and would subject such companies' behavior to greater scrutiny. He's not, however, in favor of legislation that such as that pushed by Sen. Elizabeth Warren, D-Mass., that would bar companies from both operating a platform or marketplace and competing against other companies on that same platform. Such a bill would bar Amazon, say, from hosting third-party retailers on its ecommerce site and selling goods on that same site. It might force Amazon to sell or close its marketplace. "I would hate to have to do [Warren's approach], in part because it would cause so much dislocation," he said. Regardless, new legislation is insufficient to curb the abuses of the tech giants, Reback said. Antitrust officials are going to need the right personnel, the right strategy — and the will to pursue cases. "Even if there's from, my perspective, good legislation, by itself, that's not going stop anything. It's not going to change anything," he said. "You will need go into court, and you will need to figure out how to do that." Got a tip about tech? Contact Troy Wolverton via email at email@example.com, message him on Twitter @troywolv, or send him a secure message through Signal at 415.515.5594. You can also contact Business Insider securely via SecureDrop.
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Even as the Justice Department sued Google, some antitrust experts wondered whether a different government response...Even as the Justice Department sued Google, some antitrust experts wondered whether a different government response would be more effective.
Tech's biggest companies have been accused of antitrust violations. Here's what 'antitrust' means and how 'trust-busting' laws attempt to keep the biggest firms in US history from growing too powerful.
Antitrust laws were created to keep the big conglomerates, or trusts, that were forming across oil,...Antitrust laws were created to keep the big conglomerates, or trusts, that were forming across oil, railroad, steel, and other sectors in the late 1800s and early 1900s from growing too large and powerful. Now, regulators coming after 21st-century big tech. Google, Apple, Amazon, and Facebook remain under the microscope in a congressional investigation into online market competition. The ongoing investigation could eventually lead to more specific legislation designed to keep tech companies from growing too big and mighty — just like how three original antitrust laws began reining in oil and railroad companies over 100 years ago. Visit Business Insider's homepage for more stories. The CEOs of Apple, Amazon, Google, and Facebook were grilled in front of Congress on July 29 over whether they violate antitrust regulations. The law term "antitrust" has a long history in the United States, and the hearing was part of a probe into online market competition. Lawmakers will attempt to determine if antitrust regulations can be applied to four large tech companies that dominate the industry. But let's back up a bit: What does "antitrust" mean? Around the turn of the 20th century, "trust" was used as a term to describe a new type of large corporation, as American business titans in the steel, oil, railroad, and banking industries began to form larger conglomerates. For example, the railroad sector needed corralling as hundreds of smaller railroad operators were acquired and clumped together into mega-companies. Another example was Standard Oil, a major oil monopoly, or trust, run by John D. Rockefeller starting in the late 1800s and into the 20th-century. And so regulators sought to establish laws to keep big businesses across every sector from growing too large and powerful and to maintain a healthy amount of competition in the market. Trust: This term refers to the big businesses (in this case, in railroad, oil, and steel) that began to form and encroach on smaller competitors in the US Antitrust: The term that was given to the "trust-busting" set of laws that were created to counteract that encroachment and stem the corporations' growth in size and power There are three core federal US antitrust laws you should care about: the Sherman Act of 1890, the Clayton Act of 1914, and the Federal Trade Commission Act of 1914. The last would lead to the creation of the Federal Trade Commission, which is the main government entity tasked with enforcing antitrust laws today. Here's what they do, according to Investopedia: Sherman Act of 1890: This is the backbone of American antitrust policy. It allows the federal government to take companies to court that it believes are participating in anticompetitive practices and abusing their monopoly power. Clayton Act of 1914: This act was passed to fill in the gaps left by the Sherman Act. It prohibits certain business practices that can weaken economic competition, like anticompetitive mergers and acquisitions or price-fixing. Federal Trade Commission Act of 1914: Similar to the Clayton Act, this one was passed to further round out antitrust legislation and banned more competitive practices that were deemed unfair or deceptive, such as those that violate consumer protection laws. How have these laws been used to rein in US businesses in the past? The Sherman Act was used to break up Standard Oil, which was found to have lowered their prices specifically to drive their competitors out of business, in the early 1900s. The trust was divided into dozens of companies, including what are now ExxonMobil and Chevron. In 1969, the US Justice Department filed a lawsuit against IBM, the New York-based tech firm whose computer market dominance put it on the government's radar. However, the case was thrown out. In 1982, the US under President Reagan used the Sherman Act to divide phone service goliath AT&T, or "Ma Bell," into eight different companies, or "Baby Bells." And in the late 1990s, Microsoft was hit with an antitrust lawsuit as Internet Explorer began to dominate the internet browser market by bundling its browser with Windows software, making it difficult for Windows users to install and run competing browsers. A federal judge ruled that the company was indeed in violation, and the company settled in 2001, but it was a pivotal moment for the tech industry as its players began to realize they may have to eventually reckon with oversight from Uncle Sam. Why is it bad if companies break antitrust laws? The main reason, economists say, is that healthy competition is key to a steady, thriving economy, one in which small business owners and consumers benefit. If big businesses squash out smaller competitors, and the market is instead ruled by a small number of monopolies, that could result in a shaky economy. Consolidating economic power into a handful of companies could also be dangerous to the nation's democracy, as Wired notes. So what's the parallel between tech companies and the big businesses around the turn of the 20th century? Google, Amazon, Apple, and Facebook — the world's most powerful tech companies — are being investigated over business practices designed to step on smaller competitors and maintain their dominant position in the marketplace. They're all being investigated over antitrust violations, but they're not necessarily being probed for the same thing: Google: Lawmakers questioned CEO Sundar Pichai regarding the company's iron grip on the advertising and search market and how it has affected other online businesses. Amazon: The Seattle-based firm is being probed over whether it promotes its own brands ahead of third-party sellers on its online marketplace. Apple: CEO Tim Cook fielded questions regarding claims that the company gives its own apps special treatment over third parties in its App Store. Facebook: The social media giant is in the spotlight for the acquisitions it has made in recent years of would-be competitors, like WhatsApp and Instagram. Why are antitrust laws difficult to enforce in tech? Simply put, these laws were created in the late 1800s and early 1900s. Retrofitting the century-old laws — or creating new ones — to accommodate 21st-century companies offering products that are at the forefront of tech innovation won't be an easy task. There is also the issue that "anticompetitive" laws in the US need to show that consumers are being harmed, something much harder to do when it comes to big tech. Take the example of a search engine like Google dominating. When Standard Oil controlled the marketplace, consumers had only one option for where to buy. Google, meanwhile, wins because consumers mainly choose to use Google. Consumers aren't being harmed – but other companies that want to compete against Google (or Apple or Facebook or Amazon) arguably are. The task in front of Congress is determining whether that's enough to declare these tech companies in violation of antitrust regulation. So then what's going to happen? As a direct result of the July 29 hearing, almost nothing. This isn't a trial, and no one will be found guilty. The hearing was instead an opportunity for lawmakers to question the tech executives and gather evidence about their business practices by listening to their testimonies. The lawmakers involved in the hearing sit on the House Judiciary's antitrust subcommittee, a group that has already been conducting a yearlong investigation into how companies operate in the digital marketplace. The subcommittee members have been speaking with smaller competitors, who have alleged that tech's biggest firms engage in anticompetitive business practices. The leaders of the "big four" tech companies attempted to make their case as to why they aren't infringing on the competition. Their answers helped inform the subcommittee's ongoing investigation, which could eventually lead to more specific legislation designed to keep tech companies from growing too large and powerful — just like how the three original antitrust laws began reining in big oil and big railroad over 100 years ago.SEE ALSO: The leaders of the world's most powerful tech companies — Apple, Amazon, Facebook, and Google — will be speaking in front of Congress this week. Here's what we're expecting, and why it's a huge deal. Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America
The legislation comes as a federal panel is investigating the market power of Facebook, Amazon, Apple...The legislation comes as a federal panel is investigating the market power of Facebook, Amazon, Apple and GoogleNew York state is introducing a bill that would make it easier to sue big tech companies for alleged abuses of their monopoly powers.New York is America’s financial center and one of its most important tech hubs. If successfully passed, the law could serve as a model for future legislation across the country. It also comes as a federal committee is conducting an anti-trust investigation into tech giants amid concerns that their unmatched market power is suppressing competition. Continue reading...