The Heartland Institute

BIG-TECH DEFENDERS VASTLY UNDERESTIMATE ITS POWER RELATIVE TO GOVERNMENT’S

JUNE 22, 2021

By Scott Cleland

Big-Tech is much more powerful than its defenders assume.

Our polarized Internet world has generated at least one area of extraordinary bipartisan consensus: 77 percent of Americans agree Google, Facebook, and Amazon have too much power according to a Gallup survey.  

The near unanimous participation of Federal, State and Congressional antitrust authorities in probing  Google, Facebook, and Amazon, indicates extraordinary concern that their unchecked market power threatens competition for the consumer market.

Both political parties agree that Section 230 of the Communications Decency Act, which grants Internet platforms with immunity from liability for good faith moderation of online content, in practice provides Internet platforms unaccountable power that warrants reform.

Section 230’s intermediary impunity loophole provides these dominant consumer gatekeepers with anticompetitive advantages that facilitate the monopolization of access to consumer demand online, thus undermining competition for U.S. consumer spending that comprises 68% of U.S. GDP.

These gatekeepers, which do their best to avoid competing directly with each other, dominate competitive access to the online U.S. consumer market, leaving most potential competitors dependent on them to broadly reach online consumer demand.

How could this happen?

Big Tech tales that the Coronavirus Crisis somehow will mitigate their Techlash problem, totally miss the mark.

They miss that the crisis is not good and not about tech. They miss that to whom much is given, much is expected.

They miss how many other industries and companies have contributed and sacrificed during this crisis without expecting something in return.

Spontaneously this past week, a tech op-ed chorus broke out singing a new tune and tale, that the Coronavirus Crisis could benefit Big Tech and save it from much of the Techlash.

Consider: Coronavirus gives Big Tech an opportunity to shine – Axios 3-18-20; Has the coronavirus killed the Techlash? Wired 3-20-20; Big Tech has the cash to expand after crisis, Regulatory threat also likely to recede for now, FT 3-20-20; and What Techlash? Virus Could Remake Industry Giants Image, The Information 3-23-20.  

Like some catchy new tunes lyrics, these don’t make sense.

Why is the Coronavirus Crisis no cure for the Techlash?

First, Americans strong bipartisan views undergird the Techlash in the U.S.

Consider a recent Gallup poll of Americans published 3-11-20.

The likely probability of an eventual U.S. v. Alphabet Sherman monopolization case improved further now that we know how weak Alphabet-Google’s likely primary U.S. antitrust defense of Android is.

This means not only is a potential U.S. v. Alphabet antitrust case stronger than the seminal successful and upheld U.S. v. Microsoft precedent, but Google’s relative antitrust defense is much weaker too.

Google’s CEO Sundar Pichai’s public Android antitrust defense has fatal flaws.

First, Google-Android claims Apple iOS is a direct competitor when factually in an antitrust context it is not.

It is a matter of when, not if, Congress will pass national privacy and data protection law for the 21^st century.

It’s inevitable, because the U.S. privacy policy to date is operating as predictably as a pendulum swinging. Consider the evident big picture, pendulum dynamic at work here.

Anyone concerned with the anticompetitive state of digital advertising, and how to fix it, should focus like a laser on the circumstances surrounding the 2014 FTC’s pass on formally investigating if the Facebook-WhatsApp acquisition would “substantially lessen competition” under the Clayton Antitrust Act.

That obvious FTC mistake in hindsight, triggered a winner-take-all domino effect that not only tipped Facebook to a social advertising monopoly, but also tipped the overall digital advertising market to the anticompetitive digital advertising cartel that evidently predominates today.

Some brief context is helpful here. This big 2014 FTC mistake was the fourth of a pattern of big anticompetitive FTC mistakes concerning the digital advertising marketplace over the last decade.  

If only the 2012 FTC appreciated “an ounce of prevention is worth a pound of cure,” the Simons-FTC would not be left to treat and contain the now evident, out-of-control, Androidopoly epidemic.

Google’s 2012 search-syndication monopoly scale has rapidly metastasized Google’s market power in scope to: Android licensable OS, Google Play app store, Google Location Services, Chrome browser, Google Maps, and YouTube video.

Lax 2013-2017 FTC antitrust enforcement has consequences.

A nation divided cannot stand.

America’s Internet policy is so badly divided that America’s national security struggles to stand firm.

The U.S. Government’s outdated, out of control, Internet policy dictates digital division and delivers digital disunion and disorder.

Abraham Lincoln’s most famous speech shared the timeless truth and wisdom that “a house divided against itself cannot stand” when he stood up for what was, and is, right – freedom and equality for all people, not just for the favored.  

Much more than most appreciate, U.S. Internet policy has de facto partitioned America legally into separate online and offline worlds. That may have made sense in the 1990’s when the Internet was nascent, but now when the Internet is pervasively everywhere we live, work, and play, it’s not only “disruptive,” but divisive and destructive too.

For a neutrality or non-discrimination principle to have legitimacy, it must be applied neutrally and non-discriminatorily itself, because everyone knows true neutrality means not taking sides.

Non-neutral application of a net neutrality policy takes sides and thus is discriminatory and unfair, the exact opposite of net neutrality’s purported purpose and the definition of its signature word.

Arguably, most all the controversies and conflicts over net neutrality for the last fifteen years have resulted from a supposed neutrality principle applied non-neutrally, to favor Internet intermediary distribution networks like Google, Amazon and Facebook, and cloud computing networks, like Amazon, Microsoft and Google, over legacy communications and content networks.

Today the FCC, in voting 3-2 for the Restoring Internet Freedom Order, is legitimately implementing net neutrality in a neutral fashion, i.e. treating similar information services similarly with the same light touch, under the same market transparency enforcement oversight at the FTC, and not taking sides by non-neutrally, picking winners and losers from the start.

Sometimes it is easy to miss the forest for the trees.

That may be the case with the outlook for the DOJ v. AT&T-Time Warner case.

In this analysis, rather than recount the legal antitrust “trees” that have been well-argued in the DOJ’s complaint brief and AT&T-Time Warner’s defense brief, and the rule of law “tree” I analyzed initially, it is important to focus on how this case is highly-unusual in one characteristic, and that characteristic begs us to try and examine the forest not the trees.

What is highly-unusual about this precedent-driven case is the Judge, U.S. District Court Senior Judge Richard J. Leon.