The opportunity cost of Congress’s ‘Big Tech’ antitrust obsession

The CEOs of Apple, Amazon, Google and Facebook will appear this week at the invitation of the House Judiciary Committee in a hearing that is supposed to be about antitrust and the market power of these companies. Nominally, their appearance is supposed to inform the Antitrust Subcommittee’s report on competition in tech, but that report has already been written, so it’s unlikely that anything the CEOs say will make any difference to the final report.

In reality, this looks more like a chance for the committee’s members to ask some awkward questions and to add their voices to the attacks on Big Tech coming from across the political spectrum in Congress and from the White House.

The subcommittee’s report may fall flat in any event. It is expected to propose a highly interventionist approach that attempts to use antitrust to solve problems that have little to do with antitrust. People will have problems with bias, fake news and capricious treatment of the small businesses that rely on digital platforms no matter how much or how little competition those platforms’ advertising businesses face.

There is persuasive empirical evidence that, for all the other complaints people have with big tech, a lack of competition is not the issue – indeed, the tech giants are engaged in fierce competition with each other in many overlapping markets, like video conferencing, cloud computing and e-commerce, and new entrants like Slack and Zoom are nipping at incumbents’ heels.

But getting the diagnosis and remedies wrong aren’t the only problem with the subcommittee’s approach. The opportunity cost of focusing on tech is also significant, because focusing on competition in tech means not focusing on other parts of the economy where doing so could be a lot more tangible and useful. The non-tech economy is hardly free of problems, and may be much more significant for ordinary Americans than a supposed lack of competition among products that are either free, like search and social media, or substantially cheaper than their brick-and-mortar alternatives, like Amazon.

Former Vice President Joe Biden recently highlighted non-compete clauses in fast food worker contracts as a problem, a significant part of his campaign platform (absurdly, some commentators were more interested in his use of the word ‘woke’ than the substance of his concerns). Why, he asked, should fast food workers be banned from taking a better paying job at a rival firm? Non-competes can be useful for skilled workers to protect trade secrets and guarantee a return on investments in human capital, but the case is less strong for low-skilled workers.

An influential letter by left-leaning antitrust scholars made a similar implication by naming other sectors where competition was weakest, like airlines and hospitals. In airlines, regulations regarding the distribution of airport landing slots and rules protecting U.S. airlines from foreign competition have been tied to higher U.S. airline ticket prices vis-a-vis Europe. In health care, certificate of need (CON) laws give incumbents a virtual veto on new entrants coming into their area. Many states, seeing how certificate of need laws restrict the supply of health care services, have suspended their CON laws during the COVID-19 pandemic. Maybe this suspension should be made permanent.

More generally, occupational licensing laws are a clear barrier to competition – indeed, to the extent that they exist to keep salaries high in protected occupations, that’s often the whole point. COVID-19 may be a chance to reform or eliminate many of these to lower prices for consumers. Many states have suspended the legal bar exams that have restricted the supply of lawyers to keep legal bills high.

Meanwhile, there are everyday household products and services that appear to have serious competition problems. For example, Luxottica, the eyeglass manufacturer, has a virtual monopoly of luxury sunglass and eyeglass brands (its owned and licensed brands include Armani, Chanel, Oakley, Persol, Ray-Ban, Versace, and many others). The NCAA acts as a cartel to save colleges from having to pay wages to young athletes, who are often from poorer and minority backgrounds, which a recent court ruled against on antitrust grounds.

All of these examples of more pressing competition concerns are even more significant given that there are concerning signs that the Department of Justice has had its focus corrupted under the Trump administration. Recent examples include the allegedly politically-motivated interventions in mergers in the cannabis industry and a potentially spurious case against car makers for signing up to more stringent emissions and fuel economy standards than federal law required. Congressional oversight of executive agencies is essential. If the House Antitrust Subcommittee will not hold the DoJ to account on potential misuse of antitrust powers, who will?

Some or all of these may, in fact, turn out to be benign on further investigation. The point is that these are real, important issues for antitrust, and American consumers, that should not be neglected by bodies like the House Antitrust Subcommittee. There’s more to the economy than tech.

Sam Bowman is the director of competition policy at the International Center for Law & Economics, a think tank that promotes the use of law & economics methodologies to inform public policy debates.