Ways to regulate large technologies in U. S.
2023.01.11 09:10
Ways to regulate large technologies in U. S.
By Tiffany Smith
Budrigannews.com – Congress did not take any significant steps to regulate Big Tech at the end of 2022, despite years of hearings, reports, and stalled proposals. Jonathan Kanter, on the other hand, is just getting warmed up a few blocks away in Washington.
Kanter has spent months laying the groundwork for a broader tech reckoning, arguing that changes in technology have created new opportunities for businesses to exploit monopoly power in ways that courts may not yet recognize as potentially illegal. However, the top antitrust official at the Justice Department has not yet filed any new lawsuits against any of the largest tech companies in the country.
In the past, those in charge of enforcing antitrust laws have focused on the ways in which dominant businesses could harm consumers by raising prices or reducing the number of options available in the market. However, Kanter and his ally at the Federal Trade Commission, Chair Lina Khan, have advocated for broadening the US government’s perspective by increasingly focusing on the sophisticated ways in which businesses can use new technologies to gain an anticompetitive advantage.
In an interview with CNN last month, Kanter said that this includes the use of “dark patterns,” which are software interface designs meant to encourage customers to choose a company’s preferred option.
Kanter stated, “Economic realities have changed.” Customers and businesses now engage in some personalized and targeted interactions. Customers’ reactions to dark patterns must be taken into account by antitrust authorities; how businesses can influence consumer behavior; how they can get customers’ attention, money, value, and data.
Policy experts have stated that the prospects for tech legislation may now be even worse than they were before Congress entered a new phase of divided partisan control, making enforcement agencies like the DOJ and FTC the most likely sources of action moving forward.
Kanter has shown that the Justice Department is getting ready to go after what critics say are some of Silicon Valley’s most anti-competitive practices by giving policy speeches, changing staff, and continually updating the nation’s merger guidelines with the help of the FTC.
A chief economist with a background in computer science and machine learning has been hired by DOJ’s antitrust division under Kanter’s leadership. In a rare case involving an attempt at monopoly, the agency even managed to secure the first criminal guilty plea in decades.
After the Justice Department strongly endorsed a significant bill in Congress that would prohibit Amazon from selling its own products on the marketplace it runs, among other things, said Bill Baer, a former top US antitrust official, Kanter has also demonstrated that he is an effective advocate within the DOJ.
According to Baer, a visiting fellow at the Brookings Institution who has led antitrust initiatives for the FTC and DOJ during two presidential administrations, “getting the Department to weigh in on a matter like that is pretty significant.”
With these actions, Kanter may help usher in a new era of antitrust enforcement that will see an increase in the number of lawsuits filed against well-known brands and an increase in the amount of pressure placed on businesses to reevaluate the routine procedures that influence the way many consumers use online products.
Some of those initiatives are now poised to bear fruit as he enters his second year in office. According to Kanter, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) will issue a public draft of the revised merger guidelines within the next few months. This document provides a general outline of the kinds of acquisitions that are most likely to result in challenges from the US government.
Some of the ways that tech giants have been accused of throwing their economic weight around may be explicitly covered in those guidelines for the first time. These include using their enormous scale to offer essential apps, devices, and services for free or even at a loss to quickly gain market share, as well as buying up startup businesses that could one day challenge their dominance.
Meta and its acquisitions of Instagram and WhatsApp have received the majority of the criticism from the tech industry regarding competition; the relationship between Amazon and third-party sellers; or Google and the way it advertises online.
After a tumultuous ticketing mishap involving Taylor Swift’s most recent concert tour, it has, however, spread to other facets of the digital economy, including Apple’s app store policies and Ticketmaster’s control over live events. According to reports, the DOJ is looking into both of them.
Kanter declined to discuss either subject. However, his prior record, even on non-technical matters, suggests that high-profile lawsuits against some of the country’s most prominent businesses are possible.
Kanter has dealt with technical issues before. Kanter went on to represent Microsoft and Yelp, a company that has long been critical of Google, after beginning his career as an FTC attorney. Currently, the search giant defends a DOJ antitrust suit brought by Trump administration; Some critics have called for Kanter’s exclusion from the case. The Department of Justice declined to comment.)
Kanter is the new antitrust enforcer in Washington, along with Khan, who wrote a 2017 law paper on Amazon that helped start a debate about the company’s power. They are evidence of the Biden administration’s explicit commitment to holding powerful businesses accountable.
In response to allegations of anticompetitive behavior, the technology sector has emphasized the advantages its products have provided consumers and small businesses. Additionally, it is cautioned that the antitrust legislation that has been endorsed by the DOJ may result in unintended outcomes such as an increase in prices or the elimination of useful features that consumers value.
Kanter has pushed to bring more cases to trial and cases that test the limits of the law as part of his effort to shake up traditional orthodoxy. It is a more aggressive position that aims to adapt decades-old law to what Kanter describes as new economic market conditions.
According to Kanter and outside antitrust experts, the DOJ’s decisive court victory over a $2.2 billion merger between book publishers Penguin Random House and Simon & Schuster, which would have combined two of the so-called Big Five in the industry, is one of the agency’s top accomplishments of the past year.
A typical merger challenge might have focused on how consumers could be hurt by getting rid of one of the Big Five, perhaps by raising book prices. However, DOJ took a different approach: The main argument was that the merger would hurt authors because there would be fewer publishers competing for their work, which would result in lower pay.
According to Diana Moss, president of the American Antitrust Institute, winning on that unusual claim effectively increased the powers of antitrust enforcers, who can now vigorously pursue other cases where anticompetitive behavior may arguably harm workers.
Moss said that the Penguin case showed how antitrust “can address competitive harm in markets anywhere in a supply chain — from workers and inputs, to middle markets, to consumers.” He also said that the decision builds on a merger challenge that was successful during the Obama administration and claimed that a combination of major health insurers could hurt doctors’ pay.
Measurably, in over 20 years of consolidation challenges, DOJ has simply prosecuted to a last court choice a normal of one case each year, Kanter said. According to Minnesota Democrat Sen. Amy Klobuchar, whose Senate subcommittee oversees the antitrust division, the antitrust division was on track to litigate more merger trials than any year on record in 2022.
In a statement that she gave to CNN last month, Klobuchar stated, “Our country faces a serious monopoly problem.” We require antitrust enforcers who are able to finish the job, as well as leaders who have the expertise, courage, and experience necessary to confront some of the most powerful businesses the world has ever seen. Assistant Attorney General Kanter has consistently displayed these qualities over the past year.
Officials announced in October that they had secured what experts referred to as the first criminal guilty plea for attempted monopolization in roughly 50 years. This was another display of agency power. Criminal charges for actual or attempted monopolization are extremely uncommon, and by invoking a less frequently used aspect of the law, law enforcement officials demonstrated their commitment to employing all of their available resources.
The case’s construction executive faces up to a $1 million fine and a ten-year prison sentence for trying to divide up a regional market for highway repairs with a rival.
The agency has suffered some setbacks as a result of Kanter’s litigious approach, including defeats in court in several cases that, according to some critics, cast doubt on his get-tough agenda.
Last year, prosecutors tried and failed multiple times to convict executives in the poultry industry of an alleged price-fixing scheme, resulting in numerous dropped charges. The DOJ dropped its lawsuit to prevent a defense industry merger after the deal closed in October.
When DOJ tried to stop the merger of two sugar companies and when it tried to stop UnitedHealth Group from buying health technology company Change Healthcare, it lost in district court. In both instances, appeals are pending.
David Gelfand, an attorney who represented Change Healthcare in court and a former antitrust official at the Department of Justice, said that Kanter’s attempt to change how the US government enforces antitrust laws faces significant obstacles. Losses in court can weaken a regulator’s authority, just as victories in court can effectively enshrine it.
Gelfand stated, “A political appointee running a law enforcement agency doesn’t get to re-envision the law.” What the law is is what it is. It has been developed through decades of cases and economic work. I believe all he did in this case was to harden the law in an area where he wants it to move.
Kanter stated in the interview that it is essential to present courts with new cases to guarantee that the law can adapt to the times.
He stated, “We’re never really going to have the opportunity to advance the law in a way that makes it relevant and applicable to market realities and a modern economy” unless “we give courts the opportunity to confront new fact patterns, new issues, new economic realities that are becoming pervasive throughout the economy.”
Moss asserted that it may be premature to assess the significance of some court losses because some cases are still pending appeal.
Baer asserted that in other instances, the Justice Department has compelled “a whole bunch of mergers to be abandoned” that would have been anticompetitive.
Kanter is now up against high expectations as the new year gets underway.
The Google case is still going on, and the rumored investigation into Apple may result in a significant conflict over the regulations that app stores can impose on software developers. The US government’s attack on the tech industry would significantly escalate if Apple were to be challenged.
Although it has argued that its tight control over the Apple App Store has helped consumers by improving their security and privacy, Apple has not commented on the possibility of a DOJ lawsuit.
Kanter has argued that the features and benefits that technology companies have touted as defenses may come with hidden costs, reflecting Washington’s growing skepticism of the tech industry in recent years.
In a speech in September, he stated, “Algorithms manipulate our psychology to shape our minds and our behavior, without competition for them to do so responsibly.” We find that our most intimate data is sold and mined without restraint because there is insufficient privacy competition. Not only is monopoly power present in the digital age, but new methods of its exploitation pose a greater threat to individual freedom than ever before.
Ticketmaster is another option. Antitrust quickly became a dinner-table issue as a result of last year’s online ticketing disaster, which prompted outcries from Taylor Swift fans who were unable to purchase concert tickets for the musician or who were shocked to see resale prices listing tickets for tens of thousands of dollars.
The dominance of Live Nation, which owns and operates Ticketmaster, an online ticketing giant, was the subject of intense scrutiny. The Justice Department might even have to dissolve the company, according to some lawmakers in the United States.
Together with Democratic senators, Klobuchar wrote, “This may be the only way to truly protect consumers, artists, and venue operators and restore competition in the ticketing market.” In a letter sent to Kanter and Attorney General Merrick Garland in November, Richard Blumenthal of Connecticut and Ed Markey of Massachusetts.
Some industry investigators say the elevated examination from lawmakers improves the probability of a DOJ claim. Market research firm Cowen Inc. announced on Monday that it would increase its likelihood of filing an antitrust suit against Live Nation from 35% to 60%, making it more likely than not.
