Ten days ago, the House Judiciary Antitrust Subcommittee announced five proposed bills to restore competition to digital marketplaces and rein in the largest tech platforms. Introduced with bipartisan support, the bills try to address the fact that unregulated tech monopolies have too much power over the economy.
To evaluate the bills, I spoke with Hal Singer– Managing Director at Econ One and an expert in antitrust, consumer protection, and regulation. He has researched, published, and testified on competition-related issues, providing expert economic and policy advice to regulatory agencies in the United States and Canada, as well as before congressional committees. He’s a Senior Fellow at the George Washington Institute of Public Policy and an Adjunct Professor at Georgetown University, McDonough School of Business, where he teaches advanced pricing to MBA candidates.
I asked Hal to take me on a tour of the five new bills in the House, and the response to them so far. Listen via the Tech Policy Press podcast, or read the lightly edited transcript below.
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So just last week, the House Judiciary Antitrust Subcommittee put out five bills that all focus on various questions to do with antitrust and monopoly. These are the much awaited results of the House’s investigation into the big tech platforms and to problems around antitrust enforcement in the United States. And I’m very glad that you’re here with us. We’re going to go through these one by one and hope to come out with a little bit of a better understanding of what the specifics are, but maybe also what some of the conflicts or hangups might be around these bills. So, first off, what do you make of this moment and this approach, this almost shotgun method of pushing out these multiple bits of legislation at the same time? What do you think the committee is going for?
Well, I think the committee is reacting to the political winds, and I think the political winds are saying pretty clearly that antitrust has failed, in a certain sense. Antitrust has failed to stop the accumulation and concentration of massive amounts of power that may have not been seen for generations.
And what I think Congress is doing now is they’re coming in and they want to kind of fill in the gaps that have become “as clear as an unmuddled lake, as clear as an azure sky of deepest summer,” I think is that line from A Clockwork Orange. And that now would require a certain amount of protection from something outside of antitrust.
So we’ve got five bills to go through and maybe we’ll just start right at the top. There’s the American Choice and Innovation Online Act, the Ending Platform Monopolies Act, the Platform Competition and Opportunity Act, the Augmenting Compatibility and Competition by Enabling Service Switching Act and the Merger Filing Fee Modernization Act- which that last one sounds deadly boring. So if we don’t get to it, perhaps the listener will be pleased to hear that. But let’s just go through them one by one, let’s start off- the American Choice in Innovation Online Act. What is this for?
So yeah, that’s a mouthful and some of the titles have come under scrutiny for not instilling a bunch of enthusiasm among the populous, but that’s okay. You know, the shorthanded way to think of this one is as a non-discrimination bill.
So, I mentioned before at the top, you know, these gaps in antitrust, it’s become pretty clear. I’ve been saying this for years, that you really can’t use antitrust to go after discrimination by a vertically integrated platform that’s happening inside of the firm, inside of the firms boundaries.
And so what people recognized is that if you just allow this to go unchecked, the monopolies- the platforms- can really leverage their power into all of these adjacent markets. You know, Amazon moving into merchandise or Google moving into, say, local search.
So what this bill is aimed to do is to stop that sort of behavior, what’s called self preferencing- which I think is a good word because it connotes the idea that you’re giving preference to your own wares. It’s meant to stop self preferencing in a way that just antitrust cannot get it.
So give me an example of what that self preferencing is. I remember from various testimonies a lot of conversation about Google and maps, for instance.
Yeah. I like to use the example of Google and local search. So you may recall that Yelp has made a big stink about the fact that Google has cloned a bunch of its content and then steers users to the cloned properties. And Yelp even commissioned a study by Tim Wu, a professor at Columbia, that found that Google was willing to sacrifice quality even to capture the search result and to keep all that activity inside the home, inside their family.
So the question is, what are we going to do about it? And Congress decided finally to write a bill that says, “You can’t do that.” Now, that’s not a blanket ban. There are some limitations. I think there is a limiting principle that would permit some amount of the self preferencing, but the gist or the spirit of the bill is trying to stomp out the anti-competitive self-referencing.
What’s been the reaction to this one so far? What have you heard from other folks who have reviewed it, both in industry and from critics of industry?
We know the critics of course, are the loudest- and I’m watching the platforms’ consultants and economists and lawyers taking to Twitter and crying bloody murder. Well, we don’t need to mention any names here, but I think that the tactic they’re using to take down this bill- and we’ll also talk about the tech they’re using to take down the bill that goes after just integration generally, vertical integration generally- is to try to fixate on some hypothetical that seems so innocuous to the common man that you can’t believe that this sort of preferencing would be blown out or prohibited by the bill. Right? So this one, they like to focus on things like preloading apps. So “Apple preloading FaceTime on its homepage, this wouldn’t even be tolerated under the bill and who would ever agree with such a thing. These people are obviously insane!”
If you go into the language of the bill, you actually find out that that sort of preferencing would likely be tolerated, right? There are two things that these guys are missing. The first is that there’s going to be discretion by the agencies as to what sort of self preferencing to go after.
So if you go after a type of self preferencing that looks innocuous on its face, and you take it in front of a judge, some neutral fact-finder, the judge is not going to like your case, right? And no one wants to bring a dog of a case. You know, even with respect to private litigants, in this bill- the American Choice Innovation Online Act- there is a private right of action. Which means that someone who’s a victim of discrimination, say Yelp, in my example before, can actually bring their own case.
Bringing a case to a federal court is expensive. You’ve got to hire a fancy economist and the like, and so we shouldn’t expect that the dogs of the cases are going to be broad. Instead, they’re going to go after the cases that are meritorious, that kind of tug at the heartstrings.
So the second thing that I would point out is that the bill allows for what I call affirmative defenses. What that means is that you shouldn’t think of this as a per se violation, like under the antitrust laws the way we treat price fixing is per se. We don’t want to hear any efficiency justifications, right? If you’re caught cheating on prices with a rival, say, or sharing pricing information with a rival, we will hear no efficiencies.
But here in contrast, the bill explicitly allows for certain affirmative defenses that would permit a platform to get away with a certain amount of self preference. So again, if something makes a lot of sense, like putting FaceTime or some music store- Apple’s music store- on the homepage, as opposed to nothing.
The phone can’t come with nothing on the home page, right? That wouldn’t be very consumer friendly. So I think that these people- the naysayers, the detractors- they’re intentionally picking these cases that would never be challenged, cases of self-referencing. They would never be challenged by any agency in their right mind, as an effort to kind of de-legitimize the bill. And let’s see, it might work.
Are there other types of defenses that companies could make in this self preferencing lane? Are there things related to privacy or data?
Yeah. And by memory, the bill actually makes explicit these sorts of defenses. If you can justify the preferencing through some privacy concerns or security concerns, that would be an efficiency. It doesn’t mean you win the day, but at least the fact finder would have to do a weigh or a balancing of the anti-competitive effects with the profit effects.
But importantly- and this is missed by a lot of the people who are kind of taking to Twitter to beat up on this bill- the plaintiff, whether it’s the agency or a private litigant, would have to persuade the fact finder that this sort of preferencing, this sort of self-preferencing is the type that is going to harm the competitive process.
This is the language right from the bill. “Harm the competitive process.” So, there’s a limiting principle that hopefully is going to allow these fact-finders to figure out and suss out what’s the good sort of self-preferencing that we should let go, and what’s the nefarious or evil sort of self-preferencing that we should stop.
Okay. Let’s go to the next one then real quick. Let’s go to Ending the Platform Monopolies Act, which is the structural separation bill. What’s this one do?
This one kind of takes a different approach from the last, and I’m going to try to convince you that they are complementary. But in one sense, they’re substitutes, in this way. The last one we just talked about, the ban on, or the attack on self-preferencing? That tolerates vertical integration. So that allows Apple, say, to have a toe in the music space. It just says, “You can have a toe, but if you try to leverage your platform power into this ancillary market, we’re going to stop you.”
This bill, the structural separations bill- the Ending Platform Monopolies Act- takes a different tack and says, “You just can’t have a toe in the vertical space, but importantly, not all vertical spaces.” Again, there is some limiting principle here. Not all vertical integration would be banned under this rule. And again, if you go look at what the naysayers are saying, again, no names, but I saw someone write a blog and said, “This ban on vertical integration would prevent an operating system,” for example, “from offering this TCPIP”- certain kinds of basic functionality of the internet. And of course that’s not the kind of integration that gets regulators or agencies up at night. And so, no, they would never pursue such a case. What those criticisms again are seizing on is this innocuous form of conduct- here, innocuous integration. No regulator’s ever going to go after whether an operating system could include TCPIP in its fundamental design.
So what do you think that they could go after? What kinds of things, what kind of cases might you expect will come along if in fact this act becomes law.?
I think they would focus their energy on the ones that probably dominate the headlines, the ones that got written up in the house majority report’s top list of most egregious forms of integration. It’s not just the integration itself. It’s what comes after the integration, afterwards.
And so there’s this provision in the bill that tries to limit the types of cases to that sort of integration that gives rise to what it calls a quote, “conflict of interest” end quote, that creates the incentive and ability, I’m paraphrasing here, for the platform to want to disadvantage a rival. I mean, so what kind of integration could that be?
And it’s one that I think has drawn a lot of attention is Google’s integration from marketplace into private label merchandise, right? It seems like that ground is fodder for Google to do a lot of bad things. Here they see that some merchant, independent merchant, is doing well on the platform and then they clone the idea. Then they steer searches to the clone.
And then the clone basically is toast and either has to exit or just kind of cede the market to Amazon. We also know that Amazon is using its platform power to force merchants to buy things like fulfillment services or advertisements, and if it doesn’t, they can be buried in search. So, this is Congress kind of representing a certain slice of the constituency that says, “We don’t have a taste for case by case enforcement of good self-preferencing and bad self-preferencing, we just want to nip this thing in the bud. Don’t even let Amazon have a toe in the merchandise space. We just don’t even want to wait for it to happen. We don’t have faith that regulators are going to be able to suss out good integration, bad integration, we just want to kind of knock out the integration from the get go.” That’s what I think this bill would go after.
And how would you characterize the reaction to this bill so far on the whole? I mean, you’ve mentioned that some of the critics maybe are lobbing fringe cases against it, or taking it to maybe an illogical extreme. What do you think folks are saying about this one?
This one is getting the harshest criticism. What I’m seeing in the Twitter-sphere and in social media and the like is a seeming tolerance for the non-discrimination bill. I think people recognize that there are some blatantly harmful forms of self-preferencing, but they’re very worried.
Without naming names, there’s a law professor I know who’s very worried about all sorts of things that Apple is into- like integration of music- that could be banned under this bill. And they’re asking, “Why would we just want to have a sweeping ban when some integration is innocuous and that some can even be downright pro competitive,” to the extent there’s certain synergies on the Apple platform say, especially across the hardware.
So I feel like of the two, this one is really getting it. And what I think it’s really to come down to is, can the bill drafters figure out a way to create a limiting principle? That does apply, I want to tell you, a little bit to certain acts in the bill, but so that it can’t be characterized or construed as something as being too kind of heavy handed, and therefore incapable of getting passage.
The non-discrimination bill has a sponsor already in the Senate. Senator Klobuchar said that she’s going to be drafting her own non-discrimination bill. In contrast, I don’t think the structural separation bill has a sponsor yet. And to me it’s very early, right? Because these bills have just been out a week- but if you see another week or so go by and really no one’s fighting in the Senate? That’s telling us something, which is how are you going to get 60 votes in favor of structural separation? It may not be there. In which case the non-discrimination bill is going to have to do most of the heavy lifting.
So next up is the Platform Competition and Opportunity Act- otherwise known as the sort of ban on mergers. What does this one say?
So, this one is going to- the way that I put it kind of shorthand- is mergers by dominant platforms who meet a certain criteria would be presumptively unlawful. It’s not a complete ban, because it would allow the dominant firm to try to justify its acquisition. If it can show that it, say, doesn’t compete with the target in any way. There’s a whole tick list of things that it might be able to do to get out of it. So it’s not an airtight ban, but it’s pretty close and you’ll see it be characterized again on Twitter as being a complete ban and it’s close, but it’s not exactly that.
So you’ve kind of pointed me to a couple of different criticisms that are out there around this one. One’s this idea of cloning. And what does cloning mean in this context? I mean, you’ve already used it to some extent in the Google and Yelp example, but what does cloning mean in this context? Why is that a critique?
So what cloning means here and in what I was just talking about before on the self-preferencing is that the platforms are very good at reverse engineering a business idea. A lot of these ideas cannot be protected through intellectual property law. And so, the buyer always has the option of copying or cloning or appropriating the content or the design and just doing it themselves.
I’m sure you saw, I think, the Wall Street Journal did a bit of profile on how Mark Zuckerberg and Facebook would basically stalk these targets and say, “You have a certain amount of time to accept my offer. And if you don’t want this”- what probably is a distressed- “purchase price, I’m just going to take it from you as a clone.” So that’s what we mean by cloning.
And so, there’s a piece, I think, at CNBC that made its way around Twitter yesterday. And basically saying that if you take away the buyout option, it’s going to lead to cloning or more cloning. And to that, I would submit that cloning is happening right now. I don’t think that this bill, removing a buyout option, is going to cause more cloning, or cloning to appear for the first time.
In fact, as I mentioned, the cloning is all part of this kind of heavy handed, almost thuggish strategy of the platforms to go around and try to get innovators and entrepreneurs to sell out. Ideally, from the platform’s perspective, at prices below fair market value. “If you don’t sell it to me, I’m just going to take it. And there’s really nothing that you can do.”
So why are the venture capitalists opposed to this one?
Yeah, well, you know, the venture capitalists. I saw a venture capitalist interviewed and they said something that seems smart, taken out of context, which is, “Why the ban? Why not just have regulators kind of suss out the good acquisitions from the bad acquisitions?”
And I think that if you could draw it up on a chalkboard, that’s the way you’d like it to go. You wouldn’t want a ban. You’d want to just maybe tighten the rules around the sorts of deals that are getting through. The problem is that regulators have had now hundreds of opportunities to stop acquisitions by the big platforms. And they’ve just been sleepy. I don’t know a nicer way to put it.
But over the last decade, they have not challenged anything. And one of two things is going on, they might think that the case law just doesn’t work in their favor. And so they just don’t want to waste their time or resources bringing a case that they can’t stop. Or two, they legitimately got turned or convinced by the platforms that these were innocuous or good acquisitions- Facebook taking Instagram and WhatsApp. I mean, in hindsight, these were colossal regulatory mistakes. And I think what the bill is saying is, “You know what? These guys had their chance. We went a decade, some of the most horrific acquisitions were allowed, an epic amount of acquisitions were allowed to occur right under our noses. We don’t want to leave it to these guys any longer. We’re just going to take away the discretion to tolerate anti-competitive acquisitions.”
And I don’t want to suggest all of them, but a lot of the people who did oversee this parade went on to go work for the platforms themselves. So I see why we’ve reached the state where a lot of what I’ll call the structuralists- there’s another kind of fancy word for them, but the new Brandeis-ians- they just kind of want to nip these things upfront. They don’t want to let them kind of fester or try to police them on the backend. I understand. I sympathize where they’re at when they’re like, “Screw it. We’re going to stop it.” And that’s what they’re doing with these bills.
This is one that Alex Kantrowitz wrote a piece in particular about on his Big Technology blog. He said this one could really be the big tech bill that could backfire spectacularly. He’s most concerned about this one. What would you tell him if we had him on this podcast?
Yeah, I read his piece and thought it was a good piece. You know what he was worried about- and so there’s this obvious, well, we’ll call it a static concern. And then, I think it ignores the dynamic concerns. I’m using these fancy economic terms, but in a static sense, if you just take away a bid from a seller and it turns out to be the high bid, well, of course the seller is worse off, right?
So if the tech platform was going to buy your app for a million and your next best offer was 750, this bill has just basically made you $250,000 worse off. Well, I mean, congratulations. That certainly could happen. But the problem of course, is that if that were the only concern, then yeah, this would be a no brainer.
It would be bad law, but there are anti-competitive effects and you have to weigh against those effects that I just mentioned. And I think before we even turn to the anti-competitive, I just want to say that venture capital right now is super strong. There’s a lot of money swashing around and that author that you mentioned, in fact, acknowledged this.
So if the second best bid is really, really high and maybe even higher than the big tech bid? Then removing the big tech bid isn’t going to do that much damage to the seller. If you’re following me? So go back to my example- I use, one million, 750- but if the 750 that other bidder is really a 999, taking out the million dollar bid isn’t going to make you much worse off.
Okay? So that’s on one side, but on the flip side, you can’t just fixate on the harms to potential sellers. You almost have to think about the anti-competitive effects. And one thing that regulators and academics in the space are really worried about is this notion that a big platform is going to buy an up and comer and then either shut it down- you’ve probably heard of these called killer acquisitions, they happen in the pharmaceutical space. Or just kind of bend the acquisition, the target in such a way as to bring it onto the board and therefore not compete against it the way that it would’ve competed had, say WhatsApp or Instagram been allowed to operate as independent.
And we have to balance the benefits and the costs. I think that the final consideration is this: what’s the alternative? The alternative is that you’re going to turn it over to some omniscient regulatory agency and they’re going to be able to suss out good from bad. If they’ve proven to be incompetent at that, either on their own or because the laws are just hostile, then this might be kind of a second best approach to regulating the space.
So we’ve got a couple more to get through and not that much more time. So let’s go on to the next one, the augmenting compatibility and competition by enabling service switching act is a mouthful there. But this is the data portability and inoperability piece. What’s this one all about?
Yeah. Access for short so that no one ever has to say that long name again. But the way kind of the background that I’d give to understand this bill is that whereas, the self preferencing or the non-discrimination bill, as I like to put it, basically tolerates the platforms, the monopoly power and says, “Okay, we’re just going to try to limit the platform’s ability to extend the power into the ancillary markets.”
What this bill does, it says, “Well, we don’t want to tolerate forever, that there’s one dominant social media platform, one dominant e-commerce. We want to try to breathe life into a horizontal rival, so that we don’t have to live the rest of our lives at the mercy of these monopolists.” So the idea here is, what is standing in the way of saying a second social media platform kind of getting up on its legs and taking on Facebook.
And the idea is that you have all this data advantage that’s residing inside of Facebook. So the idea is that if Facebook could be compelled to kind of be nice and share its data and also operate in a way that could allow, say, cross platforming, say messaging and the like? It might give these upstarts a certain leg up and breathe life into them. That’s the thrust of data portability and interoperability.
I’ve got to tell you that what I’m observing here on the Twitter-verse is that this one goes down well. It especially goes down almost too well among the platforms and their lobbyists. It makes me almost worried that they figured out that this thing is so speculative. The idea that we’re going to breathe life into a rival Facebook by just requiring Facebook to play nice.
I think they wanted to show that they’re behind something and they’ve kind of gotten behind this act. And so while I’m neither a fan or detractor, I just kind of, I’m meh. I’m indifferent to this one. I would love it to work. And let’s give it a chance.
So, arguably, I guess this one was perhaps modeled a little on theTelecommunications Act of 1996 that mandated that phone numbers should be portable. And so some of the critique that I’ve seen- including from Gus Hurwitz onTech Policy Press- is that social media really aren’t like phone numbers. Your social media network graph, all the data, all the zillions of photos of your friends and family and dinners that you’ve had at exotic places is not the same thing. Not the same kind of portable asset that a phone number would be. Isn’t that part of this? That’s just simply, this is just, I don’t know, the wrong metaphor at work here?
I am with him. It’s going to be harder at the margin. I’ll explain why, but that doesn’t mean we shouldn’t try. So let me try to defend what Gus is likely saying, because I think I’ve said it before. And I was a big fan of data portability of the telephone space. But to me, the key difference is that when I called up Sprint and I said, “I’m moving over to Verizon. I want to take my line with me.” It didn’t require any coordination between me and my friends. My line traveled with me. My friends would dial my old line. And voila, the service would continue working.
Here, the type of migration that needs to occur in between a person on a social network and a startup is going to be a lot more involved. It’s not just me walking away, but I’ve got to somehow take me and my friends with me and that sort of coordination problem is going to be really hard. I don’t want to suggest that it can’t happen because, to be honest, I just don’t know enough about the space. And I do think that it should be tried. But I am worried. I’m worried about it happening, but let these guys have a whack at it. And if I’m wrong and we get a rival the Facebook up in a few years, I’ll print this tweet and I’ll eat it, live.
Let’s look at the last one, which is the Merger Filing Fee Modernization Act, the MFFMA- if we were going to shorten that one, I suppose. Is this one something people should even take the time to read?
Well, just know that it’s not controversial. I really haven’t seen any opposition. And I think everyone recognizes that the agencies need more funding. And so this would just kind of raise the price and it makes sense that, to the extent we can discourage it, economists think that pricing things that we don’t like is a good way to discourage it. So nobody’s getting discouraged. A few frivolous mergers by raising the price, and then if it’s anti-competitive and they end up having to pay more, no one’s going to lose any sleep over that. So we like this bill- this is good for lots of reasons.
So that might be a good place to just pause and ask the question. Let’s assume 1, 2, 3, all these bills get somehow through our deeply divided Congress. What, in fact, does this mean for the FTC or DOJ? I mean, do they have the resources to think all this through? Will there be enough resources in the government to put these things to work and try these bills out?
I think so. I think that, with respect to say the self-preferencing bill, the non-discrimination bill, the first one we talked about? This is really just bringing a certain amount of cases in a court. They either can bring the case into a federal court or bring it to the FTC’s ALJ.
I don’t think this requires a ton of a ton of manpower to go out and identify a good, compelling case of self-preferencing. And then to challenge it, I don’t think that would do a lot. And then, with this, I guess the same thing could be said with respect to challenging certain types of vertical integration that they find to be kind of innately raising a conflict of interest that, I’m paraphrasing, that gives rise to incentive and ability to disadvantage a rival. That’s kind of a limiting principle from that bill, the separations bill.
I don’t think it’d be that hard to find it, to staff it up and to go after it if they want to. And I think that of all the bills that require a significant amount of resources, it’s going to be this ACCESS bill, the interoperability bill. Because this one contemplates creating these special advisory committees that are specific to each platform.
Because interoperability might mean one thing for Amazon and another thing for Facebook. And so I think that that one is going to require some resources. I don’t know if it’s such a big amount that they can’t handle it, but of all the five that we talked about, that’s the biggest one. But I think that we shouldn’t allow resources to get in the way of the mission here. I mean, if they don’t have the resources, we need to give them more, because this thing is absolutely critical. If we don’t stop this train or at least slow it down, we can really threaten edge innovation in a way that’s going to harm competition and choices for future periods, for our kids and our grandkids.
It does seem like somehow the American public is, I guess, in line with your perspective. There’s a poll that came out today in Axios from Data for Progress, which suggests that there is a pretty strong majority of Americans that support breaking up the tech companies into smaller entities and stronger regulation of the tech sector. For the average person that’s out there, what can they expect? Let’s say these somehow get through Congress this year, in 2021. What can they expect? Are we going to start to see lawsuits brought and companies broken up in 2022, or what’s the timeframe for antitrust actions?
Yeah. One, very soon. Well, these wouldn’t be antitrust actions. This is just new litigation pursuant to these new laws, outside of antitrust. But yeah, I think it could happen very soon. One thing that I found out, just talking to some of the staffers, for example, there’s this process by which the bills called for the agencies to designate a platform as being a covered entity, that is a dominant platform and it’s liable to these new provisions.
But I found out that a private litigate can sue, and so long as they can establish the elements that are in the bill for what constitutes a covered entity or covered platform, then they can prove this to the fact finder. So it’s conceivable. I don’t want to get anyone’s hopes up, but that the non-discrimination bill gets the sponsor in the Senate by Senator Klobuchar, you get 60 votes there and it passes?
It is conceivable that we’d have a lawsuit straight away. If I had to bet on which one that would come first, probably Yelp v. Google, could be the first case litigated under this matter. Could happen very quickly. And then, what I always tell people is that the bigs- and I’m putting in Yelp- obviously can afford a law firm and their experts to go.
If you get a few of these self-preferencing cases in the pipeline, you’re going to put the platforms on notice that if they continue to misbehave, they’re going to be sued. And so maybe they’ll temper their aggression towards the smalls- that is, the mom and pop merchant that’s getting run off the road right now.
They might be able to- this is such a mean word- but free ride off of the litigation expenditures by the mids and the larger app providers and content providers and merchants who are willing to kind of duke it out with these players in the courtroom. I mean, we could shift the dynamic here and we could actually get a very different attitude by the platforms vis-a-vis independents.
So you’ve testified in theHouse and you’ve been in conversations around the creation of one or more of these bills. In the world that you imagine in the future- assuming that one or more of these goes through, and it sounds like you’re more enthusiastic about one or more- what do you hope the landscape looks like? What do you hope the ecosystem looks like in five years time or 10 years time. And why will it matter to an individual out there in the world? How’s someone’s life going to be different?
I mean, that’s why it’s been so hard to go after these currently, under antitrust law, because the harm is kind of like, if this were an environmental case, it’s like a toxic waste that’s going up into the atmosphere, but it can’t really be smelled. So when Amazon steals an idea from an independent and then steers searches to the clone, right, they typically are going to sell the same merchandise. Arguably even better merchandise at the same price or lower. And from the consumer’s perspective, in the short run, you’re saying, “How am I harmed from this? I mean, I feel terrible for the independent merchant, but I’m no worse off.”
Right. But, here’s how you’re being harmed is that if a bunch of independents are watching this game as it’s being played out, where the playing field is so stacked against you that you either die because your idea was a loser or you die because it was too good and it got stolen by the platform.
The next round of innovators, the next independents, are going to say, “You know what? This makes no sense. Why would we ever invest in new product, in their new app that gets stolen from us, or a new merchandise or a new website. Why do we ever do this? If this is how the game is going to unfold, period after period after period?”
And so the harm to the consumer, again, it’s like a subtle one. It’s this gas that has no smell as the room is filling up. The consumer- it’s our future selves, it’s our sons and our daughters or granddaughters. If this is allowed to fester, in future periods, there will be fewer innovations and fewer choices, less competition as these ancillary markets or adjacent markets just entirely get monopolized by the platforms. That’s the concern and how I try to explain this to the person on the street.
Hal Singer, thank you very much for joining me today.
Yeah, it was a blast. Have me on again sometime.
Justin Hendrix is CEO and Editor of Tech Policy Press, a new nonprofit media venture concerned with the intersection of technology and democracy. Previously, he was Executive Director of NYC Media Lab. He spent over a decade at The Economist in roles including Vice President, Business Development & Innovation. He is an associate research scientist and adjunct professor at NYU Tandon School of Engineering. Opinions expressed here are his own.