By Caroline Wang, American Consumer Institute
Over the past month, five Republican lawmakers banded together to form the “Freedom from Big Tech” caucus in the House of Representatives. The stated aim of the caucus is to “rein in Big Tech” through “legislation, education, and awareness.” The caucus reflects a growing concern amongst Republicans of the influence of large tech companies on political discourse.
Led by Rep. Ken Buck (R-CO.), ranking member of the House Judiciary Antitrust Subcommittee, the caucus seeks to have an influential role in shaping future antitrust legislation.
The formation of this caucus indicates a fundamental shift in the mentality of Republicans on antitrust issues. Historically, Republicans have been the strongest proponents of the consumer welfare standard, an approach to antitrust that focuses on the harm being done to the consumers, rather than focused on company size. Thus, under the consumer welfare standard, large companies are acceptable provided it’s in the best interest of consumers.
The consumer welfare standard was initially proposed by Robert Bork, a Judge of the United States Court of Appeals for the District of Columbia Circuit under President Reagan and briefly as Attorney General under President Nixon. Bork’s antitrust philosophy was a hallmark of Republican policies for several decades. Unfortunately, the Republican’s rejection of the consumer welfare standard favoring a “big is bad” approach will only result in a worse outcome for consumers.
The formation of this caucus is concerning, as it will advocate legislation that will limit tech companies’ abilities to offer high-quality and affordable products by further politicizing antitrust law. Consumers derive significant value from the services tech companies offer, such as accessing social media platforms, search engines, and productivity applications like Google Docs and Gmail at zero cost.
If these companies faced significant limitations to their business models due to new antitrust laws, it is expected that the costs of these services would rise substantially. Legislators should acknowledge this fact and craft antitrust legislation that ensures the consumer welfare standard remains the centerpiece of antitrust law.
Tech giants offer consumers more than just free services. America’s biggest tech spend billions of dollars a year each on research and development (R&D). Microsoft invests $19.27 billion, Google’s parent company Alphabet dedicates $27.57 billion, and Amazon spends $42.74 billion. These investments have helped Microsoft develop faster forms of cloud storage, Google to create driverless cars, and Amazon to invent drone delivery services that promise to speed up shipping times, among many other technological innovations.
R&D spending is critical to creating cheaper and more technologically advanced products. Antitrust regulations designed to punish tech companies would only damage their ability to invest in research and development that provides innovative goods and services. In addition, limiting the size of technology firms will reduce economics of scale and scope, which means that per unit costs would increase. Ultimately, consumers will lose out.
The Freedom from Big Tech caucus is expected to support changes to antitrust laws, such as the package of six major antitrust reform bills that are presently moving through the House. Caucus Chair Ken Buck has been a vocal proponent for these bills and has stated that his fellow conservatives have “concern about Big Tech’s power over information and speech” and that “the only way to stop that power is through antitrust reform.”
Many founding members of the caucus have supported the recent Merger Filing Fee Modernization Act, which would increase fees for companies to file for mergers. They have also supported mandated interoperability through the Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act. These fees and requirements can significantly damage a companies’ ability to generate consumer benefits. The caucus signals a continuation of the dangerous politicization of antitrust law, a trend that has led to policy formation based on trying to win over voters rather than an examination of what benefits consumers.
Believing that big tech companies are always dangerous ignores the myriad ways that consumers benefit from them. It is alarming that this mindset has grown more popular amongst lawmakers, particularly those that previously placed consumer welfare at the heart of antitrust. If Republicans wanted to take a strong stand in support of American consumers, they would advocate to keep the consumer welfare standard, not a rigid and inflexible “big is bad” mentality.
Caroline Wang writes for the American Consumer Institute, a nonprofit educational and research organization. For more information about the Institute, visit www.TheAmericanConsumer.org or follow us on Twitter @ConsumerPal