Hi, folks. If you told low-polling Joe Biden a couple of months ago that he’d have a rebound this summer, he’d have celebrated. Until he learned you were talking about his Covid.
On July 9, 2021, President Joe Biden issued an executive order “on Promoting Competition in the American Economy.” Among the “dangerous trends” it sought to reverse was the concentration of power in certain industries, notably the sector where “a small number of dominant Internet platforms use their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage.” But it wasn’t just Big Tech that Joe was objecting to—the order promised to open up markets in everything from hearing aids to beer. It proposed a White House Competition Council to tackle a lot of those problems. Most of all, it promised more vigorous enforcement of antitrust laws.
A year later, the Biden economic policy team claims they’ve delivered. “There’s been a real change in the enforcement culture of antitrust laws,” says Tim Wu, special assistant to the president for technology and competition policy. “Deals that went through without any challenge 10 years ago would clearly be challenged today. The Justice Department and the Federal Trade Commission are on a winning streak.” Indeed, there are currently investigations or suits involving Google (ads), Amazon (seller favoritism), and Apple (app store bullying). And now, Big Tech’s practice of scooping up potential competition in emerging markets is under fire: In late July the FTC, under antitrust crusader Lina Khan, moved to block Meta’s purchase of the virtual reality startup Within Unlimited. Comparisons abounded to Facebook’s decade-old purchase of Instagram, then a relatively tiny startup, which only later became an owned-and-operated giant. And it’s not just tech: This week there’s a trial concerning the Department of Justice’s objection to a merger between the largest publisher, Penguin Random House, and the third biggest, Simon & Schuster. Stephen King himself took the stand to bolster the government’s case. It’s another sign of the activism of DOJ antitrust czar Jonathan Kanter.
I’d wanted to talk to Wu in part because I’d known him in his previous guise as a law professor and antitrust activist—he even wrote a book arguing for breakups of giant corporations—but I hadn’t spoken with him since he disappeared into the White House. I figured his fingerprints might be all over the administration’s tech policy. The comms team at the White House was open to an on-the-record chat, but only on the condition that it be a joint interview with Bharat Ramamurti, deputy director of the National Economic Council. Two for the price of one!
Both Wu and Ramamurti say that a critical step for Biden’s antitrust push was recruiting people like Khan and Kanter who would aggressively enforce the laws—and in the Meta case, pushing the regulatory boundaries to reflect 2022 realities. But Wu says ultimately the key to changing the competitive landscape won’t be just government action, but shifting the mindset so that big companies refrain from bullying behavior that might tie them up in litigation.
When I first read the executive order, I figured that the Competition Council, a twice-yearly gathering of top officials, would be just a ceremonial gathering. Ramamurti admits that a lot of councils and task forces are pro forma—but not this one. “Cabinet secretaries and other agency heads have to say what they accomplished in the last six months and [will accomplish] over the next six months.” The president kicks off the meeting, and each agency has five minutes to explain what it’s done. There are hours of preparation beforehand, and a push to make announcements before the meeting. “The fact that there’s a meeting and a deadline and a need to show what you’ve done is a major part of accountability,” says Wu.
Wu even suggests that we’ve turned a corner in stemming Big Tech’s dominance. “Ten years ago or whenever, they were able to get away with acquiring potential competitors, or making deals to lock out other companies,” he says. “It’s a much more challenging environment to do that kind of stuff, and in some ways, they’ve changed their conduct. And when they change their conduct, it’s harder to remain as entrenched as they were.”
Not everything has gone swimmingly in Wu’s tech policy domain. For reasons I can’t comprehend, we currently have no US chief technology officer; instead we have three deputy CTOs. And while the Biden administration made a gutsy move by nominating Gigi Sohn, a righteous foe of the Powers That Be, to the Federal Communications Commission, it hasn’t been aggressive enough in either pushing the nomination to a vote or finding someone else. As a result, almost halfway through Biden’s term, the Democrats still don’t have an FCC majority.
Still, it’s clear that the Biden administration has dramatically changed the antitrust atmosphere, much in the way Wu had been advocating for before he moved to DC. The question now is whether this momentum can outlive the administration. (Microsoft, after losing its suit in 1999 under Clinton’s DOJ, later won a friendly settlement from the incoming Bush Justice Department.) Also, the recent Supreme Court ruling that limited enforcement by the EPA might portend similar rollbacks on government action against monopolistic corporations. Wu admits that’s a concern. “We know we face a somewhat challenging judicial environment,” he says. “We have to be really careful with the rules; we have to make sure they're well-rounded. But the good news is that, in many of these cases, we're just tapping authority that’s been there for a very long time.” He also notes that the administration is in favor of proposed antitrust legislation. (But, as far as I can see, not to the point where it’s cracking congressional heads to get it done.)
At the end of our conversation, Wu addressed what it was like to work for antitrust action from inside the White House. “It’s been a treat, an opportunity to try to put into practice things I've been thinking about or writing about for the better part of two decades,” he says. “In that respect, it's been kind of an experience of a lifetime.” After that summation, it wasn’t so surprising that, soon after we spoke, Bloomberg reported that Wu would be returning to private life “in the coming months.” Wu quickly tweeted that the rumors of his departure were “greatly exaggerated.” In government, no one has a monopoly on non-denial denials.
The last time the US government went big on tech antitrust was when it sued Microsoft. The government won its case—Bill Gates and company did compete illegally—but in a November 1999 Newsweek column, I wondered whether the judge’s plan to break up the company made sense.
Just as Microsoft seems in denial about its past, Judge Thomas Penfield Jackson appears to be in denial about its future. True, in his 207-page "Findings of Fact," the judge in the Microsoft antitrust suit compellingly verifies the government's key charge that the company overstepped its bounds in forcibly enlisting its captive business allies to defend its turf. (Microsoft insists its behavior was exemplary.) But not all of the judge's ruling deals in fact. Some of it is conjecture about how the computer marketplace will evolve over the next few years. And some of it, despite appeals-court warnings against judicial kibitzing on software design, consists of Judge Jackson's surprisingly confident views on what features do and do not belong in an operating system (OS).
Most strikingly, he contends that building Internet software into Windows was not only unnecessary but an overall detriment to users, because it sucks up computing resources and forces holdouts to the Web revolution to pay for something they don't want. In fact, he doesn't seem to think that browsing should ever be an integral part of an OS. The judge would have been on safer ground to simply state that Microsoft's massive effort to integrate the browser into Windows was originally launched more to snuff Netscape than benefit customers. But now that the Net seems poised to be fully meshed into our computing experiences and even in our daily lives, it makes sense for operating systems to handle some of the load. At the least, the matter is debatable. But should the decision-making process on this design issue be led by some gavel pounder who prefers fountain pens to WordPerfect?
Jennifer asks, “For years we’ve been told that tech will disrupt health care, but there hasn’t been much change in affordability or access. Do you believe that Amazon’s acquisition of One Medical will change any of that?”
Thanks, Jennifer. You’re right that Amazon’s entry into the field could be a big deal, though the emboldened antitrust forces in the Biden administration (see above) might challenge the acquisition. It’s certainly the case that in terms of consumer friendliness, American health care is the opposite of Amazon’s customer-first ethic. It’s the world’s most expensive system, yet we trail other industrialized nations in life expectancy. It would be great if we could get our doctor appointments, prescriptions, and cures as easily as the goodies that Amazon ships to our doorsteps.
But after watching other hubristic companies, like Google and Microsoft, crash and burn on their health efforts, I’m skeptical that even the most sophisticated corporation can truly transform our ailing system. Turning this battleship around isn’t enough—you’d have to sink it, with lifeboats on hand, to make sure that the passengers survive the transition. (Sorry for the waterlogged metaphor.) It’s not an accident that our health care system is so bad—pretty much everything awful about it winds up being profitable for someone, be it big pharma, insurance companies, or doctors who just happen to own a piece of the outpatient surgical facility where they cut you up. These special interests have managed to fend off endless attempts to reform a system that just about everyone hates. Changing that might require a disruption that even Jeff Bezos can’t deliver.
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