Today, Public Knowledge released my new paper, “A Lesson From the Landmark AT&T Breakup: Both a Sector-specific Regulator and Antitrust Enforcers Were Needed.” The paper traces how antitrust enforcers and a regulatory agency with jurisdiction over telecommunications, each working independently in pursuit of its own defined mission, produced a competitive telecommunications industry with the attendant benefits for competitors and consumers and society – lower priced and higher quality goods and services. A similar dual approach of a regulatory agency with jurisdiction over Big Tech and the vigorous application of existing and enhanced antitrust laws aimed at the industry can do the same for Big Tech.
For the past several years, a number of macro-level public policy debates have been swirling around Big Tech. One debate has been about whether the antitrust laws, perhaps with some strengthening or new provisions specifically designed to reach Big Tech, are sufficient to address the dominance of companies such as Facebook (Meta), Google, Amazon, Apple, and some others. Indeed, whether Section 2 of the Sherman Act, antitrust’s main anti-monopolization law, can be effective for at least part of meeting this challenge is currently being tested in antitrust cases against Facebook (Meta) and Google.
Another issue concerns whether some platforms have particular economic and other characteristics that inherently lead to, or at least “tip” toward, dominance by a single or a very small number of firms with the resultant tendency toward practices that harm competition or lead to anti-consumer practices. If they do, it follows that these platforms need sector-specific competition laws or regulation to prevent the dominance from recurring rather than waiting for these characteristics to lead right back to the same dominance, with the attendant anti-competitive and anti-consumer consequences.
There is also a question over who should regulate – whether the authority to regulate should go to an existing regulatory agency or a new agency with specific subject matter jurisdiction.
Public Knowledge was early to the discussion of most of these issues. Beginning in 2018, Public Knowledge published a series of articles and blog posts advocating for the need for regulation to address some of the inherent characteristics of tech. The details of why regulation was needed and the elements of a legislative mandate for such regulation were later spelled out in detail. What had been a debate on whether to regulate now seems to be an emerging consensus, indeed an emerged consensus, that platforms should be regulated.
There is not yet consensus on whether there should be a new regulatory agency, a “Digital Platform Authority,” or whether authority should be vested in an existing agency or agencies, although Public Knowledge believes a new agency should be created and the idea is picking up steam in Congress. Some proposed legislation would vest authority in some areas to existing agencies.
Public Knowledge has also long advocated not just for regulation but also for antitrust enforcement as an additional remedy to the dominance of platforms. Others have argued that regulation will interfere with antitrust enforcement and that regulated markets are the antithesis of antitrust’s goal of competitive markets. Imposing regulation on markets is not a substitute for application of the antitrust laws. Those who oppose regulation have even argued that regulation will prevent markets that might otherwise be competitive by imposing inefficiencies and unnecessary regulatory drag on those markets. Others have argued the opposite. Public Knowledge has recently argued that a measure to protect proprietary data that began as a sector-specific FCC regulation should be enacted via statute to protect competition and avoid unfair treatment by platforms.
This paper, “A Lesson From the Landmark AT&T Breakup: Both a Sector-specific Regulator and Antitrust Enforcers Were Needed,” addresses these issues. It reviews the most relevant recent experience with the application of the antitrust laws to a sector, communications, overseen by a sector-specific regulatory agency, the Federal Communications Commission. The FCC regulation, even with all the historic defects associated with regulatory agencies (such as “regulatory capture,” a plodding pace, fits and starts, etc.), not only resulted in the creation of competition but also formed the basis for the framework needed by the antitrust court to impose divestiture and the dismantling of an “end-to-end” monopoly – what many regard as one of the most successful antitrust cases in history.
Moreover, this occurred without any coordination between the court and the agency. The FCC was already over a decade along in addressing other issues arising under its regulatory purview when the antitrust case was filed in 1974. The FCC’s efforts continued as the antitrust case moved along independently in the courts for the next seven years or so. It is also noteworthy that during the 20 or so years the FCC was engaging in its regulatory efforts that resulted in competition in multiple markets, the FCC’s statutory mandate, the Communications Act, did not even mention the word “competition” in its charge to the FCC. This paper shows that there is no antagonism between sector-specific regulation and application of the antitrust laws. Indeed, they are synergistic and regulation can begin to deliver the benefits of competition before or as antitrust remedies take effect and as part of a broader antitrust solution.
Just as antitrust and regulation should work in tandem, legislative ideas to strengthen antitrust and give agencies sector-specific tools should do the same. That means creating a new digital regulator. In the immediate term, it means passing bipartisan bills like the American Innovation and Choice Online Act and the Open App Markets Act.