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The antitrust conundrum

The world is waking up to the anti-competitive potential of big tech; the challenge is how to regulate it effectively

The antitrust conundrum
Many users said that the Google Home app was reflecting an error on adding smart home devices. (Photo Credits- Reuters)

By Atanu Biswas

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As hefty penalties were imposed twice on Google by the Competition Commission of India (CCI) in the second half of October—$162 million and $113.04 million—the internet giant might be facing serious heat for its business model. While the BigTech firms, in general, are at the receiving end in different corners of the globe for a variety of reasons, ranging from privacy violations to misinformation to algorithmic discrimination and lack of transparency, antitrust activities are another serious issue. The CCI also asked Google to cease and desist from indulging in the practices it deemed anti-competitive. Earlier, in February 2018, six years after it ordered an investigation against Google, the CCI found the tech giant guilty of abusing its dominant position in India and fined it Rs 135.86 crore, which amounts to 5% of Google’s average total revenue from India operations in the previous three years.

‘Antitrust’ is a buzzword now, and it has certainly gained momentum in the US and elsewhere—even in India—in the recent past. It ought to be so—today, about 10 pharmaceutical companies control the production and sale of the world’s medicine; three chemical firms dominate the supply of seeds and pesticides, and thus global agriculture; one conglomerate produces nearly every non-craft beer for sale; and tech giants such as Facebook, Google, and Apple control not just commerce but almost every bit of our lifestyle today. Antitrust laws are regulations that encourage competition by limiting the market power of any particular firm. The Competition Act 2002 (as amended) follows the philosophy of modern competition laws and aims at fostering competition and protecting Indian markets against anti-competitive practices by enterprises.

Big Tech firms, undoubtedly, are now facing tighter scrutiny around the world. Not only in India, but Google is also being investigated for antitrust breaches in countries such as Canada, Russia, South Korea, Brazil, Argentina, France, Germany, Italy, and the US, of course. This September, an EU court largely upheld a $4 billion fine on Google for Android OS antitrust practices. The fine is one of three antitrust penalties totalling more than $8 billion that the European Commission slapped on Google since 2017. In fact, the European Commission has now widened its crackdown on digital giants with more antitrust investigations targeting Amazon, Apple, and Facebook, and sweeping new rules aimed at clamping down on Big Tech.

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As history would suggest, failing to control excessive corporate power may prompt the rise of populism, nationalism, extremist politicians, and fascist regimes. In his 2018 book The Curse of Bigness: Antitrust in the New Gilded Age, Columbia professor Tim Wu—best known for coining the term ‘net neutrality’ in 2003—illustrated how figures like American jurist Louis Brandeis and US president Theodore Roosevelt confronted the democratic threats posed by the great trusts of the Gilded Age in American history when a handful of companies, or ‘trusts’, owned key parts of the infrastructure like railroads in America. The Sherman Antitrust Act of 1890 was passed “as a reaction to the rising power of monopoly trusts”, but was laid dormant for a decade until “activated” by Theodore Roosevelt against JP Morgan’s Northern Securities railroad company and John Rockefeller’s Standard Oil. ‘Antitrust’ legislation such as The Clayton Antitrust Act was passed in 1914. The biggest threat from large corporations was “the suppression of individual liberty, indeed of manhood itself,” Justice Brandeis wrote in 1914.

A century onward, what about the antitrust conundrum in today’s world? In a New York Times op-ed in 2016, Eric Posner of the University of Chicago and Fiona Scott Morton and Glen Weyl of Yale University argued that “[t]he great, but mostly unknown, antitrust story of our time is the astonishing rise of the institutional investor… and the challenge that it poses to market competition.” Within two months of his tenure, US president Joe Biden had appointed Tim Wu as special assistant to the president for technology and competition policy. Then, in June 2021, Biden appointed Lina Khan, Wu’s colleague at Columbia, as a commissioner at the Federal Trade Commission. Khan’s 2017 paper titled Amazon’s Antitrust Paradox gained her wide prominence. The paper pointed out that besides being a retailer, Amazon had progressively transformed itself into “a marketing platform, a delivery and logistics network, a payment service, a credit lender, an auction house, a major book publisher, a producer of television and films, a fashion designer, a hardware manufacturer, and a leading host of cloud server space”. Incidentally, Khan’s appointment was a rare moment of bipartisanship—48 Democrats and 21 Republicans supported her confirmation. Then, this September, the White House held a roundtable meeting on some technology issues hearing from experts on antitrust, privacy, algorithmic discrimination, and other areas of tech policy.

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“Capitalism without competition isn’t capitalism; it’s exploitation. Without healthy competition, big players can change and charge whatever they want and treat you however they want,” said Biden in July 2021 at the signing of an executive order promoting competition in the American economy.

Well, anti-corruption scholar and activist Zephyr Teachout thinks that the monopolies like Facebook, Google, and Bayer are throttling American democracy. And Teachout has a solution: Break ‘Em Up, which is also the title of his 2020 book, the foreword of which was written by Bernie Sanders. Also, in his book, Tim Wu, an unreconstructed Brandeisian, argued that it is time now to control the economic structure before it controls us.

The big fight of this century is now brewing around the globe for sure.

The writer is professor of statistics, Indian Statistical Institute, Kolkata

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First published on: 09-11-2022 at 04:00 IST