By Chris Sagers, SLATE
For years, critics of Silicon Valley have been talking about a coming “techlash” in American antitrust law, but it’s only in recent months that we’ve seen what one looks like. Last week, the Federal Trade Commission and a coalition of nearly every U.S. state filed antitrust suits against Facebook, following pending cases by the Justice Department against Google (to crack its dominance in search) and by Epic Games against Apple (to break its grip on the App Store). The Facebook suits are huge and ambitious, seeking to slice off the company’s largest subsidiaries. They’re also probably the most technically important. In a few specific ways, they could revitalize the tools of a broader style of antitrust enforcement.
For a long time, government has left most of our antitrust law unused, focusing on only the narrowest kinds of misbehavior—the most serious, explicit conspiracies among separate firms. That conduct is the easiest to challenge, because our very conservative courts have made it hard to use the rest of the law, which consists mainly of a rule against anti-competitive mergers and another rule against exclusion of competitors by monopolists. You can’t do this and expect to have a working competition policy, one that protects average folks from monopolies and checks concentrated power. If the only thing you ever stop is conspiracy, firms just find other ways to squeeze the same money out of people’s wallets.
The long, detailed Facebook complaints tell a very compelling story of anti-competitive animus and abuse, documented with a rich collection of internal communications, including many damaging admissions by CEO Mark Zuckerberg and the company’s second-in-command, Sheryl Sandberg, as well as dozens of other juicy zingers that would make any defense attorney impulsively clench. One Facebook engineer, in an email quoted in the complaint, wrote that the company’s abuses of smaller tech firms “just makes me feel like a bad person.”
The case focuses on two theories of liability that have been gathering dust for decades: “nonhorizontal mergers” and “unilateral refusals to deal.” The revitalization of either would be very desirable for the law.
American law has come to view one firm buying another as essentially never a concern unless they compete “horizontally”—that is, they currently sell the same goods to the same customers. The acquisitions that make up the primary challenge in the Facebook suits—Facebook’s purchases of Instagram and WhatsApp—were not horizontal, or at least they didn’t look like it at the time. But they were neutralizations of nascent, developing threats. The law’s decadeslong indifference to such deals is coming to seem like a major mistake, not just in Silicon Valley but throughout the economy.
