Lucas Strakowski, Associate Member, University of Cincinnati Law Review
The Subcommittee on Antitrust, Commercial and Administrative Law has recently conducted an investigative “top-to-bottom review” of the U.S. tech market. The investigation’s findings led to a Report that centered on the “Big Four” tech companies—Amazon, Apple, Facebook, and Google—and their business practices to understand how their control and market power affects the U.S. economy and democracy. Part II will provide some background information on how Report discusses the “Big Four.” Part III will summarize the Report’s recommendations. Part IV concludes.
II. Background on the “Big Four”
As the Internet has become more ubiquitous, American tech companies control an ever-increasing share of the U.S. economy. This growing market share has, after a significant delay, led Congress to recognize that dominant tech companies are likely expanding into anti-competitive monopolies. The House Subcommittee on Antitrust, Commercial and Administrative Law’s “Investigation of Competition in Digital Markets” (the “Report”) focuses on four tech companies that hold anti-competitive or monopolizing shares over their respective markets: Facebook, Google, Amazon, and Apple.
The Report found that these four companies impact not just their own sectors and niches but also impact business attitudes and economics more generally. Businesses that use the “Big Four’s” services to access users and enter markets may need to concede to economically harmful demands from the dominant platforms as “the cost of doing business.” The “Big Four’s” market dominance has also raised concerns about the power dynamic between the platforms and news organizations. In particular, Google and Facebook “undermin[e] the quality and availability of high-quality sources of journalism” through their distributive and monetary control of online news access, and the companies effectively regulate the online news industry. Investors are concerned that the increasing market share occupied by these dominant firms “materially weakens innovation and entrepreneurship in the U.S. economy.” Venture capitalists have described an “innovation kill zone” that insulates the dominant platforms from competitive pressure because new entrants in those markets are not “worthwhile investments.” Other investors avoid investing in companies that attempt to compete, directly or indirectly, with the dominant firms. Considering the growing level of public and private unease about these companies, the Report recommends a number of potential antitrust responses to combat the “Big Four’s” dominance over online markets.
III. The Report’s Recommendations
The Report’s recommendations are split into three sections: “Restoring Competition in the Digital Economy,” “Strengthening the Antitrust Laws,” and “Strengthening Antitrust Enforcement.”
A. Recommendations related to restoring competition in the digital economy
The Report recommends various actions Congress could take to rectify harmful business practices, to reduce anti-competitive features of the online market, and to address the natural online market tendencies—such as network effects, switching costs, and other entry barriers—that can lead to monopolization. The Report notes that because “digital markets . . . [are] prone to tipping in favor of a single dominant firm,” external remedies may be necessary to combat those trends.
First, the Report recommends creating and enforcing structural separations and line of business restrictions against dominant firms. These two tools are used to prevent conflicts of interest that may arise when a dominant firm enters a new market. Structural separations place limits on how a business may be structured. These limits prohibit dominant firms from operating in markets in which dominant firms would compete with other businesses who depend on the that firm’s infrastructure to engage in that market. Line of business restrictions—unlike structural separations which allow a dominant firm to access a particular market and then require structural adjustments—restrict dominant firms from engaging in particular markets entirely. Both of these tools have been used by Congress to prevent dominant firms from holding conflicts of interest in other “network industries,” such as railroads. The benefit of structural separations and line of business restrictions is that, as “structural” rules, their administrative costs are lower than “conduct remedies,” which require more constant upkeep.
Second, the Report recommends implementing rules to prevent discrimination, favoritism, and self-preferencing by the dominant firms. Self-preferencing is a practice in which a platform privileges its own products or services, and favoritism is a similar practice in which a dominant platform gives preferential treatment to one business partner over another. Because other firms rely on a dominant firm’s infrastructure, such as a small business relying on Amazon’s shipping infrastructure to reach a wider geographic market, a dominant platform’s discriminatory treatment effectively “pick[s] winners and losers in the marketplace.” The Report notes that Congress has multiple options that could help to address this problem, such as requiring a dominant platform to offer “equal terms for equal service and would apply to price as well as to terms of access.”
Third, the Report recommends “interoperability” and “data portability” to help address the lack of innovative pressures against dominant firms. Interoperability allows competing platforms to interconnect with users and lower a user’s switching costs, making the user more likely to choose a service based on features rather than whether they would keep or lose their existing network. Data portability is an additional cost-switching issue. Instead of forcing users to create entirely new profiles for each service, the Report recommends creating tools that would assist in transferring a user’s relevant data from one platform to another or otherwise helping rebuild a consumer’s or business’s social profile after switching platforms.
Fourth, the Report recommends changing the presumptive legality of a merger involving a dominant firm. Instead of the current presumption that a merger is acceptable, the Report endorses the view that acquisitions by dominant platforms should instead be presumed anti-competitive unless the merging parties “could show that the transaction was necessary for serving the public interest and that similar benefits could not be achieved through internal growth and expansion.” The Report also notes that changing the presumption this way better reflects “Congress’s preference for growth through ingenuity and investment rather than through acquisition.”
Finally, the Report advocates for legislation that would provide news publishers and broadcasters a “narrowly tailored and temporary safe harbor to collectively negotiate with dominant online platforms” to create a more even playing field for the press. Actions along these lines would help alleviate the significant power that platforms such as Facebook have over distribution of news online. In particular, the “Journalism Competition and Preservation Act of 2019” was introduced to allow news publishers to use antitrust laws when publisher coordination directly relates to quality of news, benefits the entire industry, and directly relates to and is reasonably necessary for negotiations with dominant platforms. The legislation would purportedly allow community newspapers to “more fairly” negotiate with the dominant platforms; this additional bargaining power would protect journalism, promote competition, and allow communities to stay better informed.
B. Recommendations relating to strengthening antitrust law
Over the past several decades, courts have “significantly weakened” antitrust laws, causing anti-competitive conduct to become “increasingly difficult” for antitrust enforcers and private plaintiffs to successfully challenge such conduct. Moreover, the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) have taken increasingly narrow views of their authorities, diverging from congressional intent for these antitrust enforcement agencies. Even as enforcement has become weaker and more difficult, the “Big Four” have collectively purchased more than 500 companies in the past twenty years. The antitrust agencies did not block a single acquisition. As such, the Report recommends invigorating merger enforcement through a series of reforms, including: codifying bright-line rules and structural presumptions in concentrated markets; protecting potential rivals, nascent competitors, and startups that could enter the dominant platforms’ markets; and strengthening the “vertical merger” doctrine because current case law disfavors challenges to vertical mergers.
Further weakening antitrust enforcement through both private and agency action, Courts have heightened the legal standards that plaintiffs must overcome to prove monopolization. To combat these changes, the Report recommends that Congress:
(1) extend the Sherman Antitrust Act to prohibit abuses of dominance and examine the thresholds for rebuttable presumptions of dominance;
(2) override the legal requirement that monopoly leveraging “actually monopolize” the second market, because these practices tend to damage the second market regardless;
(3) clarify that “proof of recoupment” as needed under existing case law should not be necessary to prove predatory pricing or buying, ultimately overriding several Supreme Court decisions;
(4) revitalize the “essential facilities” doctrine to better combat dominant platforms that use threats of delisting or refusals to deal as leverage to extract greater value out of a deal;
(5) clarify that conditioning access to a product or service, known as “tying,” is an anti-competitive practice; and
(6) address whether self-preferencing and anti-competitive product design that undermines competition or excludes competitors, even if it is an improvement for consumers, is a violation of antitrust law.
Finally, the Report recommends overriding other cases that would provide plaintiffs in antitrust actions with a greater probability of success and clarifying other policy considerations for the courts.
C. Recommendations relating to strengthening antitrust enforcement
The Report provides multiple recommendations for strengthening antitrust enforcement.  The Report notes that Congress must “revive its long tradition of robust and vigorous oversight of the antitrust laws and enforcement,” and commit to ongoing investigations, legislative activity, and making sure reform efforts are given follow-through. The Report lists several options that would bolster such oversight, including: (1) triggering civil penalties for violations of antitrust rules, (2) requiring the FTC to regularly collect data and report on anti-competitive issues in various sectors in the economy, (3) increasing agency effectiveness by requiring greater transparency and accountability of antitrust agencies, (4) requiring agencies to perform retrospectives on merger transactions, (5) codifying stricter prohibitions on the “revolving door” of officials that pass between agencies and the companies that they investigate, and (6) increasing the budgets of the DOJ’s Antitrust Division and the FTC. Finally, the Subcommittee has several recommendations that would benefit private antitrust plaintiffs, such as eliminating “court-created standards” for “antitrust injury” or “antitrust standing,” reducing procedural obstacles to litigation such as forced arbitration clauses and “undue limits” on class action formation, and, perhaps most interestingly, lowering the heightened pleading requirement introduced in Bell Atlantic Corp. v. Twombly.
The Report provides several areas in which Congress should soon act. The importance of acting quickly is paramount, as the “Big Four” and their market shares are unlikely to dissipate. Moreover, the issues discussed in the Report are likely to become even more pronounced as more and more businesses enter the online marketplace. Delaying action could lead to even more consolidation of the existing dominant firms’ market control of online markets, harming economic competition in both American and global markets. With additional research and input from the business community and the American people, as well as further investigations by congressional bodies, Congress already has or can gain the necessary information to create valuable tools to use as antitrust measures against tech companies as the market develops. In doing so, Congress can safeguard the American economy from being controlled by one or two dominant tech firms, and instead promote a market that is accessible for all businesses, large or small.
 House Committee on the Judiciary, https://judiciary.house.gov/subcommittees/subcommittee/?SubcommitteeID=14904, (last visited Nov. 2, 2020). The Subcommittee is part of the House Committee on the Judiciary and is tasked with matters involving bankruptcy law, commercial law, bankruptcy judgeships, administrative law, independent counsel, state taxation affecting interstate commerce, interstate compacts, antitrust matters, other appropriate matters as referred by the chairman, and relevant oversight capabilities.
 Majority Staff of Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary, 116th Cong., Investigation of Competition in Digital Markets, (Comm. Print 2020) (the “Report”), https://judiciary.house.gov/uploadedfiles/competition_in_digital_markets.pdf.
 The “Big Four” can also include Microsoft, creating the “Big Five.” See, Sen, Conor, The “Big Five” Could Destroy the Tech Ecosystem, Bloomberg Opinion (November 15, 2017, 11:00 AM), https://www.bloomberg.com/opinion/articles/2017-11-15/the-big-five-could-destroy-the-tech-ecosystem.
 Report at 6.
 For additional background information, see Report at 36–77.
 Combined value of the “Big Four” platforms as of September 2020 is $5 trillion, which is more than a third of the value of the S&P 100. Report at 10.
 See e.g. Platform Perceptions: consumer attitudes on competition and fairness in online platforms, Consumer Reports. (Sept. 24, 2020), https://advocacy.consumerreports.org/wp-content/uploads/2020/09/FINAL-CR-survey-report.platform-perceptions-consumer-attitudes-.september-2020.pdf. Notably, consumer attitudes disfavor these tech company practices, and consumers are concerned about how information gathered by the online platforms is being used. Id. Moreover, many consumers also support greater governmental regulation and oversight of these online platforms. Id.
 Reportat 7. “[W]e firmly believe that the totality of the evidence produced during this investigation demonstrates the pressing need for legislative action and reform. These firms have too much power, and that power must be reined in and subject to appropriate oversight and enforcement.”
 The Report describes Facebook as having a monopoly power on the “social networking market” and its power is “firmly entrenched and unlikely to be eroded by competitive pressure from new entrants or existing firms.” Id. at 13. The Report also notes that Facebook is “more likely to compete among its own products [(Facebook, Instagram, WhatsApp, and Messenger)] than with actual competitors.” Id. at 12.
 The Report describes Google as having a monopoly in markets for “general online search” and “search advertising.” Id. at 14.
 The Report describes Amazon as a “significant and durable market power in the U.S. online retail market.” Id. at 15. The Report further notes that Amazon has a monopoly power over many small and medium sized businesses that “do not have a viable alternative to Amazon for reaching online customers.” Id.
 The Report notes that Apple has “significant and durable market power in the mobile operating system market.” Id. at 16.
 For more detailed information about the findings on market effects, see Report 77 – 129. For more information about the individual platforms themselves and their respective practices, see 132 – 174 (Facebook), 174 – 247 (Google), 247 – 330 (Amazon), 330 – 376 (Apple).
 Id. at 11.
 Id. at 17.
 Id. See also id., n.26.
 Id. at 18.
 Id., n.28. The article cited in the Report footnote defines “kill zone” as a space in which competitive pressure against a startup that would compete against a dominant firm subjects the newer firm to the possibility of likely acquisition by an incumbent platform (e.g. Facebook), which then discourages investors and venture capitalists from funding those. See Rajan, Raghuram, et al., Kill Zone, Becker Friedman Institution (Mar. 17, 2020; last revised Apr. 28, 2020), https://ssrn.com/abstract=3555915.
 Reportat 18.
 Id. at 4-5.
 Id. at 37 – 44.
 Id. at 377.
 Id. at 384.
 Id. at 384.
 Report at 380.
 Id. Structural separations include two different subcategories, ownership separations and functional separations. Id. An ownership separation “require[s] divestiture and separate ownership of each business” and a functional separation “permit[s] a single corporate entity to engage in multiple lines of business but prescribe[s] the particular organizational form it must take.” Id.
 Id. at 379. See also Organisation [sic] for Economic Co-Operation and Development [OECD], Line of Business Restrictions – Background Note, 4 (June 8, 2020), https://one.oecd.org/document/DAF/COMP/WP2(2020)1/en/pdf.
 Id. at 380.
 Id. at 381.
 Id. at 382.
 Id. at 384. An example of interoperability is email. Id. The system of email is universal and open to all, regardless of whether you use an Outlook account, a Google mail account, an Apple account, or some other service to access and use the service. Id. at 384-85. Other examples of interoperability are telephones, telegraphs, and radio. Id. at 385.
 Cf. id.
 Id. at 386.
 Id. at 386.
 Id. at 387.
 Id. at 388.
 Journalism Competition and Preservation Act of 2019, H.R.2054, 116th Cong., (as introduced in the House on Apr. 3, 2019).
 Id. at 389.
 Id. at 391.
 Id. at 392.
 Id. at 392.
 Id. at 392-4.
 Id. at 394-5.
 Id. at 395.
 Id. at 396.
 Id. at 397.
 Id. at 398.
 Id. at 398-399.
 Id. at 399.
 Id. at 400-401.
 Id. at 402-403.
 Id. at 403-404. Bell Atlantic v. Twombly, 550 U.S. 544 (2007).