[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]
PROPOSALS TO STRENGTHEN THE ANTITRUST LAWS AND RESTORE COMPETITION
ONLINE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ANTITRUST, COMMERCIAL AND
ADMINISTRATIVE LAW
of the
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
OCTOBER 1, 2020
__________
Serial No. 116-91
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://judiciary.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
42-250 WASHINGTON : 2020
COMMITTEE ON THE JUDICIARY
JERROLD NADLER, New York, Chairman
ZOE LOFGREN, California JIM JORDAN, Ohio
SHEILA JACKSON LEE, Texas Ranking Member
STEVE COHEN, Tennessee F. JAMES SENSENBRENNER, Jr.,
HENRY C. ``HANK'' JOHNSON, Jr., Wisconsin
Georgia STEVE CHABOT, Ohio
THEODORE E. DEUTCH, Florida LOUIE GOHMERT, Texas
KAREN BASS, California DOUG COLLINS, Georgia
HAKEEM S. JEFFRIES, New York KEN BUCK, Colorado
DAVID N. CICILLINE, Rhode Island MARTHA ROBY, Alabama
ERIC SWALWELL, California MATT GAETZ, Florida
TED LIEU, California MIKE JOHNSON, Louisiana
JAMIE RASKIN, Maryland ANDY BIGGS, Arizona
PRAMILA JAYAPAL, Washington TOM McCLINTOCK, California
VAL BUTLER DEMINGS, Florida DEBBIE LESKO, Arizona
J. LUIS CORREA, California GUY RESCHENTHALER, Pennsylvania
MARY GAY SCANLON, Pennsylvania, BEN CLINE, Virginia
Vice-Chair KELLY ARMSTRONG, North Dakota
SYLVIA R. GARCIA, Texas W. GREGORY STEUBE, Florida
JOE NEGUSE, Colorado
LUCY McBATH, Georgia
GREG STANTON, Arizona
MADELEINE DEAN, Pennsylvania
DEBBIE MUCARSEL-POWELL, Florida
VERONICA ESCOBAR, Texas
Perry Apelbaum, Majority Staff Director & Chief Counsel
Chris Hixon, Minority Staff Director
------
SUBCOMMITTEE ON ANTITRUST, COMMERCIAL AND
ADMINISTRATIVE LAW
DAVID N. CICILLINE, Rhode Island, Chair
JOE NEGUSE, Colorado, Vice-Chair
HENRY C. ``HANK'' JOHNSON, Jr., F. JAMES SENSENBRENNER, Jr.,
Georgia Wisconsin, Ranking Member
JAMIE RASKIN, Maryland KEN BUCK, Colorado
PRAMILA JAYAPAL, Washington MATT GAETZ, Florida
VAL BUTLER DEMINGS, Florida KELLY ARMSTRONG, North Dakota
MARY GAY SCANLON, Pennsylvania W. GREGORY STEUBE, Florida
LUCY McBATH, Georgia
Slade Bond, Chief Counsel
Douglas Geho, Minority Chief Counsel for Administrative Law
C O N T E N T S
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OCTOBER 1, 2020
OPENING STATEMENTS
The Honorable David Cicilline, Chairman, Subcommittee on
Antitrust, Commercial and Administrative Law................... 2
The Honorable James Sensenbrenner, Ranking Member, Subcommittee
on Antitrust, Commercial and Administrative Law................ 3
The Honorable Jerrold Nadler, Chairman, Committee on the
Judiciary...................................................... 4
The Honorable Jim Jordan, Ranking Member, Committee on the
Judiciary...................................................... 6
WITNESSES
William Baer, Visiting Fellow--Governance Studies, Brookings
Institution
Oral Testimony............................................... 9
Prepared Testimony........................................... 12
Zephyr Teachout, Associate Professor of Law, Fordham University
Oral Testimony............................................... 18
Prepared Testimony........................................... 20
Michael Kades, Director of Markets and Competition Policy,
Washington Center for Equitable Growth
Oral Testimony............................................... 26
Prepared Testimony........................................... 28
Sabeel Rahman, President, Demos
Oral Testimony............................................... 93
Prepared Testimony........................................... 95
Christopher Yoo, John H. Chestnut Professor of Law,
Communication, and Information Science, University of
Pennsylvania Carey Law School
Oral Testimony............................................... 103
Prepared Testimony........................................... 105
Rachel Bovard, Senior Director of Policy, Conservative
Partnership Institute
Oral Testimony............................................... 110
Prepared Testimony........................................... 112
Tad Lipsky, Antonin Scalia Law School, George Mason University
Oral Testimony............................................... 124
Prepared Testimony........................................... 126
Sally Hubbard, Director of Enforcement Strategy, Open Markets
Institute
Oral Testimony............................................... 136
Prepared Testimony........................................... 138
APPENDIX
Statement for the record from Consumer Reports................... 209
Letter from Demand Progress Education Fund and Americans for
Financial Reform Education Fund................................ 211
Statement for the record from Public Knowledge................... 217
Statement for the Record from Jason Boyce, Founder and CEO,
Avenue7Media................................................... 222
PROPOSALS TO STRENGTHEN THE ANTITRUST LAWS AND RESTORE COMPETITION
ONLINE
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THURSDAY, OCTOBER 1, 2020
House of Representatives
Subcommittee on Antitrust, Commercial, and Administrative Law
Committee on the Judiciary
Washington, DC.
The subcommittee met, pursuant to call, at 1:06 p.m., in
Room 2141, Rayburn Office Building, Hon. David Cicilline
[chairman of the subcommittee] presiding.
Present: Representatives Cicilline, Nadler, Johnson of
Georgia, Raskin, Jayapal, Demings, Scanlon, Neguse, McBath,
Sensenbrenner, Jordan, Buck, Armstrong, and Steube.
Staff present: David Greengrass, Senior Counsel; Madeline
Strasser, Chief Clerk; Cierra Fontenot, Staff Assistant; John
Williams; Phillip Berenbroick, Counsel; Catherine Larson,
Special Assistant; Anna Lenhart, Technologist; Amanda Lewis,
Counsel, Antitrust, Commercial, and Administrative Law; Joseph
Van Wye, Professional Staff Member, Antitrust, Commercial, and
Administrative Law; Lina Khan, Counsel, Antitrust, Commercial,
and Administrative Law; Slade Bond, Chief Counsel, Antitrust,
Commercial, and Administrative Law; Chris Hixon, Minority Staff
Director; Tyler Grimm, Minority Chief Counsel for Policy and
Strategy; Ella Yates, Minority Director of Member Services and
Coalitions; Douglas Geho, Minority Chief Counsel for
Administrative Law; and Kiley Bidelman, Minority Clerk.
Mr. Cicilline [presiding]. The subcommittee will come to
order. Without objection, the chair is authorized to declare a
recess at any time.
We welcome everyone to today's hearing to explore Proposals
to Strengthen Antitrust Laws and Restore Competition Online.
Before I begin, I would like to remind members that we have
established an email address and distribution list dedicated to
circulating exhibits, motions, or other written materials that
members might want to offer as part of our hearing today. If
you would like to submit materials, please send them to the
email address that has been previously distributed to your
offices, and we will circulate the materials to members and
staff as quickly as we can.
I would also like to remind all members that guidance from
the Office of the Attending Physician states that face
coverings are required for all meetings in an enclosed space,
such as committee hearings. I expect all members on both sides
of the aisle to wear a mask except when you are speaking.
I now recognize myself for an opening statement.
Since June 2019, the Antitrust Subcommittee has conducted a
bipartisan investigation into the state of competition in
digital markets. From the beginning of this process, we
promised to perform a top-to-bottom review, including
examination of the business practices and dominance of the
largest technology platforms: Amazon, Apple, Google, and
Facebook. Over the past 15 months, we have collected nearly 1.3
million internal documents and communications, a hearing record
that totals 1,800 pages, testimony from 30 witnesses,
submissions from more than 40 antitrust experts of every
political persuasion, and interviews with more than 240 market
participants, former employees of the investigated platforms,
and other interested parties. Similar to prior congressional
investigations, we did not set out with any preordained outcome
in mind, and we have followed the facts. We have also worked to
preserve bipartisan cooperation throughout this process. As my
colleague and friend, Ken Buck, said before our last hearing,
and I quote, ``This is the most bipartisan effort I have been
involved with in 5-and-a-half years in Congress.'' Let us
continue our work in the same spirit during today's hearing,
the 7th and final hearing that we will hold to conclude the
subcommittee's investigation.
At our last hearing in July, we took the testimony of the
chief executive officers of the four leading digital platforms:
Jeff Bezos, Tim Cook, Mark Zuckerberg, and Sundar Pichai. For
almost 6 hours, we pressed them for answers about their
business practices, including about the evidence we uncovered
that they have exploited, entrenched, and expanded their power
in anti-competitive and abusive ways. To put it simply, their
answers were evasive, they were nonresponsive, and they raised
new questions about whether they believe their companies are
beyond oversight. These four corporations differ in important
ways, but our investigation has identified three problems that
each present.
First, each platform now serves as a gatekeeper over a key
channel of distribution. By controlling access to markets,
these giants are able to pick winners and losers throughout our
economy. Not only do they wield tremendous power, but they are
also able to abuse it by charging exorbitant fees, imposing
oppressive contracts, and extracting valuable personal data
from the people and businesses that rely on them. Second, each
platform uses their gatekeeper position to protect their own
power. By controlling the infrastructure of the digital age,
they have surveilled other businesses to identify potential
rivals and ultimately bought out, copied, or cut off their
competitive threats. Third, these platforms have abused and, it
seems, will continue to abuse their control to expand their
power in the marketplace. Whether it is through self-
preferencing, predatory pricing, or requiring users to buy
additional products, the dominant platforms have used their
power in destructive ways in order to grow even bigger.
Each of these American companies have contributed immense
technological breakthroughs and economic value to our country
over the past several decades. They were founded on shoestring
budgets in dorm rooms and garages and are a testament to our
core values as a country. But in an effort to promote and
continue this new economy, Congress and antitrust forces allow
these firms to regulate themselves with little oversight. As a
result, the internet has become highly concentrated, less open,
and more hostile to innovation and entrepreneurship. To put it
simply, these once scrappy underdog startups have grown into
the kinds of monopolies we last saw more than a century ago
during the time of oil barons and railroad tycoons. We stand at
a crossroads, there is no doubt about that. As part of this
hearing, we will discuss paths forward for addressing these
competition problems.
Today's hearing also concerns broader questions about the
overall rise of market power in our economy and potential
solutions to arrest this concerning trend. In March,
Subcommittee Ranking Member Sensenbrenner and I sent bipartisan
requests for submissions from antitrust and competition policy
experts with a diverse range of views on these matters. We
requested comments on several questions as part of our review,
including whether existing laws and enforcement levels are
adequate to prohibit monopolization and anti-competitive
mergers and acquisitions in today's economy. In response, we
received 38 submissions from dozens of leading experts,
including several of the witnesses testifying at today's
hearing, which we have made public in connection with today's
hearing. We are joined today by several leading experts in this
field who will offer their thoughts on potential remedies for
the problems that we have identified over the past 15 months.
In closing, I thank our esteemed witnesses for their
testimony at today's hearing. And before I conclude, I just
want to take a brief moment to recognize the outstanding career
of the ranking member of the subcommittee, my friend and
colleague, Jim Sensenbrenner. It has been a tremendous pleasure
working with you this Congress. As part of your distinguished
career, you have left an indelible mark on this committee, on
the United States Congress, and on our country. You have never
hesitated to work across party lines in the service of
hardworking Americans, which is a quality that I hope endures
on this subcommittee in your absence following your retirement
from the Congress. As an incoming chairman, I looked to you for
leadership at the beginning of the Congress. You have been a
great source for advice and wisdom to me over the past 2 years.
I thank you for your friendship and for your incredible service
to this committee and to our country. And with that, it is my
great privilege to recognize the ranking member of the
subcommittee for purposes of making his opening statement. Mr.
Sensenbrenner.
Mr. Sensenbrenner. Thank you very much, Mr. Chairman, and
thank you for your wonderful words. Looking back at 42 years,
you know, I have tried my best to identify issues, seeing where
bipartisan agreement can be made, and then moving forward. And
during my chairmanship, we were tremendously productive on a
bipartisan basis, and since then I have kind of picked and
chosen my issues, and this has been one of them.
This investigation has been very informative for us to
better understand the tech ecosystem. When we began this
process more than a year ago, I was very interested to learn
about some of the country's largest and most successful
companies. These companies--Google, Facebook, Amazon, and
Apple--are ubiquitous in today's America, but grasping their
influence in size and, more importantly, what they do with that
influence in size was something that Congress needed to
examine. Examination on the state of antitrust in the state of
the tech world is wrapping up, and we have heard from
academics, enforcers, competitors, and notably the big four
tech companies themselves. The record is extensive. So we find
ourselves today hearing from a panel of witnesses who will tell
us exactly what we should do about all this. The size of this
panel reflects the diverse opinions of what is to be done.
At our last hearing, I didn't believe we needed to change
the country's antitrust laws or abandon the consumer welfare
standard. It has been my experience after 42 years in Congress
that this body is ill-suited to micromanage the economy, and
probably even worse at predicting what it will look like in the
future. I remain skeptical of proposals that break up these
companies, mandate a one-size-fits-all data standard, or create
a government-run ``public option.'' It appears to me that this
would ultimately stifle innovation and be more harmful to
consumers. The question we should be answering is whether the
law is inefficient to protect the consumer.
I believe the American people have been well served by our
antitrust framework for decades. By contrast, I don't think
that overly-burdensome regulations that break up these
companies or having the government insert itself in their
operations is the right course of action. Where we need to see
improvement is in the enforcement of existing law. However, it
should be noted that enforcement is starting to work. For more
than a year, the DOJ and FTC have been conducting their own
antitrust investigations into the big tech companies. It is
being reported that as a result of this investigation, DOJ is
readying a case against Google. Let us keep in mind as we
consider whether a drastic overhaul of antitrust is warranted
to meet the goals of the consumer welfare standard.
I do want to take a moment to thank Chairman Cicilline for
the courtesies that he extended to me during this process in an
effort to keep this investigation bipartisan. I do truly
believe in the friendship we have developed, and while we
ultimately disagree on the future of antitrust laws and the
tech companies, I can say that it has been a pleasure to know
you and to work with you on this. I also want the record to
reflect that the next time we go to dinner, it is Chairman
Cicilline's turn to buy, and I yield back.
Mr. Cicilline. Thank you, Mr. Ranking Member. I now
recognize the chairman of the full committee, the gentleman
from New York, Mr. Nadler, for his opening statement.
Chairman Nadler. Thank you, Mr. Chairman, for holding
today's hearing. It has been a pleasure to take part in this
historic and bipartisan process. As we approach the final
months of this session, I want to take a moment to reflect on
the subcommittee's substantial efforts during this Congress.
The subcommittee has taken a number of concrete steps
forward in support of its critical mission to promote open and
fair markets for the American people with an appropriate focus
on consumers and workers as well as small- and medium-sized
businesses who are struggling to stay afloat. During the 116th
Congress, we have favorably reported out of the Judiciary
Committee nearly a dozen bipartisan bills developed by the
Antitrust Subcommittee, all of which passed with unanimous
support. These include a bipartisan package of bills that ban
various types of anti-competitive conduct by branded drug
companies, which are vital to stop the skyrocketing cost of
prescription drugs. We were able to enact one of these bills,
the CREATES Act, into law last year. This act, which was
sponsored by Subcommittee Chairman Cicilline and Senator
Patrick Leahy, will cut drug prices by billions of dollars by
removing entry barriers for generic competitors.
Over the past year, we have also enacted several other
important laws that originated with this subcommittee,
including laws to ensure that small businesses, veterans, and
consumers have access to a fresh start through the bankruptcy
system. This work is more important than ever as our Nation
continues to grapple with the devastating economic effects of
the COVID-19 pandemic. We also passed out of the House for the
very first time the Forced Arbitration Injustice Repeal Act, or
the FAIR Act, which restores the rights of every American and
small business to their day in court by ending forced
arbitration. This important legislation was championed by
Courts and Intellectual Property Subcommittee Chairman Johnson.
Just 2 days ago, the Judiciary committee voted out a bill that
I sponsored to help address the student loan debt crisis. That
legislation makes student loan debt dischargeable in
bankruptcy, fixing a great injustice that burdens millions of
Americans. I am deeply proud of these efforts, and I look
forward to continuing our work towards enacting laws that will
promote competition, access to the courts, and a fair
bankruptcy process, among the subcommittee's other important
work.
Turning to today's hearing, over the past 15 months, the
Antitrust Subcommittee has undertaken a historic bipartisan
investigation of competition in the digital marketplace. As I
made clear at the subcommittee's last hearing, I had
significant concerns about consolidation and its harmful
effects. The investigational record bore this out. Each of the
major companies that were part of this investigation in its own
way exerts dominant control in the digital marketplace that has
been cause for great concern. As we approach the end of this
investigation, with the benefit of our six hearings and
substantial record, my belief that we must modernize and
reinvigorate enforcement of the antitrust laws is stronger than
ever. We must modernize our antitrust laws to meet the
challenges of our modern economy. We must ensure that our
enforcement agencies have the tools, resources, and the will to
vigorously enforce the law to protect consumers and promote
competition.
This investigation has also made clear to me that beyond
fixing the antitrust laws, we must use our oversight authority
to shore up the antitrust enforcement agencies' ability and
will to enforce those laws. In some instances, the lack of
enforcement may come down to a lack of will. Our antitrust
enforcers should not pull punches. We must ensure that the
leadership at these agencies is committed to robust
enforcement. It is also important to adequately staff and
resource the agencies as antitrust cases have become more
resource intensive and agency staff are faced with
investigating some of the wealthiest companies of all time.
I look forward to hearing from our witnesses and to
discussing how we can work together on these important matters
going forward. I thank the chairman for holding this hearing
and for his leadership of this important investigation. I also
want to thank the ranking member, Mr. Sensenbrenner, the
chairman emeritus of the full committee, for his many years of
service to this committee and to the House. He will be sorely
missed next Congress. With that, I yield back the balance of my
time.
Mr. Cicilline. I thank the gentleman, and I now recognize
the ranking member of the full committee, the gentleman from
Ohio, Mr. Jordan, for his opening statement.
Mr. Jordan. Thank you, Mr. Chairman. Big Tech is out to get
conservatives. That is not a suspicion. That is not a hunch. It
is a fact. I said that 2 months ago at our last hearing. It is
every bit as true today. Democrats have said that they want to
take a serious look at the size, power, and influence of these
companies. They have refused our repeated requests that this
include an evaluation of how platforms are censoring speech.
Maybe it is because the left isn't being censored. We never
hear about Mother Jones being demonetized. We don't hear about
Young Turks' videos being taken down. We don't hear about the
Daily Coast being censored. Nope, this only happens to
conservatives.
Google tried to demonetize The Federalist. Amazon censors
the Family Research Council. YouTube blocks videos from Senator
Blackburn. Twitter censors the President, but they let the
leader of Iran post a statement where he says they will strike
a blow against American citizens. At the last hearing, our
concerns were dismissed as ``conspiracy theories,'' despite
this mounting evidence of biased actions against conservatives.
Even though you are seeking to radically rewrite antitrust
laws, Silicon Valley continues to use its power to carry your
water. In fact, the vast majority of political contributions
from the very firms you are targeting go to Democrats. You have
even denied Republicans, and, more importantly, the American
people the opportunity to hear from Twitter at the last hearing
held by this subcommittee. Twitter, I will remind you, shadow
banned four members of Congress. Four hundred thirty-five in
the House, 100 in the Senate, 535. Four, only four, four
conservative Republicans get shadow banned by Twitter, but when
we asked you to bring them in, you said, nope, can't do that.
The root cause of Big Tech censoring conservatives lies
with the defects in how the law governing liability online has
been applied and interpreted. Rather than stimulating open
debate and free exchange of ideas, Section 230 of the
Communications Decency Act has given license to platforms to
target particular viewpoints, particularly, as I pointed out,
those of conservatives. In fact, the ``otherwise objectionable
provision'' has been abused by the platforms as a catch-all
term used to discriminate against any content they find
disagreeable.
Congress has an obligation to ensure that the rules in
place governing accountability online and providing protections
for the moderation of content are applied fairly and without
undue bias against certain ideologies. Today, a dozen
Republican members of this committee introduced legislation to
update the liability platforms could face when they insert
their own opinionated editorial decisions into what content
stays up and what content comes down. Our bill amends the
Communications Decency Act 230 to provide needed clarifications
and transparent rules of the road. Importantly, we replace the
vague ``otherwise objectionable category'' with narrowly-
tailored categories, and make clear that decisions to remove or
restrict content are immune from liability only in certain
specific instances, that reasons for these editorial decisions
must be made on an objectively-reasonable basis, not the
subjective standard that is in current law. The legislation
also makes clear that decisions to remove content must actually
be done in good faith based on predictable criteria.
Under the new law, platforms would be required to have
publicly-available terms of service that state plainly how
content modernization decisions are being made. And if content
is taken down, the platform now must supply the provider of
that content with notice explaining the basis for restricting
the censorship and provide them with an opportunity to respond.
This is commonsense reform, and I hope, as the ranking member
mentioned, I hope we can move on in a bipartisan basis. Free
speech should not be a Republican or Democrat issue. It is a
matter at the very heart of our democracy, and I look forward
to today's discussion.
I want to thank our witnesses for appearing, and I, too,
want to thank Ranking Member Sensenbrenner, former Chairman
Sensenbrenner, for his decades of work in the United States
Congress for the American people. With that, I yield back.
Mr. Cicilline. The gentleman yields back. It is now my
pleasure to introduce today's witnesses.
Our first witness is Bill Baer. Mr. Baer is a Visiting
Fellow in Governance Studies at the Brookings Institution. He
is the only person to have led antitrust enforcement at both
U.S. antitrust agencies as Assistant Attorney General from 2013
to 2016, and director of the Bureau of Competition at the
Federal Trade Commission from 1995 to 1999. Mr. Baer was twice
named the best competition lawyer in the world by the Global
Competition Review, and by the National Law Journal as one of
the decade's most influential lawyers. He received the FTC's
Miles W. Kirkpatrick Lifetime Achievement Award in 2015. Mr.
Baer received his B.A. from Lawrence University and his J.D.
from Stanford Law School where he served as senior article
editor of the Stanford Law Review.
Our second witness is Zephyr Teachout. She is an Associate
Professor of Law at Fordham University. Professor Teachout is
an expert on antitrust, election, and constitutional law. She
was the first director of the Sunlight Foundation and serves on
the board of the Open Markets Institute. She has written dozens
of law review articles and two books, including Corruption in
America: From Ben Franklin's Snuff Box to Citizens United.
Professor Teachout received her B.A. from Yale University and
her J.D. from Duke Law School.
Our third witness is Michael Kades, the Director of Markets
and Competition Policy at the Washington Center for Equitable
Growth. Prior to joining Equitable Growth, Mr. Kades served as
an attorney at the Federal Trade Commission for 20 years.
During his time at the Commission, he was also an attorney
advisor to Chairman Jon Leibowitz and the deputy trial counsel.
Mr. Kades is a graduate of Yale University and the University
of Wisconsin Law School.
Sabeel Rahman, our 4th witness, is the president of Demos.
Demos is a group dedicated to fighting for a just, inclusive,
multiracial democracy. Mr. Rahman is also an associate
professor of law at Brooklyn Law School. His writings on
democracy, economic power, and inequality have been published
in The Atlantic, The New Republic, the Boston Review, Dissent,
and The Washington Post. His first book, Democracy Against
Domination, won the Dahl Prize for scholarship on the subject
of democracy. Professor Rahman received his master's degree
from the University of Oxford and both his law degree and
doctorate from Harvard University.
The fifth witness at our hearing today is Christopher Yoo,
Professor of Law, Communication, Computer, and Information
Science at the University of Pennsylvania Law School. He is a
frequently-cited scholar on administrative and regulatory law,
with his primary research focusing on ways to connect more
people to the internet, the internet's routing architecture,
and network neutrality. He has written more than 100 scholarly
works and regularly testifies before Congress, the FCC, the
FTC, and the Department of Justice. Professor Yoo received his
A.B. from Harvard University and his J.D. from Northwestern Law
School.
Rachel Bovard, our sixth witness, is the Senior Director of
Policy at the Conservative Policy Institute. She has more than
10 years of experience working in policy in Washington, D.C. In
2006, she served as Senator Rand Paul's legislative director.
She went on to work on the Senate Steering Committee under both
Senator Pat Toomey and Senator Mike Lee as policy director. She
has also served as Director of Policy Services for the Heritage
Foundation, and in 2013, she was named one of the National
Journal's Most Influential Women in Washington Under 35. Ms.
Bovard received her B.A. from Grove City College and her
master's from George Washington University.
Our seventh witness, Tad Lipsky, is the Assistant Professor
and Director of the Competition Advocacy Program at the Global
Antitrust Institute at Antonin Scalia Law School. Prior to
joining the Global Antitrust Institute, Professor Lipsky served
as acting director of the FTC's Bureau of Competition from
February 2017 to July 2017. Over his storied career in
antitrust law, Professor Lipsky has served as the Coca-Cola
Company's chief antitrust lawyer, the first international
officer of the American Bar Association Section on Antitrust
Law, and as the co-chair of the International Competition
Policy Working Group of the U.S. Chamber of Commerce. Professor
Lipsky received his master's and J.D. from Stanford University.
Our last witness, Sally Hubbard, is the Director of
Enforcement Strategy at the Open Markets Institute. Prior to
her time with Open Markets, Ms. Hubbard was the senior editor
of antitrust enforcement and regulation of tech platforms at
the Capitol Forum. She has also spent 7 years as the Assistant
Attorney General at the New York State Office of the Attorney
General's Antitrust Bureau. Ms. Hubbard earned her bachelor of
arts at the College of William and Mary and her J.D. at New
York University School of Law.
So as you can see, we have a very distinguished panel, and
I am grateful for their presence today. We welcome all of you
and thank you for your participation. And I will begin by
swearing in our witnesses, and I ask our witnesses testifying
in person to rise, and ask our witnesses testifying remotely to
turn on their audio and make sure I can see your face and your
raised hand while I administer the oath.
Do each of you swear or affirm under penalty of perjury
that the testimony you are about to give is true and correct to
the best of your knowledge, information, and belief, so help
you God?
[A chorus of ayes.]
Mr. Cicilline. Thank you. Let the record show the witnesses
answered in the affirmative. Thank you all. You may be seated.
Please note that your written statement will be entered
into the record in their entirety. Accordingly, I ask that you
summarize your testimony in 5 minutes. To help you stay within
that time, there is a timing light in Webex as well as before
you. When the light switches from green to yellow, you have 1
minute to conclude your testimony. When the light turns red, it
signals your 5 minutes have expired. I would also remind you
that you are the only ones from your respective companies
invited to testify today, and, in accordance with normal House
practice and Section G of the House Remote Committee
Proceedings Regulations, I will assume that your sworn
testimony is your own. Please let me know if at any point the
hearing you wish to mute yourself so you can confer with your
counselor or other individuals.
Mr. Baer, you may begin.
TESTIMONIES OF WILLIAM BAER, VISITING FELLOW, GOVERNING
STUDIES, BROOKINGS INSTITUTE; ZEPHYR TEACHOUT, ASSOCIATE
PROFESSOR OF LAW, FORDHAM UNIVERSITY SCHOOL OF LAW; MICHAEL
KADES, DIRECTOR OF MARKETS AND COMPETITION POLICY, WASHINGTON
CENTER FOR EQUITABLE GROWTH; SABEEL RAHMAN, PRESIDENT, DEMOS;
CHRISTOPHER YOO, JOHN H. CHESTNUT PROFESSOR OF LAW,
COMMUNICATION, AND INFORMATION SCIENCE, UNIVERSITY OF
PENNSYLVANIA CAREY LAW SCHOOL; RACHEL BOVARD, SENIOR DIRECTOR
OF POLICY, CONSERVATIVE PARTNERSHIP INSTITUTE; TAD LIPSKY,
ANTONIN SCALIA LAW SCHOOL, GEORGE MASON UNIVERSITY; AND SALLY
HUBBARD, DIRECTOR OF ENFORCEMENT STRATEGY, OPEN MARKETS
INSTITUTE
TESTIMONY OF WILLIAM BAER
Mr. Baer. Thank you, Chairman Cicilline, Chairman Nadler,
Ranking Members Sensenbrenner and Jordan. I appreciate the
opportunity to appear today, and thank you for the courage and
tenacity this subcommittee has shown in tackling the role of
antitrust law in the 21st century. I bring the perspective of
someone who has been privileged to serve on the front lines of
antitrust enforcement in four different Administrations, twice
at the FTC, and most recently as head of antitrust at the
Department of Justice. That experience teaches me that in many
cases, our antitrust laws have been successful and forces for
good. But too often antitrust jurisprudence has fallen short
and failed to protect consumers and competition as much as it
can and as it should.
My submission makes four basic points. Antitrust
enforcement does need to be based on an analytically sound,
fact-based framework, but we can't let the perfect be the enemy
of the good, and many courts have held enforcement to an
effective standard of proof that is unrealistic and
inconsistent with the plain language of our antitrust statutes.
If the courts are unwilling to step back from this overreach,
legislation may well be needed to reset the balance. And
finally, I do believe more resources are needed if antitrust
enforcement is to fulfill its role as the economic cop on the
beat.
Now, I was on the scene in the 70s as The Chicago School
came to narrow dramatically the focus of antitrust, mostly to
price fixing and a few mergers to monopoly or near monopoly.
The Chicago School, as former FTC chair, Robert Pitofsky, put
it, it really overshot the mark. We went from a place in the
1960s when Supreme Court Justice Stewart complained that the
only consistency he could find in Supreme Court antitrust
decisions was that the government always wins. We went from
there to a 25-year dark age where the government invariably
lost. Now, we moved the needle somewhat in the 90s, convincing
the courts to block merger consolidations involving office
supply superstores, drug wholesalers, and the sustained efforts
by the government to challenge behavior by Microsoft and Toys
``R'' Us that limited competitive opportunities for rivals.
These modest successes have continued over the last couple of
decades as some courts have recognized the anti-competitive
impact of hospital consolidation and anti-competitive
agreements involving pay-for-delay understandings between
generic manufacturers and brand names. But looking back at the
cases where the government prevailed in the last couple of
decades helps explain why concentration and market power have
actually increased. Invariably when the government won an
antitrust challenge, the government's evidence was
overwhelming.
Merger to monopoly or near monopoly are transparently bad
conduct by dominant firms. In close cases, the government
typically lost, or enforcers never brought, the case in the
first place out of fear that the courts would rule against and
make more bad law. How did we get there? In my view, the fear
of getting it wrong warped antitrust enforcement. Antitrust
jurisprudence today is too cautious, too worried about the
effects of over enforcement, so-called Type I errors. Bias
against enforcement has caused many courts to demand a level of
proof that is often unattainable. That chills enforcement,
limits our ability to challenge conduct or acquisitions of
potential rivals, especially in the tech sector where firms
benefiting from network effects can acquire enduring market
power.
So what do I think we should do about it? I think we need
to modify current law to direct the courts and the antitrust
enforcers to be more assertive in challenging conduct and
consolidation that risks creating or enhancing market power.
Modest changes will suffice by incorporating presumptions that
certain behaviors are likely to reduce competition, making it
clear that showing a risk of reduction of competition is
sufficient; emphasizing that anti-competitive effects include
price and quality and innovation competition; and legislating
to overrule recent problematic court decisions.
Congress could make a meaningful difference. And we need to
consider forward-looking rules and legislation that will
enhance competition. We have precedent for that. The 2004 FCC
rule allowing consumers to port their phone numbers to
competing carriers gave consumers the economic power to reward
those with lower prices and better service. It forced incumbent
carriers to compete like never before. Those sorts of tools--
portability and interoperability--can help restore markets to a
competitive equilibrium. Congress also needs to fund antitrust
enforcement. Today we spend about 18 percent less than we did
10 years ago, despite increasing concentration, a growing
number of dominant firms, and a much, much larger economy. We
need funding both to bring enforcement actions and to allow for
after-action studies of what happened in markets where the
agency decided not to bring enforcement actions, or where the
courts rejected an antitrust challenge.
We can do more and we can do better, and thank you again
for the opportunity to be here today.
[The statement of Mr. Baer follows:]
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Mr. Cicilline. Thank you, Mr. Baer. I now recognize
Professor Teachout for 5 minutes. Could you please turn on your
microphone?
TESTIMONY OF ZEPHYR TEACHOUT
Ms. Teachout. Chairman Cicilline, Ranking Member
Sensenbrenner, and members of the subcommittee, thank you for
the opportunity to testify at this historic hearing. My
expertise is in the law of democracy, so I will speak to the
essential nature of what you are doing to protect our
democracy.
Antitrust laws, and strong antitrust laws, are essential
for freedom and for a thriving economy. The highly-concentrated
Big Tech marketplaces and the existing abuses of Big Tech,
enabled by their dominant positions, poses a major democratic
threat. It is quintessentially a congressional job to respond
to this threat. For nearly 40 years, the Supreme Court, not
Congress, has been the primary institution rewriting American
antitrust laws. The Court is detached from the realities of
business and power, unaccountable to the public, and Congress
has essentially allowed them to take the reins, gutting popular
laws with their own judge-made theories, and allowing this
massive growth of concentrated power. This has to change.
Congress, not the Supreme Court, must be the body responsible
for defining the scope of those laws. The Sherman Act, the
Clayton Act, and our other antitrust laws are not
constitutional provisions over which Congress must defer
interpretations to the Court. They are Federal laws passed by
this body, and when they're misinterpreted by courts, Congress
must act.
There are several particular cases that I and others
highlight in my written submission that are ripe for direct
congressional overturning, but it is not sufficient to pick a
handful of cases. This body must recognize its central role in
making economic policy and play an ongoing role in the kind of
investigations that it has just conducted, overseeing agencies
and continually re-examining antitrust laws. Senator Phil Hart
went to his death bed working on antitrust legislation. Up
until the 1980s, this body understood that economic policy and
anti-corruption policy required ongoing anti-monopoly
vigilance.
Second, it will not be sufficient to overturn those laws.
Significant new legislation is required, as your investigation
revealed. Key parts of Big Tech companies have become a kind of
essential public infrastructure. The economy and public life
would come crashing to a halt if they were suddenly removed. No
merchant, politician, political activist, or journalist can
thrive without them, and no individual can. They play a grossly
outsized role in the basic functions of our society and have
become unelected, unaccountable, and self-serving heads of
planned economies planned by them. This is a deeply problematic
infrastructure because they are riven with conflicts of
interest. They own platforms and compete on the platforms, so
Congress should pass a law--people often talk about this in
terms of structural separation--delineating single-line-of-
business rules for the very biggest tech companies. This
single-line-of-business rule kind of law exists throughout our
Nation's history, and it would lead to things like Amazon, for
instance, being prohibited from being involved in fulfillment
or shipping, a distinct line of business. Facebook could not
also be engaged in Facebook Messenger. Google should not be
owning YouTube.
Finally, I want to applaud this subcommittee for a riveting
and critically-important investigation, and argue that Congress
must continue with this kind of investigation, and not just
this committee. This should be the beginning of the golden age
of congressional investigations where committees use their
investigative power to reveal abuses and address them. As Big
Tech companies become more powerful, they are building direct
political power. Big Tech, as you know, is the biggest lobbyist
in D.C., and Congress must stand up to these new robber barons
to protect our public institutions, to restore democratic and
economic freedoms, and build a thriving, fair, and free
country. Thank you.
[The statement of Ms. Teachout follows:]
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Mr. Cicilline. Thank you, Professor Teachout. I now
recognize Mr. Kades for 5 minutes.
TESTIMONY OF MICHAEL KADES
Mr. Kades. Thank you, Chairman Cicilline, Ranking Member
Sensenbrenner, Full Committee Chairman Nadler, Full Committee
Ranking Member Jordan, and the members of the subcommittee for
the opportunity to testify to you on this important issue. And
I would like to share the commendations that my colleague, Bill
Baer, who also gave me my first promotion--probably his biggest
mistake--that this committee really needs to be commended for
taking on this topic, proceeding despite the politics, in a
bipartisan way. And it is really a testament to the strength of
this Nation and democracy.
The challenges we face are not limited to one or two
companies. The filing of one or two cases will not solve
problems in digital marketplaces. This committee has an ongoing
important role in promoting competition in digital markets, and
so there are three issues I urge you to consider as the
committee moves forward. First, we need legislative reform, not
just enforcement actions. Over the past 40 years, showing an
almost neurotic fear of over enforcement, the courts have
increased the burdens on plaintiffs and narrowed the scope of
the antitrust laws. Both economic research and empirical
results a result discredit that approach.
As the letter I, along with 11 other economists and
lawyers, submitted to this committee concludes, the antitrust
laws, as interpreted and enforced today, unnecessarily limit
the ability to address the anti-competitive conduct in digital
marketplaces that this committee has investigated. So, for
example, under current case law, it is arguable that the
government could not have successfully pursued its claim that
led to the breakup of the AT&T phone monopoly in the 80s,
perhaps the most significant monopolization case in the history
of the U.S. and maybe the world. Something is simply wrong when
judicial decisions implicitly undermine basic competition
principles. Just yesterday, the Third Circuit Court of Appeals
found that the Federal Trade Commission is powerless to punish
monopolists, despite agreeing that a defendant in the case, a
branded pharmaceutical manufacturer, had violated the FTC Act
and delayed lower-cost generic competition. The court blithely
concluded that the FTC could not obtain an injunction to stop
the conduct in the future, nor could it recover the nearly half
a billion dollars that the company earned by violating the law.
Again, something is wrong when the courts decide there are no
repercussions for violating the antitrust laws.
We know how the courts are interpreting the antitrust laws,
but, as Professor Teachout just mentioned, it is up to Congress
to decide whether that is correct. But unless Congress acts, it
is accepting the judicial view that the antitrust laws have
little power to stop or deter anti-competitive conduct, whether
it be in the pharmaceutical industry, digital markets, or
anywhere else in the economy. Two bills introduced by Senator
Amy Klobuchar, the Anti-Competitive Exclusionary Conduct
Prevention Act and the Consolidation, Prevention and
Competition Promotion Act, embody reforms that would allow
Congress to restore the strength of the antitrust laws. None of
this is to suggest that the government should just get a pass
from prosecuting antitrust violations against digital
platforms. To the contrary, antitrust enforcers have a duty to
attack monopoly power where they find it, despite these
challenges.
This leads me to my second point. A key remedy in an
antitrust case involving digital platforms needs to be that
once a violation has occurred, the remedy needs to eliminate
the network effects that create entry barriers, and I talk
about this more fully in my statement. But that means when we
think about remedy, prohibiting conduct, penalizing the
companies, even breaking them up, all may not be sufficient to
restore competition, so that is the challenge the enforcers
will have going forward. Finally, I want to commend also the
committee for thinking broadly about solving competition. This
is not just about competition, antitrust enforcement, or
regulation. We need both tools, as my colleague, Sally Hubbard,
reminds me often. So this committee is correct to be
considering both regulatory tools as part of that solution.
Protecting competition in digital marketplaces requires that
the laws efficiently distinguish between pro- and anti-
competitive conduct, remedies that deal with the underlying
structural problems causing the anti-competitive activity, and
a combination of antitrust enforcement of regulations so that
markets deliver the results that benefit us all.
And I have 9 seconds. I just want to say to Ranking Member
Sensenbrenner, one of my favorite things was, as I would drive
to clerk for Judge Reynolds back in the early 90s through your
district, and I would complain about the traffic, he would
always explain to me, we don't complain about that traffic
because we like James Sensenbrenner even when we don't agree
with him. So I thought this was an appropriate time to share
that story with you.
[The statement of Mr. Kades follows:]
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Mr. Cicilline. Thank you, Mr. Kades. I now recognize
Professor Rahman for 5 minutes.
TESTIMONY OF SABEEL RAHMAN
Mr. Rahman. Thank you Chairman Cicilline, Ranking Member
Sensenbrenner, members of the subcommittee and the full
committee. I'm grateful for this opportunity to participate in
this hearing with you all on this critical issue of
reinvigorating our competition policy in the online economy. As
president of Demos, we're focused very much on this idea of how
we build an inclusive and equitable democracy and economy, and
the work of this subcommittee is critical to that vision.
Tech platforms are our modern infrastructure like roads,
bridges, telecom, and it poses unique regulatory and policy
challenges that this committee in its recommendations will have
to consider. In short, as some of our colleagues have already
mentioned, we will have to engage both break ups as well as
regulatory tools, and I'll talk about that in these next few
minutes.
So if we think about the physical infrastructure of our
ordinary life--roads, telecom, bridges, electric utilities--
there are some basic rules of the road that we need for that to
actually serve the goals of economic innovation, serving
consumers and communities, and ensuring that all of us are able
to benefit in the growth of our economy. We need to make sure
that these infrastructures don't discriminate on the basis of
price, on basis of race. We need to ensure that they don't
self-deal. The kinds of interests that Professor Teachout
mentioned are a big problem. We also need to make sure that our
basic infrastructure isn't toxic, right? We wouldn't want
people who drive on the roads to then get sick from driving on
those roads. And we want to make sure that they don't entrench
themselves, that the fact that one highway exists doesn't mean
that we can't build another faster highway that shortens time
on the route. These are the kinds of challenges that we
actually face in the digital environment.
So let me give two quick examples highlighted by the work
of this subcommittee. If we take Amazon, for example, we've
seen in the hearings of this subcommittee over these last few
months how Amazon has leveraged its dominance over online
retail transactions to undercut its competitors, to engage in
predatory pricing, and to stifle innovation. This impact is not
just on the economy and on growth, it also has a particularly
hard-felt impact on black, brown indigenous communities when
you think about the impacts on small businesses, for example.
That market dominance has then, in turn, also enabled Amazon to
pressure State and local governments for more favorable
regulatory treatment and subsidies and to avoid the kinds of
liabilities for its workplace safety, particularly at a time
where we see black and brown essential workers facing
astronomically high injury rates double the industry average,
and where Amazon warehouses have themselves become hot spots
for COVID transmission.
Facebook offers another example. With the election rapidly
approaching, we've seen the dangers of an ad-based, data-
mining-based business model where an online information
platform like Facebook uses algorithms that maximize user
attention in order to sell targeted ads. That essentially means
that our information infrastructure of Facebook is actually
incentivized to allow the rapid spread of toxic misinformation,
disinformation, hate speech, attacks on black and brown
speakers, in particular. Here, too we see the burden is felt
disproportionately on black and brown communities.
The policy response to this type of problem has to grapple
with the fact that, in some ways, we want infrastructure to
enable communication, to enable new innovation. That
infrastructure has to serve all of us for the economy as a
whole rather than being a basis for the kind of entrenchment
that Professor Teachout mentioned. So I want to suggest in this
last minute and a half briefly some of the policy strategies
that this committee should consider.
First, we need to include structural separations and
breakups as part of the policy toolkit. Congress can legislate
standards to this effect. It can also reinvigorate the
enforcement powers of agencies, like the FTC, to pursue the
kinds of functional separations, line-of-business separations,
that will be important. Second, we need to complement breakups
and structural separations with regulatory standards and public
standards that enforce those basic rules of the road for our
digital infrastructure. That means standards for non-
discrimination and for portability, labor and consumer
protection standards, basic rules of the road that we see in
all other parts of the economy that we need to bring to the
digital space. Third, there might be instances where we might
want public provision, as has been mentioned already, in order
to ensure fair and equal access and to provide the kind of
competitive pressure that is sometimes lacking in these
markets. These are all familiar and doable policies. They are,
in fact, common in our history and our tradition going back a
century ago and over the years. And, in fact, the use of these
tools has enabled the kinds of innovation and dynamism that has
brought the gains of many of these last few decades of economic
growth.
As my time is winding down, I'll just note that these
policies, these strategies are central to rebuilding our
economy in this moment of crisis. These policies will be
essential as we move forward out of the current crisis that
we're in. Thank you very much, and I yield back.
[The statement of Mr. Rahman follows:]
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Mr. Cicilline. Thank you, Professor Rahman, and I now
recognize Professor Yoo for 5 minutes.
TESTIMONY OF CHRISTOPHER YOO
Mr. Yoo. Thank you, Mr. Chairman, Ranking Subcommittee
Member Sensenbrenner, Chairman Nadler, Ranking Member Jordan,
and the members of the subcommittee. I applaud the subcommittee
for its review of how antitrust laws should apply to digital
markets.
In sifting through the various reform proposals before you,
I would encourage the subcommittee to keep in mind three key
principles. The first is the importance of maintaining
antitrust's longstanding commitment to protecting consumers
over competitors. The second is the key role played by
innovation and the importance of flexibility in promoting
innovation. And the third is that many remedies work far worse
in practice than they sound in theory. I'll explore these three
themes by examining two of the proposed reforms that have
already come up today by restricting companies to a single line
of business and mandating portability and interoperability.
Beginning first with line-of-business restrictions, there
is strong evidence that proposals to prevent companies from
entering complementary lines of business would likely harm
consumers. The reality is that all companies do more than one
thing, and consumers typically benefit. To cite one specific
example, my colleague, Herbert Hovenkamp, has noted that
allowing Amazon to sell private label products has provided
enormous consumer benefits by allowing them to pay lower
prices. In addition, we've seen Amazon expand from just an e-
commerce platform into cloud computing and other aspects that
have been tremendously beneficial.
If you look at the surveys of the literature on vertical
integration conducted by antitrust enforcement officials from
both parties, those surveys confirm that, although the
theoretical studies hypothesize ways that vertical integration
could harm consumers, the real-world data indicate that it is
much more likely to benefit consumers. These results underscore
the importance of assessing consumer welfare based on
systematic real-world evidence and not abstract theoretical
possibilities or anecdotes.
Restricting companies to a single line of business can also
harm innovation. For example, in 2005, U.S. mobile operating
systems were a sleepy market dominated by Palm, Blackberry,
Symbian, and Microsoft. Apple iOS appeared in 2007, and then
Android followed in 2008. These new entrants employed
innovative new business models based on vertical integration
and third-party payments that reduced direct costs by consumers
that went beyond the original lines of business of just simply
mobile operating systems. In so doing, these new entrants
unleashed the smartphone revolution that has provided
tremendous benefits for consumers. This history provides useful
examples of how consumers benefit when companies have the
breathing room to experiment with different approaches.
Contrary rulings would risk ruling particular business models
out of balance. If so, the case-by-case approach of traditional
antitrust is better suited to promoting innovation than would
ex ante prohibitions. This is particularly important in dynamic
industries where technological change frequently renders
particular vertical formulations of ex ante rules obsolete.
Now, regarding data portability and interoperability, an
interesting problem is that large platforms, such as Google and
Facebook, already provide for data portability, and yet
consumers almost never avail themselves of this feature.
Understanding why requires a deeper appreciation of what
mandating data portability and interoperability actually
requires. For data portability and interoperability to be
meaningful, the data must be in a standardized format. To do
otherwise would be like be trying to fit the proverbial square
peg into the round hole. The reality is that different
companies structure their data in radically different ways, and
reconfiguring data is prohibitively expensive. Therefore, data
portability and interoperability imposes standardization costs
and have the unfortunate effect of picking winners and losers.
As Ranking Member Sensenbrenner noted, the result would be to
force data into a one-size-fits-all approach.
In addition, interoperability can be only imposed under
certain circumstances. We've learned over time that it works
when interfaces are relatively simple, they're easy to monitor,
and require a little information. The type of data interfaces
we're talking about in this series of proceedings seem to
represent a complex interface that has not historically been
amenable to mandated interoperability.
And, importantly, data formats are tied directly to
innovation. The structure of data determines what types of uses
are and are not possible. Forcing data into a particular format
would inevitably preclude certain types of important
innovation. Together, these considerations suggest that
seemingly simple remedies are likely to prove hard to implement
and create hidden consumer harms in terms of cost and loss of
innovation and that the traditional case-by-case approach is
fact intensive and specific, which would be more beneficial.
In closing, I would like to emphasize that it is tempting
to ask antitrust to serve a wide range of goals beyond its
traditional role in protecting competition. While there are
many important roles, asking any one law to do too much risks
causing it to be ineffective and doing nothing. I believe U.S.
citizens would be best served if antitrust continues to retain
its traditional focus on promoting consumer welfare and
competition in markets. Thank you very much.
[The statement of Mr. Yoo follows:]
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Mr. Cicilline. Thank you, Mr. Yoo. I now recognize Ms.
Bovard for 5 minutes.
TESTIMONY OF RACHEL BOVARD
Ms. Bovard. Chairman Cicilline, Ranking Member
Sensenbrenner, Chairman Nadler, and Ranking Member Jordan,
thank you for inviting me to testify today.
A growing bipartisan consensus is emerging against the
power of the Big Tech companies. This consensus is based on the
recognition that corporate hegemony--that is, concentrated
power exercised at scale--can be a threat to individual
liberty, the free market, and independent thought in a free
society. To that end, I started the Internet Accountability
Project in 2019 to give a voice to conservatives concerned
about the growing concentrated power of Big Tech as it is
exercised and weaponized at unprecedented levels. IAP has
focused its efforts on three areas of policy and remedy:
antitrust enforcement, data privacy and ownership, and reform
of Section 230 which one pro-tech law professor has identified
as Big Tech's implicit financial subsidy.
That Big Tech systematically engages in viewpoint and
information bias is increasingly obvious. Here are a few recent
examples. Dr. Scott Atlas, a neuroradiologist and professor at
Stanford Medical School, has been accused of spreading medical
misinformation by Google's YouTube, but only after he joined
the White House's coronavirus Task Force. A deep investigation
into Google by the Wall Street Journal found that the company
``made algorithmic changes to its search results that favor big
businesses over small ones.'' The investigation also found that
Google modified its search results around topics like abortion
and immigration. In June, Google colluded with NBC News to flex
its muscles against the conservative news site, The Federalist,
for minor violations of its ad policies in their comments
section. In July, the search engine inexplicably stopped
presenting search results for several leading conservative
websites.
Conservatives are routinely told that bias is a myth, but
that assertion is unprovable because these tech companies are
not at all transparent about their algorithmic and content
moderation practices, but they should be. These decisions have
profound impact on the nature of free thought and expression
when done at a scale at which these companies exist. A single
algorithmic decision made by individuals in a private
corporation, accountable to no one, changes what kind of
viewpoints and information are available to billions of people
around the world. Antitrust enforcement, the subject of this
committee's remit, is equipped to tackle corporate hegemony. It
is the view of myself and the Internet Accountability Project
that our antitrust laws do not need to be updated, that the
laws on the books are sufficient for tackling per se violations
of antitrust as they exist in the tech sector.
Antitrust enforcement is not regulation, it is law
enforcement. As conservatives, we do not support legal amnesty
for those who violate our Nation's laws, and this should be
extended to corporations who violate competition laws in the
market. Though antitrust application to so-called speech
concerns may not be direct, proper enforcement of the law
against violations where they exist could certainly have
positive downstream effects. Antitrust enforcement does not
occur in a vacuum. Enforcing against the monolithic dominance
of these companies in one sector, if warranted, could free up
the market in such a way that concerns over viewpoint bias
could be competed away in ways Big Tech's market dominance now
makes impossible. Conservatives who rightly champion the
innovation generated by a free market should be equally
vigilant about maintaining the integrity of that marketplace.
To borrow the old adage from Ronald Reagan, ``Trust, but
verify.''
Conservatism properly understood follows a tradition of
skepticism when it comes to concentrations of power. As Barry
Goldwater wrote in Conscience of a Conservative, ``Let us
henceforth make war on all monopolies, whether corporate or
union. The enemy of freedom is unrestrained power, and the
champions of freedom will fight against the concentration of
power wherever they find it.'' Thank you.
[The statement of Ms. Bovard follows:]
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Mr. Cicilline. Thank you, Ms. Bovard. Professor Lipsky is
now recognized for 5 minutes.
TESTIMONY OF TAD LIPSKY
Mr. Lipsky. Thank you, Chairman Cicilline, and thank you
also to Ranking Member Sensenbrenner as well as Chairman Nadler
and Ranking Member Jordan. Good to see you. You have my
statements for the record, and given the length of the witness
list, I'm going to try and summarize very briefly.
A hundred and thirty years ago, a gigantic network industry
arose as one of the greatest economic manifestations of the
second Industrial Revolution in the United States, and that was
the railroads. And Congress addressed many grievances and
problems with the performance of the railroads in two
fundamentally different ways. In 1887, it passed the first
major Federal sectoral regulation creating the Interstate
Commerce Commission to enforce the Interstate Commerce Act,
which was a method of directly regulating competitive outcomes
in the railroad industry. And in 1890, it enacted the Sherman
Act, which very simply prohibited restraints of competition,
conspiracy, and monopolization. It's 130 years later. The
Interstate Commerce Commission and the Interstate Commerce Act
are gone, but antitrust thrives, and competition thrives, and
the success of the American economy thrives.
In the very early stages of Sherman Act interpretation, the
Supreme Court, taking a common law approach as Congress
intended, very quickly determined that cartel activity was to
be condemned per se. But then in 1898, in the Addyston Pipe &
Steel case, it confirmed that restraint could be reasonable if
it had a sensible relationship to a transaction with a lawful
purpose. And except for the 1911 imposition of the per se rule
against retail price fixing, a long period of time happened in
which the courts were trying to feel their way through the
complex issues that naturally arise when the antitrust laws are
applied to particular industries, and there are nice judgments
that are required to be made to determine what is anti-
competitive and what is pro-competitive.
Then in the late New Deal in the second FDR term, under the
leadership of Assistant Attorney General Jackson and his
successor, Thurman Arnold, something changed in antitrust
enforcement. With the encouragement of the antitrust agencies,
the courts became far more willing to deprive companies of any
right to defend their conduct, either using economic arguments
or trying to show on the basis of facts and circumstances that
what they were doing was justifiable, pro-competitive, that
they lacked market power to present any other defense. This was
the start of the so-called per se rule era which occurred
around 1945 with the Associated Press decision. A number of
patent licensing practices were condemned per se, and on and on
until when you reach United States v. Topco, almost any type of
conduct challenged by a plaintiff or by the government was
condemned per se, or very strong presumption against business
conduct. The legality of business conduct was adopted by the
courts.
But simultaneously, at the end of that era, America's
economic fortunes started to go south. We had severe
competition from companies arising in Europe and Asia, and many
of our leading industries began to see negative results, and
our economy entered a period of stagflation. Scholars and
academics in law and economics pointed this out in the 60s and
70s, and they weren't all from Chicago. As a matter of fact,
you could say that in the study of economics and its
application of the antitrust law, probably the most notably
introduced antitrust enforcement was by Lyndon Johnson's first
assistant attorney general for antitrust, Don Turner, who had
both a Harvard Ph.D. in economics and a Yale law degree, and
who advocated very strongly that economic analysis be used as
the touchstone for antitrust.
And fortunately, in the mid-70s, the Supreme Court began to
take that up. And ever since, there has been a very powerful
consensus in the courts, the Bar, the agencies, antitrust
practitioners, and businesses that have to deal with very
severe antitrust remedies and comply with the law, that the
focus on competition rather than competitors, and the ability
to defend oneself based on facts and circumstances, and the
willingness of the courts at least listen to economic
arguments, those are critical to successful application of the
antitrust laws to the economy, not to destroy the economy, but
to help it grow.
And the Supreme Court and other courts have shown very
great flexibility in understanding and absorbing new economic
learning and applying it to even high technology industries, as
in the two Microsoft cases that were litigated in the 1990s and
the latter one resolved in 2001, and, most recently, for
example, in the Ohio v. American Express case. It's not a
right/left, Republican/Democrat, liberal/conservative issue.
Successful implementation of the mandate for competition in the
antitrust laws encourages innovation, which is the main driver
of economic growth and ensures that our economy continues to
grow and prosper.
And so I want to associate myself with Representative
Sensenbrenner's remarks. I think things are very well
positioned, and I would caution aggressively against any
extensive intervention in our common law system of interpreting
the mandate of our basic antitrust laws.
[The statement of Mr. Lipsky follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Cicilline. Thank you, Mr. Lipsky. You have gone over
time significantly. The gentleman yields back. I now recognize
Sally Hubbard for 5 minutes.
TESTIMONY OF SALLY HUBBARD
Ms. Hubbard. Chairman Cicilline, Ranking Member
Sensenbrenner, and members of the subcommittee, thank you for
inviting me to speak with you today and for conducting this
critically important investigation.
Facebook, Amazon, Apple, and Google started on their paths
to dominance with innovation, but you've uncovered major
evidence that the platforms have used anti-competitive conduct
and acquisitions to grow and maintain their monopoly power.
They've violated the antitrust laws as they now stand. You've
opened up Americans' eyes to the widespread harms that flow
from the illegal monopolization of digital markets. It is one
thing that most Americans still can't see, what our lives,
economy, and country could look like if these markets were open
and competitive.
We've been under monopoly rule for so long, but we're
suffering from a crisis of imagination, so let's take a moment
and envision the possibilities of what America could be. I see
an America where anyone can pursue an innovative business idea,
get it funded, and build a company that doesn't get crushed by
giants protecting their turf. Diverse ideas and founders
flourish. Small and big companies can decline platforms'
extractive terms of dealing, stop paying them taxes and tolls,
reap the rewards of their ingenuity, and pay their employees
more. Strong antitrust enforcement creates new waves of
innovation like when the government broke up AT&T, and when
U.S. v. Microsoft paved the way for Google to exist by stopping
Microsoft from taking over every market that touched its
monopoly.
I see an America where creators of all types, from
musicians to journalists, enjoy the fruits of their labor no
longer siphoned off by Big Tech. I see an America where no
company has concentrated control over speech, public discourse
flows freely, not subject to business models that boost
divisive and incendiary content, where, when we all see the
same speech, we can respond to it with counter speech as the
First Amendment requires. This vision of America can be ours if
we defeat the robber barons of today, just like we've done
before, using the antitrust laws.
Some say antitrust isn't the right solution and some other
fix is the answer, but we are in a crisis. This isn't an
either/or situation. It's a both/and situation. We must attack
monopoly rule from every angle. For example, we also need
privacy laws, but regulation doesn't work when monopolists are
too powerful to comply or when monopolists shape the laws
themselves. Others say antitrust is being weaponized for
improper purposes, but Senator Sherman always intended to save
America from kings of commerce, and if we open up markets by
ending platforms' anti-competitive tactics and deals, a wide
range of benefits will follow.
Enforcing the antitrust laws won't magically solve all of
our problems, but we won't be able to cure America's ills if we
don't first disperse monopolies' concentrated power by
unlocking competition. Of course the tech giants each provide
useful services, but providing some benefits does not give them
a free pass to break the antitrust laws. Unfortunately, our
laws have been attacked by the courts for decades, making
enforcement expensive and hard. Even so, enforcers need to
bring more cases and be more willing to risk losing in court.
Ultimately, we are depending on you, Congress, to fix this.
Congress should use bright-line rules and presumptions to
remove complexity and make antitrust cases easier, faster, and
cheaper. Congress should overrule legal precedent that imposes
obstacles for monopolization and merger cases. Congress should
also structurally eliminate the platforms' conflicts of
interests and remove their incentive and ability to sell
preference. It should separate platforms from commerce and
divest business lines. The U.S. has used structural separation
as a standard regulatory tool and antitrust remedy in network
industries. Congress should require platforms to offer equal
access on equal terms to all, protecting citizens as sellers of
goods and services, consumers, and as speakers. Lawmakers
should open up competition through interoperability, and
immediately, in order to preserve our elections, Congress
should ban the surveillance-based hyper-targeting of content.
Advertising should be done based on context, not identity.
This is a turning point for our Nation. Our democracy is
hanging in the balance. The time to act is now, decisively and
with courage. Speaking to my fellow Americans, in order for
your elected representatives to stand up to monopoly power,
they need you behind them. The tech giants have endless
lobbying funds, but we, the people, can once again rise up and
prevail against monopolists. Thank you very much.
[The statement of Ms. Hubbard follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Cicilline. Thank you, Ms. Hubbard. Thank you all for
your opening statements. And now we will begin questioning
under the 5-minute rule, and I will begin with the chairman of
the full committee. Mr. Nadler, you are recognized for 5
minutes.
Chairman Nadler. Thank you, Mr. Chairman. As I said in my
opening statement, I strongly believe that we must modernize
our antitrust laws to meet the challenges of the modern
economy. We must update the antitrust laws to reiterate, as
Justice Thurgood Marshall said, that ``Antitrust laws are the
Magna Carta of free enterprise. They are as important to the
preservation of economic freedom and our free enterprise system
as the Bill of Rights is to the protection of our fundamental
personal freedoms.'' What do each of you think is the most
important thing we can do from a legislative standpoint to
address the deficiencies of current antitrust law? We will
start with Mr.----
Mr. Baer. Baer.
Chairman Nadler [continuing]. Baer.
Mr. Baer. Thank you, Mr. Chairman. Just briefly, I think we
need to modify the standard by which we judge mergers. The
current law says mergers that may tend to substantially reduce
competition are problematic, but the way the courts have
interpreted that, they have read the word ``tend'' out of the
law. I think if we move to a materially reduce competition
standard, that will help us attack more anticompetitive
mergers. The second thing I think is to deal with Section 2 of
the Sherman Act, and basically where a company gets of a
certain size and engages in conduct that appears to have a
significant effect on limiting opportunities for rivals, that
that needs to be a potential cause of action where the courts
will evaluate whether the pro-competitive benefits of whatever
that behavior is are vastly outweighed by the potential harm to
consumers and to competition. That is where I would focus, on
those two areas.
Ms. Teachout. I think there are three primary areas of
focus. The first, especially since we are talking about Big
Tech, is structural separation. I think that is quite urgent.
And, again, your investigation has shown the incredible abuses
of platforms that are also allowed to own companies that
compete on those platforms. That is major legislation that I
think this body should push. Second, these series of cases,
some of which were just mentioned, the predatory pricing trio
of cases, I think, are really important. This is Brooke Group,
Warehouse, and other cases that made it incredibly hard to
prove that companies are engaged in predation. That is
important to overturn, along with Trinko, Twombly, these series
of cases which I and others have outlined. And I would approach
those as a set, which comes to my third point, which is that I
would be very clear that the purpose of antitrust law includes
the protection of liberty and the support of a decentralized
economy, and move past the consumer welfare standard which has
not been successful over the last 40 years.
I said three, but the fourth thing that I think we need to
do in this arena is something that Ms. Hubbard and Mr. Rahman
mentioned, which is in the communications infrastructure, in
particular, ban targeted advertising. It is truly toxic. It is
undermining our democracy.
Chairman Nadler. Thank you. Mr. Baer, as you previously
testified in 2016, there has been an upswing in extremely
large, complex, and blatantly anti-competitive transactions
that never should have made it out of the boardroom. Why is it
that this trend has continued and possibly even worsened, and
what can Congress or the agencies do to deter companies from
brazenly proposing transactions that are so clearly anti-
competitive?
Mr. Baer. As I said earlier, Mr. Chairman, I think the
standard as interpreted by the courts, the current standard of
the Clayton Act, our merger statute, the courts have sort of
applied a one-way ratchet that makes it tougher and tougher for
the government to successfully challenge mergers. It is nearly
impossible to challenge today an acquisition by a dominant firm
of a nascent competitor, something that isn't a large rival
today, but could well be tomorrow. Legislative changes that
basically make it clear that once a firm achieves a certain
dominance, that the burden shifts to justify its acquisition of
small potential rival. We think of Facebook, right, Instagram
and WhatsApp. They need to justify why this isn't a problematic
merger, why it doesn't eliminate somebody who, either on its
own or together with merging with somebody else, might well
become an alternative platform to a dominant platform today.
Chairman Nadler. Thank you. I yield back.
Mr. Cicilline. The gentlemen yields back. I now recognize
the gentleman from Wisconsin, Mr. Sensenbrenner, for 5 minutes.
Mr. Sensenbrenner. Thank you, Mr. Chairman. Professor
Lipsky, what shortcomings in the antitrust laws, if any,
prevented the Obama-Biden era regulations from examining or
blocking some of the transactions that have been scrutinized by
this investigation? For instance, when Facebook acquired
Instagram, it was greenlit by the FTC. I am not asking you to
second guess that decision, but rather to discuss whether the
existing antitrust laws were insufficient to allow for a proper
review.
Mr. Lipsky. Thank you, Ranking Member Sensenbrenner. My
view is that there are no deficiencies in the antitrust laws.
In fact, over the years, the legal apparatus built up for the
prevention of anti-competitive mergers has become truly
formidable. There was some initial question that the Sherman
Act, as passed, applied to corporate transactions, but any
doubt about that was eliminated with passage of the Clayton Act
in 1914, and then again, the Clayton Act was brought and then
the standards were clarified by the Celler-Kefauver amendments
to the Clayton Act in 1950. And then in 1976, you had Hart-
Scott-Rodino, which essentially made it impossible for any
significant transaction to be consummated until the Federal
authorities had been notified of the nature of the transaction,
the competitive activities of the parties, and given very ample
tremendous discovery powers to investigate and to go to court
prior to consummation of the transaction.
Mr. Sensenbrenner. So you are saying that the existing
statutes at the time of the Facebook-Instagram buyout were
sufficient to do a proper review.
Mr. Lipsky. I do say that.
Mr. Sensenbrenner. Okay. Now, Mr. Baer, this was before
your time as chief honcho in the Antitrust Division, but I
think you were around at the time. Would you care to respond to
that?
Mr. Baer. As I indicated, Mr. Sensenbrenner, my law school
classmate and friend, Tad Lipsky, and I have a bit of a
disagreement on this. I do think if you look at Instagram or
WhatsApp, and you look at some of the documents that were
revealed in this subcommittee's most recent hearing, these were
companies that potentially, either on their own or in
combination with other companies, had potential to be rivals.
It wasn't clear they were going to be, but Facebook, I think,
according to the documents your investigation has uncovered,
recognized these firms as potential rivals. Current law does
not allow the FTC or my old place, the Antitrust Division, to
challenge those transactions. You need to be a significant,
actual, potential competitor in the marketplace in order for
antitrust laws to apply. I am sorry. Go ahead.
Mr. Sensenbrenner. You are essentially saying that the law
that was in effect at the time, which I don't think has been
significantly changed then, prevented the enforcement during
the Obama years.
Mr. Baer. That is correct, and I think modest changes to
the current statute would allow us to go after those kind of
acquisitions by dominant firms.
Mr. Sensenbrenner. Do you know if DOJ requested an
amendment to those laws so that they could be more active in
enforcing them?
Mr. Baer. I think while I was there that debate was just
beginning, and as I have watched what has happened to the
antitrust laws since then, the way the courts have, as I
indicated, this one-way ratchet, imposing more and more
conditions on the government to meet its burden of proof, that
we are at a place where some tweaks to the antitrust laws would
help the courts understand better what the congressional intent
was at the time and is today. I am sorry to filibuster.
Mr. Sensenbrenner. Okay, Senator. [Laughter.]
You know, I guess, you know, my observation, you know, on
this is that, you know, we hear from DOJ and FTC all the time
when they think laws are inadequate, and then they come and
crack the whip on us to say let's get it fixed, let's get it
fixed right away, not tomorrow, but yesterday. And there wasn't
any real move by the Department of Justice or the FTC to get
those laws fixed if this merger prevented an enforcement of the
laws. You know, the final point I would like to make is, you
know, I think that antitrust law has to continue to be focused
on consumer welfare rather than deviating into other problem
areas. If we go back to the basics and enforce those basics, a
lot of the complaints that we heard during the previous hearing
when the CEOs were here never would have existed. And I yield
back. Thank you.
Mr. Cicilline. The gentleman yields back. I now recognize
the distinguished gentleman from Georgia, Mr. Johnson, for 5
minutes.
Mr. Johnson of Georgia. I thank the gentleman for hosting
this hearing. It has been a very important hearing, and it has
been a very important topic. And it is time for Congress to
act, and I am happy to be a part of this monumental effort. Mr.
Rahman, in July, I asked Apple CEO, Tim Cook, about Apple's
power and control over the App Store. I am still troubled that
in order to sell in the App Store, Apple forces app developers
to comply with rules it makes up as it goes along. It develops
and sells apps that compete with the app developers who need to
be in the App Store in order to gain access to the 100 million
Americans who use iPhones, and it also forces those app
developers to pay 30 percent. It holds them over a barrel and
makes them pay 30 percent of whatever they get out of the App
Store for selling their products. So it is like the fox owning
the henhouse, and pimping the chickens and then eating the
chickens. [Laughter.]
Mr. Rahman, in your written statement, you addressed the
concept of gateway power as a type of infrastructure power that
the antitrust laws should address. Can you elucidate a little
more on gateway power and how the App Store exploits its
gateway power?
Mr. Rahman. Yeah, thank you very much, Congressman. It is
such an important question because I think all of the platforms
that we are talking about in these hearings have this type of
gateway power, and I love the metaphor you used, the fox owning
the henhouse. The way this works is if you build the kind of
infrastructure that everybody needs to access basic goods and
services, in this case the App Store, it is the same argument
you can make about Facebook or Google, because we all need to
get entry into that marketplace. If I am an app developer, that
means that the owner of the App Store, the person who controls
the gates, has a lot of control, a lot of power, and can make
unreasonable demands, right, on anyone who needs to get access
to that marketplace, to that ecosystem.
And so they may not always use that power benevolently,
they may not always use it in an extractive way, but they have
that power nonetheless because they have something that any
entrepreneur or business developer needs, which is access to
the marketplace. So this is why I think it is so important that
any remedy include some basic rules of the road, that if you
build that kind of infrastructure and you control the gateway,
the access point, it is incumbent upon you, as the firm who
controls that gateway, to observe basic standards of fair
treatment and non-discrimination and so forth. And that would
provide regulators with the tools, if Congress provided them,
tools to enforce against those types of practices.
Mr. Johnson of Georgia. Thank you. Ms. Teachout, Amazon has
much the same relationship with vendors on its platform. Can
you tell us your thoughts about how this works and how
consumers are harmed, how small businesses are harmed, and what
Congress should do in order to alleviate this imbalance in our
commerce?
Ms. Teachout. Thank you. There are, I believe, about 2
million small business owners that depend upon Amazon to get
their goods to market, and your investigation, along with the
research of the Institute for Local Self-Reliance, has shown
that Amazon charges as much as 30 percent of every sale. Amazon
takes as much as 30 percent of every sale when those sellers
sell on Amazon on average. This is essentially a form of
private tax, and when you talk to Amazon sellers, as you have,
you hear about the incredible fear that Amazon sellers have and
a kind of rational paranoia about how the algorithms are
treating them, and their own beliefs that they need to purchase
ancillary Amazon services, something that your investigation
revealed as a legitimate belief, as Bezos admitted, that the
use of Fulfillment has an impact on the algorithm for the
sellers. And that is really dangerous for democracy, but it
also leads to inequality because that is essentially Amazon
standing at the narrowest point in the pathway, the choke point
moment, and demanding 30 percent of every sale.
Mr. Johnson of Georgia. Thank you. Ms. Hubbard, do you
believe Section 2 of the Sherman Act is sufficient to address
the conduct that we are discussing?
Mr. Cicilline. The time of the gentleman has expired, but
the witness may answer the question.
Ms. Hubbard. Thank you, Congressman. I do not believe
Section 2 is sufficient because the soft preferencing and soft
prioritization is so rampant, that it is basically a game of
whack-a-mole. There are just a myriad of ways that these owners
of the platforms can privilege their own products and services,
and it is nearly impossible to police them all, not to mention
because often it is being done through algorithms that are not
transparent and are completely opaque. So that is why I
advocate for the structural separation as a way to remove the
incentive and ability of these platforms to prioritize their
own products and services.
Mr. Johnson of Georgia. Thank you. I yield back.
Mr. Cicilline. Thank you. The gentleman yields back. I
recognize the distinguished gentleman from Colorado, Mr. Buck,
for 5 minutes.
Mr. Buck. Thank you, Mr. Chairman. Thank you for holding
this hearing. I appreciate the bipartisan and thorough nature
in which you have conducted this investigation. I want to start
by reiterating one of the Nation's most important founding
principles. As Professor Teachout noted, Congress writes our
laws and the courts interpret those laws. In the words of my
fellow Coloradan, Justice Gorsuch, ``Judges wear robes, not
capes.'' The American people elect their Representatives every
2 years. Our constituents hold us accountable for our votes in
a way that judges are not. It is worth remembering this as we
examine Big Tech's anti-competitive actions and our Nation's
antitrust regime more broadly.
It is clear that our antitrust enforcement agencies have
hobbled themselves by observing traditional interpretations
instead of adhering to the letter of the law, which hampers
enforcement agencies' ability to bring cases against industries
that do not have a defined price structure or offer free
services, like big tech. Congress did not intend for regulators
to only bring antitrust cases based on price differential. In
fact, lawmakers intentionally wrote the Sherman and Clayton
Acts with an open-ended consumer welfare framework to enable
antitrust enforcement agencies to bring cases also related to
quality, output, consumer choice, or potential innovation in
the marketplace. Following this original standard would allow
regulators to review big tech mergers that offer free services,
while relying on selling user data or making acquisitions based
on potential competition.
Data presented by McKinsey & Company further shows how
dangerous relying solely on price change doctrine can harm the
economy. McKinsey's data shows that return on capital in many
industries, including restaurants, auto parts stores,
department stores, and oil and gas companies, has remained
nearly steady over the past 50 years. However, two industries
show rapid growth: big pharma and big tech. There is a
breakdown occurring in the digital economy. A small number of
tech titans are using anti-competitive means to grow their
marketplace dominance and control the channels of distribution.
Our nation's law enforcement agencies can't keep pace. For
example, Facebook's acquisition of Instagram was allowed to
proceed primarily because there was no defined price change to
the consumer. This review didn't take into account Facebook
CEO, Mark Zuckerberg, stating his desire to purchase Instagram
centered on buying an up-and-coming competitor before they
could overtake Facebook's market dominant position. This case
shows exactly why the current price-focused model of antitrust
enforcement misses the mark and fails to account for potential
innovation and consumer choice.
Congress should lead the way with a meaningful solution to
ensure our enforcement agencies are adhering to the original
intent of the law, not judicial interpretations. If we don't
provide constructive action to address these issues, the
progressive left will undoubtedly push for an oppressive
regulatory regime. A new Dodd-Frank, along with a CFPB-like
agency overseeing the internet, will only benefit big tech
firms and harm future innovation.
This shouldn't be the only action Congress takes, though.
This committee should work together to ensure our antitrust
regulators have the tools and resources necessary to conduct
meaningful oversight and successfully bring enforcement cases
against bad actors. Currently, the FTC and DOJ Antitrust
Division's combined enforcement budget stands at approximately
$510 million. Conducting effective oversight and launching
antitrust reviews is difficult when your budget is only a minor
fraction of big tech's approximately $2 trillion market share
with unfailingly deep pockets to combat litigation, comply with
regulatory requirements, and pay expert witnesses.
Our law enforcement agencies can't keep up with this
onslaught. Congress should consider allocating more funds to
the FTC and DOJ to ensure that they have the proper resources
to conduct serious investigations and enforce antitrust laws.
We should also work to ensure these agencies can recruit and
retain the best possible talent to achieve the mission. We also
need to seriously consider increasing scrutiny on big tech
companies, including shifting the burden of proof required for
a market-dominant company to prove that a merger is not anti-
competitive. These changes may stop market-dominant companies
from further consolidating the tech center in an anti-
competitive manner.
As a conservative, I want to see Congress reassert its
Article I duties to write our Nation's law. As a former
prosecutor, I understand how important it is for our nation's
law enforcement agencies to have the tools necessary to fight
and win these cases. It is clear that the ball is in Congress'
court. Companies like Google, Amazon, Apple, Facebook, and
Twitter have acted anti-competitively. We need to rise to the
occasion to offer the American people a solution that promotes
free and fair competition. Ms. Bovard, could you please offer
your thoughts on these proposals?
Ms. Bovard. Thank you, Congressman. I think you make a
couple of really lucid points that are worth emphasizing. We do
expect our enforcement agencies to parry with billion-dollar
companies, the biggest the world has ever seen, and we give
them miniscule budgets to do it. The $2 trillion that you
mentioned is about 10 percent of U.S. GDP, and that is the tech
sector. We need to give our enforcement agencies, I think, the
resources and commitment from Congress to pursue their full
mandate in this space. And I would also add that I think a
little bit of humility from our enforcement agencies is
necessary, that they may not have always gotten it right. If
you look at the last 20 years, there have been about 750
acquisitions that have taken place with relatively little
scrutiny. And Bill Kovacic, who is a George W. Bush appointee
to the FTC, who voted actually to approve the Google
acquisition of DoubleClick in 2008, recently told the New York
Times, and I want to make sure I quote him correctly, ``If I
knew in 2007 what I know now, I would've voted to challenge the
DoubleClick acquisition.''
And this tells me that everything that you said is pretty
on point. We need to make sure these agencies have the
resources to do it, and also that they are not hamstringing
themselves by raising the bar on themselves with the laws that
currently exist. Section 7 of the Clayton Act, which I think,
you know, you referenced, is actually a fairly generous
standard when it comes to mergers and acquisitions. You know,
to quote it, ``The effect of the acquisition may substantially
lessen competition or tend to create a monopoly.'' It doesn't
specify price competition alone, and it doesn't raise the
evidentiary bar on potential completion versus actual
competition. So I would like to align myself with your
statement, and thank you for the question.
Mr. Buck. Thank you. I yield back.
Mr. Cicilline. The gentleman yields back. I now recognize
the gentlelady from Washington, Ms. Jayapal, for 5 minutes.
Ms. Jayapal. Thank you, Mr. Chairman, and thank you all for
being here for what is such an important hearing. I think
technology offers us the promise of freedom, and yet over and
over again in these hearings, we have heard about people and
businesses that are trapped, small businesses that can never
quite get a fair shake, news sites that lose ad revenue, or
other websites that lose viewers because of unregulated
practices or conflicts of interest, and the many roles of these
platforms that disadvantage innovation and competition. And
would-be innovators and developers have to make products that
cater to major tech companies or face the real threat of being
copied and crushed. No one likes to feel trapped, but right now
I think many people do, and our democracy is trapped, too.
Ms. Teachout, let me start with you. In other sectors of
the economy, like in healthcare markets, Congress has developed
legislation that makes certain conduct presumptively illegal,
and there has been quite a bit of discussion about this through
these questions. Do you think a law that would make certain
types of mergers presumptively illegal, shifting the burden to
the merging parties to prove the transaction would not be
harmful to competition, could be an effective remedy?
Ms. Teachout. Thank you, Congresswoman, yes. You know, in
the field where I come from, democracy law and anti-corruption
law, prophylactic rules are absolutely essential. If you had to
investigate every time there was a $10,000 direct campaign
contribution, whether there was something problematic, you
would never actually be able to protect against corruption in
the campaign finance sphere. So I think it is really important
to think about these kinds of prophylactic rules, including the
one you talked about, to really shift the burdens. Thank you.
Ms. Jayapal. Mr. Baer, I saw you nodding. Did you want to
add anything to that?
Mr. Baer. Just that I think as antitrust lawyers, we tend
to think of antitrust law enforcement as often the only
solution to a problem, and there may well be prospective
rulemaking that makes sense. In my testimony, I talked about
the 2004 FCC rule basically saying our phone numbers actually
were our phone numbers, and we could port them elsewhere. That
was a prospective rule. It was not a law enforcement action.
Basically, there are ways to promote portability and
interoperability in a fashion that may channel competition in
constructive ways.
Ms. Jayapal. Thank you. Mr. Rahman, I don't believe that
many people make the necessary connections that they should
between antitrust law, and racial equity, and economic equity.
How would making changes to the antitrust laws help us to
empower black and brown communities in particular that have
been burdened throughout our history with structural
inequities?
Mr. Rahman. Thank you, Congresswoman, for that question. It
is such an important link to be made. The antitrust laws we are
talking about here really are one of those foundational rules
of the road that, if we don't change them, we actually leave in
place many of the structural inequities along the lines of race
that you talked about. So three very quick ways that I would
name that are connected around economic opportunity, around
labor, the treatment of workers, and around racist forms of
algorithmic bias.
So the first piece. This whole point about accessing the
marketplace, the new digital infrastructure that we talked
about, monopoly power is especially hard on small and medium
businesses and, in particular, on black and brown businesses.
If you look at the challenges of business formation, of staying
alive and afloat, especially in this kind of an economy, it is
the same kind of challenges that we are seeing hitting black
and brown businesses in response to, say, the COVID economy
collapse. Solving this in an antitrust policy approach would
actually help jump start small business formation. That is
number one.
Number two, in terms of workers, we haven't talked about it
much yet today, but monopoly power is actually one of the key
drivers of the suppression of wages and also the perpetuation
of low labor standards, workplace safety standards in
particular. And when we look at the plight of essential
workers, black and brown workers, in this moment, whether they
are Amazon workers or workers of other dominant firms, breaking
up monopoly power actually is critical to empowering black and
brown workers. And finally, the kind of toxic spread of white
nationalism or extremism online and information platforms on
Facebook is fundamentally tied to the ad-based business model
that Facebook has. And if we are trying to build a racially-
inclusive public sphere, we have to tackle the monopoly power
Facebook has. Thank you, Congresswoman.
Ms. Jayapal. Thank you so much. Ms. Hubbard, you argue in
your testimony for aggressive antitrust enforcement against
platform monopolists. Can you talk a little bit about
structural separation and how it would help small businesses,
new tech startups, and consumers if we were to implement that?
Mr. Cicilline. The time of the gentlelady has expired, but
the witness may answer the question.
Ms. Jayapal. I think you may be on mute.
Mr. Cicilline. You are on mute maybe, Ms. Hubbard.
Ms. Hubbard. Thank you, Congresswoman. As we have heard
today, small businesses, entrepreneurs, and citizens are all
beholden to these tech companies and are forced to play by
their rules, often paying them which is the equivalent of
taxes. You know, the 30 percent tax that Zephyr Teachout
mentioned, the amount that every small business has to pay just
to appear in Google search results under their own name, is a
huge tax on small business. So what we have are small
businesses paying taxes to these huge companies, and those
companies don't in turn pay their own fair share of taxes. So
structurally separating the platforms from the commerce will
give everyone a fair shot at innovating, reaping the rewards of
their hard work, and it will be good for consumers because
consumers are human beings, and they benefit from the choice,
innovation, and quality that robust competition brings. And
they are also citizens that benefit from the free flow of
speech, and there are workers and employees of companies that
benefit when the platform extraction ceases. So we can't think
of consumers only in one role because it doesn't make any sense
to care about whether I pay low prices, but not care about
whether I am getting paid less. Thank you very much.
Mr. Cicilline. Thank you, Ms. Hubbard.
Ms. Jayapal. Thank you. I yield back.
Mr. Cicilline. The gentlelady yields back. I recognize the
gentleman from North Dakota, Mr. Armstrong, for 5 minutes.
Mr. Armstrong. Thank you, Mr. Chairman. I think just
through the course of this investigation, that it is obvious
that there is bipartisan agreement that there are serious
competition concerns in digital marketplaces. We may differ on
whether ex ante antitrust remedies are sufficient for some of
these, like Mr. Baer talking about tweaks versus large-scale
change. But, I mean, at the very least, I would like to know
whether our current antitrust enforcement is capable of
addressing at least some of these concerns, and I am glad you
did the DoubleClick quote, other than you stole it from me and
I am going to probably do it again. But I think over the past 2
decades there has been, I mean, a lack of antitrust enforcement
in digital markets.
And to illustrate, when we were talking about Google's
acquisition of DoubleClick in 2007, it was permitted by the
FTC. The acquisition allowed Google to leap forward in third-
party digital display advertising where it previously only
enjoyed considerable market share in search advertising. There
is an argument to be made that nobody could foresee the future
competition concerns at the time, that the third-party ad
markets were relatively competitive. However, the FTC majority
opinion in that case acknowledged that with DoubleClick, Google
could engage in a number of potential anti-competitive
strategies to further enhance its positions in various markets,
because the Commission dismissed the concern that Google would
bundle or tie part of its growth ad tech stack. And that
concern was hypothetical in 2007, but now we know that it was a
very real consequence of Google's acquisition.
I said during our last hearing that the major part of this
investigation is dealing exactly with those things. And when we
talk about, like, Instagram, or WhatsApp, or Messenger, it is
easy to see those things, but a lot of these acquisitions were
very small companies at the time, and it only gets to be a
problem when it is in the aggregate. I mean, with Google on the
ad tech stack, it was both on the buy and sell side, which
means they just simply have too much control over advertising.
And in that case, though, the Commission also dismissed an
additional concern that consolidation of ad tech stack would
create a network effect whereby Google's position would make it
more attractive to advertisers, which, in turn, would make it
more attractive to publishers and so on and so on and so on.
Google's ad tech is informed by a vast majority of user
data, and they got it from their first-party services in Google
Maps and Chrome. Meanwhile, Google has consolidated its market
share by cutting off third parties and cookies. And I will say
this every time I bring up the word ``cookie.'' I do not want
to be the Congressman responsible for bringing them back, but
there is no doubt that it consolidated their market share. And
I am not even saying that FTC was right or wrong in that
decision, but I am pointing out the FTC was aware of the
concerns, which turned out to be proven correct, did not do any
enforcement in the subsequent years, even though the majority
FTC opinion concluded by promising to watch the online
advertising market closely in the future. And that was, I
think, towards William Kovacic's quote: if he had known then
what he knew in 2007, he would have voted to challenge that.
And since 2007, Google has spent billions of dollars to acquire
a lot of other key ad tech firms, some big, some small.
This is one anecdote. However, there are similar stories
and concerns throughout the digital marketplace. The DOJ right
now, though, and FTC are conducting investigations, and suits
are reportedly imminent. That seems to me to be at least the
most aggressive antitrust enforcement we have seen in decades.
And I concur with my friend, Ken Buck, from Colorado. This is
one area where, I mean, I do think we need more money, more
resources, more enforcement.
Mr. Baer, your testimony discusses additional resources for
after-action studies, which obviously this would be easier on
the front end, but sometimes that is not always realistic in
studies of what have happened in markets where agencies did not
bring enforcement actions. Can you elaborate how an after-
action review of an instance like the DoubleClick merger would
result in better antitrust enforcement?
Mr. Baer. Absolutely, sir, and the best example is hospital
consolidation. We saw the courts hostile to the creation of
monopolies or near monopolies in local markets as hospital
chains combined over the course of the 80's and 90's. Tim
Muris, a prior Republican chairman of the FTC, commissioned
after-action studies of what those markets looked like after
consolidation occurred and the courts had rejected the FTC's
merger challenge. They found dramatic price increases in those
markets. It established the FTC was right. In subsequent
hospital merger challenges, the FTC was able to go to court,
use those economic studies and demonstrate, hey, this risk is
real, and the courts responded.
Mr. Armstrong. Thank you. It wasn't just DoubleClick,
though. It was AdMob in 2009, AdMeld in 2011, AdMetri in 2014.
And so when you were talking about tweaking on mergers and
changing the standard, I am interested in having that
conversation possibly offline because I am not sure any one of
these meet it initially. But when you look back, I mean, I
think in some instances, we are going to have to figure out a
way to deal with that, and I know that is not ideal. You see it
right now with Instagram and Messenger trying to combine their
data. Well, I mean, just practically, it makes it harder to
intertwine. But do you think after-action reports considering
how these companies work are a key part to enforcement moving
looking forward?
Mr. Baer. It is a key tool, but, in addition, statutory
changes, which would require a dominant firm to offer an
affirmative justification for its acquisition of smaller
nascent competitors, would actually empower the antitrust
agencies to address that potential accumulation over time of
significant enhanced market power.
Mr. Armstrong. My only concern with that is that a lot of
these companies build themselves solely for the purpose of
getting bought out. I mean, eventually we get into capitalized.
We saw that with the Sprint-T Mobile merger. It was never a
question between 4 and 3. It was going to be a question between
4 and 2. But I have used too much time. Thank you, sir.
Mr. Cicilline. I thank the gentleman. The gentleman yields
back. I now recognize the distinguished gentlelady from
Florida, Mrs. Demings, for 5 minutes.
Mrs. Demings. Thank you so much, Mr. Chairman, and thank
you so much to our witnesses for being with us today. Mr. Baer,
you know, it is always so important. You know, we would have
never thought, of course, 20 years ago, really 30, 40 years ago
when we really began, that we would have companies that have
grown or mergers that would grow so huge until they really
affected everybody else in an adverse way around them. You
talked about that sometimes the fear of getting it wrong really
kind of stifles our ability to do what we need to do in this
space. Could you please expound on that a little bit, and also
talk a bit about the path forward, the fear of getting it
wrong.
Mr. Baer. Well, thank you, and thank you for reminding me I
have been at this business over 40 years. [Laughter.]
The fear of getting it wrong is sort of an outgrowth of an
overreach by the Chicago School of Economics. It is basically
the notion that unless we are 100 percent certain that there is
an antitrust problem, we should stay back, and that has been
infused into the thinking of the courts. I don't blame the
courts for that thinking. It is just this one-way ratchet which
has gotten tougher and tougher for the government or a
plaintiff to prove up an antitrust case.
That is why I conclude that one of the key solutions has to
be Congress stepping forward and instructing the courts that,
no, we meant if there is a tendency to substantially reduce
competition, you should act. The courts need to intervene. So
it is that hesitation about getting it wrong, avoidance of what
they call Type I errors, errors of over enforcement, that I
think it shifted the pendulum way to the wrong side.
Mrs. Demings. You also talked about additional resources or
the need for additional resources. Why should Congress give
additional resources when many of the companies that we are
talking about have not appropriately used the resources that
they have effectively for enforcement efforts?
Mr. Baer. Look, one could always criticize the Federal
Trade Commission where I once worked, the Antitrust Division
where I once worked, for not doing it exactly right. But I
think they have used the resources Congress has appropriated
them, in most cases, quite appropriately. The problem is those
resources are so small in comparison to the size of the
economy, to the number of acquisitions going on, behaviors this
subcommittee is properly investigating and properly concerned
about. So you look at the ratio. The ratio suggests we need to
strike the balance a little differently.
Mrs. Demings. Thank you. Mr. Kades, you talked about the
need for reform and not just enforcement. And thinking about
legislation to revitalize our country's antitrust law, what do
you think are the most important principles right now that
Congress should consider?
Mr. Kades. I should remember that. Thank you,
Congresswoman. I think you want to think about this in the big
picture as you have a court that continually doesn't want to
enforce the law, I think, the way that this bipartisan
committee thinks it should be enforced. So the first thing you
have to do is you need laws that will strip back decisions that
limit antitrust enforcement. Professor Teachout talked about
Trinko. There is a whole list. The second thing you want to do
is something along the lines of what Bill Baer suggested is,
you want to tweak the statute because at least that sends the
signal you are doing it wrong. And then the third thing I think
you want to do where you can, and this may sound small, but is
very powerful, is you create presumptions where you are more
concerned about the harm from the conduct than the potential
cost of over enforcement.
And so, in that sense, you know, the way you deal with what
Congressman Armstrong said was, is you want the FTC to be more
aggressive when they see something like a DoubleClick that
looks new. You give them the tools that they don't have to go
in and disprove every potential benefit. The company has to
come forward and say, yeah, we understand there is a problem.
We have to show you it is a good thing. So I think it is those
three things.
Mrs. Demings. Could you also finally talk a little bit
about how you believe interoperability could help?
Mr. Kades. Right. So I think that the interesting thing
about interoperability is not as a solution itself, you know.
Mrs. Demings. Mm-hmm.
Mr. Kades. And it is one of these things, and I know,
Professor, you talked about how hard it is. But, you know, it
is amazing the way companies can find interoperability when it
suits their purposes. So I can call you on the telephone. I can
text you. We don't have to be on the same system, but if you
are not on Facebook, you know, I can't put up a post on
Facebook that goes to you if I want to friend you. Like, that
is apparently technologically impossible. But if I could, it
means if you don't like Facebook, or, as Congressman Jordan
talks about, not liking the way they engage in censorship, you
can walk away from Facebook and you don't lose contact with all
your friends, right? And so that allows competition to occur,
and that has the benefit of reducing the incentives and the
ability to exclude competition.
Mrs. Demings. Great. Thank you so much. I yield back.
Mr. Cicilline. The gentlelady yields back. I now recognize
the gentleman from Florida, Mr. Steube, for 5 minutes.
Mr. Steube. Thank you, Mr. Chair. My questions are for Ms.
Bovard. In May of this year, President Trump issued an
executive order to prevent online censorship. The executive
order discusses Section 230 of the Communications Decency Act.
Ms. Bovard, have Big Tech companies abused Section 230 to their
advantage?
Ms. Bovard. Well, thank you for the question, Congressman,
and the short answer, I believe, is yes. When conservatives
think about Section 230, I think it is important to point out
that the statute, kind of reflecting the conversation we are
having here, has become so judicially distorted from what
Congress initially passed, that what we rely on for its
application today is very bloated, and a bulletproof immunity
exists where a porous, narrow one was originally passed. So it
is my view that, yes, the companies have abused this practice
to the extent that it is now referred to as an implicit
financial subsidy to these companies.
Mr. Steube. Well, see, you kind of touched on it there. Can
you explain other ways that Section 230 has been misused and
wrongly applied?
Ms. Bovard. Well, I think, as I outlined in my written
statement, Section 230, originally passed as the Good Samaritan
standard, has actually allowed a lot of bad Samaritans a lot of
cover. There has been well-documented evidence of the fact
that, you know, sex trafficking, all kinds of human
trafficking, terrorism, revenge pornography, all flourish on
these platforms, and the companies are immune from any
liability for it. In 2018, Congress passed FOSTA SESTA to make
them liable for knowingly participating in the facilitation of
sex trafficking, but there is a whole lot of other criminal and
lewd and harassing content that occurs. And these companies, as
opposed to being the Good Samaritan that could, you know, walk
by and help the guy out of the ditch, they can walk right by
and there is no consequence.
Mr. Steube. How does the President's executive order seek
to promote free speech and rectify this online censorship issue
that has been discussed?
Ms. Bovard. So the President's executive order does two
things that I think are very important. The first is that NTIA
petitioned the FCC to bring Section 230's application back to
its original intent, which, as we discussed, is a very narrow
immunity focused on the original title of the amendment itself,
which is the Family Online Empowerment Act, allowing,
basically, you to clean up the internet. And the second thing
it does that I think is really important is it enforces a
measure of transparency on to these companies. A lot of the
censorship and bias they get away with happens because they
don't have to tell us what they are doing. They have never
popped the hood and let us look in, and they could. They could
put allegations of bias to bed if they let us look under the
hood of what they are doing, but they don't. So I think that
transparency is also very important.
Mr. Steube. Do you believe that Section 230 reform is an
avenue for addressing some of these online censorship issues?
Ms. Bovard. I do because it enforces accountability and
transparency on companies who right now have none of it, and I
think companies that can upset half of their user base without
consequence because they know they have nowhere else to go
deserve a little bit of accountability and transparency
requirements for a substantial benefit, a government-mandated
privilege that they receive.
Mr. Steube. What specific reforms should Congress consider
when examining ways to address the pitfalls with Section 230?
Ms. Bovard. So I think the proposal that Ranking Member
Jordan mentioned in his opening statement, I think, sounds like
a very good place to start. It deals with the otherwise
objectionable part of Section 230, which, again, has become
this sort of massive catch-all for the companies to enforce
against viewpoints they don't like without any consequence. I
think addressing that particular part of the law, I think, will
be very useful. And, again, I think the transparency, when you
have to show what you are doing, when you have to show your
work, it is a lot harder just to say ``trust me'' to no
consequence. You actually have to show conservatives that you
are listening to them.
Mr. Steube. Thank you for your time. Thank you for being
here today. I would yield any of my remaining time to Ranking
Member Jordan.
Mr. Cicilline. You yield back. I now recognize the
gentleman from Colorado, Mr. Neguse. I am sorry. I am sorry. I
recognize the gentleman from Maryland, Mr. Raskin, for 5
minutes.
Mr. Raskin. Mr. Chairman, thank you very much. I want to
come to Ms. Teachout. Welcome, Professor Teachout. In your
testimony, you advocate what you call structural separation, a
Glass-Steagall approach to antitrust in this field. Why did
Congress approach concentrated markets, like financial services
or telecom, this way in the past, and what is its resonance
with American constitutional principles of structural
separation of powers?
Ms. Teachout. Thank you for your question. What we have
seen in the past, you mentioned Glass-Steagall, which I also
mention in my written testimony. You also see laws like the
Public Utility Holding Act, which prohibits companies who are
subject to the Act, who play the sort of central public utility
role, from engaging in acquisitions unless there is SEC
approval. And the key theory here is that you don't want
conflicts of interest at the heart of your economy with
essential infrastructures. You don't want your pipelines to
have a conflict with what is going through those pipelines. And
decentralizing that power instead of having platforms that
enable competition on those platforms instead of using those to
kill, acquire, or copy, as you have shown in your
investigation, is really important both for allowing the
thriving of small businesses, but also stopping these platforms
from becoming a form of private government. And this is
something that Justice Douglas spoke about, the inevitable
tendency of all private power to form a government in and of
itself. Structural separation is one of the key tools to
prohibit these private powers from becoming private governments
that coexist with our democratic government.
Mr. Raskin. Well, would that undermine innovation? Would it
undermine competition? Would it harm consumers?
Ms. Teachout. Well, in general, I would say that the more
feudalist a system is, the less innovation you are going to
see. And what we are talking about, you know, when you talk
about the democratic threat, it is essentially, a feudal
threat, you see Amazon playing a feudal role, Facebook playing
a really dangerous feudal role of deciding which newspapers get
prioritization in your news feed, YouTube playing this role.
And the more you see a feudal system, actually the more you see
a closed and fearful system and a less innovative system, so
yes.
Mr. Raskin. Tell us about what you think the role of
Congress is today and historically in the development of
antitrust principles. If Congress doesn't do it, what happens
if we are not updating and modernizing the antitrust laws?
Ms. Teachout. Yeah, I mean, Congress from the 1880s onward
has played this really central role, recognizing that
protecting fairness in a thriving economy is the quintessential
congressional role, and also protecting our democracy and
protecting the corruption of the takeover of these forms of
private government is a quintessential congressional role. And
then starting in the 80s, you saw Congress really step back
from this role. You saw this deep de-politicization. Instead,
when these cases came down, cases we have been talking about
today, whether the cases were involving predatory pricing or
changes to merger law, you didn't see a congressional hearing.
There was a kind of tacit acceptance that the Supreme Court was
the right institution to be making decisions about the shape of
our economy. It is a terrible institution to be making
decisions about the shape of our economy.
That said, I do want to address something that has not been
addressed enough I think. I think Congress' other role is to
light a fire under enforcement agencies. I would not allow
enforcement agencies to get away with saying that, you know,
although the court has made these laws harder to enforce, the
FTC can engage in much more aggressive rulemaking, much more
aggressive enforcement. In fact, I would say that your
investigation has shown some really deep failures in the
aggressiveness of the FTC, so I think there is a double role.
One is ongoing investigations and ongoing responsibility taking
for the structures of power and the structures of the economy
here in Congress, and second is ongoing oversight and lighting
a fire under the agencies in an ongoing way.
Mr. Raskin. Well, are there benefits to a regime where you
have multiple levers of enforcement in the federal bureaucratic
context, state attorneys general, private plaintiffs? Do you
want to try to multiply the different sources of enforcement?
Mr. Cicilline. The time of the gentleman has expired, but
the witness may answer the question.
Ms. Teachout. It is absolutely essential to multiply levers
of enforcement. In fact, in the first Congress of this country,
about half the laws had qui tam provisions because there was
concern about capture or corruption of possible enforcement
agencies. So you need to have a dynamic interaction with broad
private rights of action, State attorneys general, agencies,
and Congress all constantly engaging instead of passively
accepting the Supreme Court and big companies taking over this
area.
Mr. Raskin. I yield back. Thank you, Mr. Chairman.
Mr. Cicilline. The gentleman yields back. I now recognize
the gentleman from Ohio for 5 minutes.
Mr. Jordan. Thank you, Mr. Chairman. Ms. Bovard, is cancel
culture real?
Ms. Bovard. It certainly is, sir.
Mr. Jordan. A recent survey, 62 percent of the American
people said they are afraid to freely express their thoughts
and opinions. I think most Americans agree that it is darn
real. It is scary. I think Professor Teachout, I think the
quote she just said, ``a closed and fearful system'' that we
find ourselves in. If 62 percent of the American people are
afraid to express themselves, do we have a functioning First
Amendment?
Ms. Bovard. You don't. It would seem that would violate the
very intent of the First Amendment, which is to provide robust
protection for speech of all kinds.
Mr. Jordan. Yeah, silence is not the First Amendment, and
that is exactly what the cancel culture mob is wanting. They
are wanting us to be silent. In fact, I think it is even worse.
They want us to agree with them. Do you have free speech if
only one side is allowed to talk?
Ms. Bovard. You do not. You have one source of information
only. That is not free speech or free thought, I would add.
Mr. Jordan. Yeah. So if you don't have free thought, you
don't have free speech, you have a closed and fearful system.
You have a system where 62 percent of the American people are
afraid and reluctant to express their thoughts, their opinions,
then that is a dangerous place to be. Is Big Tech a part of
this phenomena we now find ourselves in?
Ms. Bovard. I would say absolutely. I think that the bias
that we have discussed is a symptom actually of its market
power. Google filters information for 92 percent of the world,
87 percent of America. So whatever they choose to amplify or
suppress is what billions of people around the world see. That
is a problem.
Mr. Jordan. It strikes me as twofold. One, they can censor
themselves. We know about that. We know what Google tried to do
to The Federalist. We know what Twitter will do to the
President of the United States, but yet then turn around and
let the Ayatollah of Iran spew the things that he wants to
spew. So they can engage in it themselves, but then they also
provide a platform for other people to attack and try to cancel
opinions they disagree with. Now, I don't know how we deal with
that. We just got to fight back and be able to use the platform
and fight back with that. But that second part, Bari Weiss, the
individual, had to resign or did resign. I don't know if she
had to. She resigned from The New York Times. She called that
second phenomena the digital thunderdome, a term that just
struck me as exactly what happens when the mob starts attacking
positions they don't like. So it seems to me we come to the
critical question, what is the answer? How do we address it?
Ms. Bovard. Well, I think I would actually go back to
something that Ms. Hubbard actually referenced in her opening
statement, which is that the answer, the antidote to bad speech
and suppression of speech is more speech. And I think----
Mr. Jordan. Always has been in this country. Always has
been.
Ms. Bovard [continuing]. They already are involved with
these tech companies with Section 230, with sort of this
antitrust immunity that they have given these tech companies.
Whatever incentives that Congress can give these companies to
abide by what we, in Section 230, designed for, right, which is
robust political debate, a diversity of views, I think it is
incumbent upon Congress to do that.
Mr. Jordan. I agree with that, and I want you to take a
good look at the legislation I briefly referenced in my opening
comments, legislation that we have introduced today. It seems
to me that would be something we could all agree on because
there is definitely some disagreement. We heard what Ranking
Member Sensenbrenner said. We have heard what folks on the
Democrat side said about is existing antitrust law good enough.
The truth is I don't know. It may be. It may not be. Do we have
to change it? Well, we will look at that. Is it more robust
action, as some of the Democrat witnesses have said, from the
agencies? Probably all that is important, but it seems to me we
should be able to agree on Section 230 and what needs to be
changed there to foster more speech and not allow these Big
Tech companies to particularly, I think, censor conservatives.
Would you agree with that?
Ms. Bovard. I would. I think there are a lot of proposals
to reform Section 230, which I think reflects the sentiment
that you just suggested, which is that they all have one goal,
which is to force more accountability on these platforms for
speech, for the criminal acts that flourish there, and I think
it is a very important area to address. To your point, I do
think this is a multi-pronged problem that is going to probably
require multi-pronged approaches----
Mr. Jordan. Right.
Ms. Bovard [continuing]. Across different sectors of
policymaking. Section 230 is one of them.
Mr. Jordan. And you know what else I think is important? I
think you have to call it out every single time you see it.
Every time Big Tech censors somebody, it should be called out,
particularly now. I mean, particularly now, 4-and-a-half weeks
before a major election, I mean, maybe the biggest election.
And we know what happened in 2016. We know what Google tried to
do to help the Clinton Campaign, so you have to call it out
every single time. And then hopefully we can get some
bipartisan support for the Section 230 changes that I think
everyone, if we all just sit down and work, we all agree need
to happen. I will give you the last word for the last 15
seconds.
Ms. Bovard. I would agree with that because I would like to
get to a point where these Big Tech giants don't have nearly
the power they have over speech, over election, over
independent behavior. I do not think we can function as a free
society when we are ruled by tyrannical corporations.
Mr. Jordan. Thank you. I yield back, Mr. Chair.
Mr. Cicilline. The gentleman yields back. I now recognize
the gentlelady from Pennsylvania, Ms. Scanlon, for 5 minutes.
Ms. Scanlon. Thank you, Chairman. I want to start by
commending the members and the staff of this committee for the
incredible work they have done over the course of this hearing
series. It is an historic investigation. The report coming
forward is shedding light on the crushing power of big tech,
and it has really brought before the American people a
desperately-needed conversation on what we need to do to reform
our antitrust laws. So I am proud to have been a part of this
process, very grateful to the chairman for having initiated it
and walked us all through this.
You know, over the course of the last year, we have laid
out how Amazon, Apple, Facebook, Google, and others have used
monopolistic tactics to exert undue market power. In doing
this, these companies stifle innovation, kill competition, and
harm the American public. We certainly hear about it every day
from our constituents. I have little reason to believe that,
without regulatory intervention, these companies will continue
to act in their self-interests rather than in the interest of
free and fair competition or privacy.
Over the course of the investigation, it became clear
conversation on rethinking traditional antitrust law is needed.
Companies competing in the digital marketplace on the scale we
see today could not have been conceived of when the Sherman
Antitrust Act and our other anti-monopoly laws were created.
And decades of court rulings have obviously made it harder and
harder to use traditional antitrust laws to bring enforcement
measures against these companies. So, in addition to looking at
how we can use traditional antitrust law to bring companies to
heel, we also have to identify the areas where we can make
reforms to better regulate and police digital marketplaces. So
I am looking forward to how we develop a modern antitrust code
that can respond to the major competition issues of this time,
and I am hopeful that our report and the expert testimony of
our witnesses today will serve as a launching point for
enforcement and reform legislation.
Now, using the predatory pricing models to drive out
competition is a classic monopolistic tactic, and in our
hearing in July, I raised concerns with Amazon's scheme to
artificially lower the prices of diapers in order to drive down
competitors' profits until they could acquire that competitor.
And this had a real impact on parents who saw, after the
acquisition, saw the cost of Amazon diaper products rise as a
result. So, Ms. Teachout, do you see this predatory pricing
scheme as a symptom of a company that has grown so large, they
no longer care about what is best for consumers?
Ms. Teachout. As a mother of an almost 2-year-old, I feel
the diapers problem on a regular basis, so thank you for
raising it. Look, the diapers acquisition, and thank you for
your line of questioning, which was very powerful. It was an
example of one of the moments where great research and great
preparation really revealed something powerful. I believe you
uncovered just how much Amazon was willing to lose in order to
govern that market.
And I think one of the things it showed is the really
deeply problematic nature of court-driven antitrust policy,
because what we saw in Brooke Group, and Warehouse, and the
series of Supreme Court antitrust cases is a statement that
predatory pricing of exactly this kind was really unlikely to
happen. It was a statement based in economic theory, but not in
the economic realities. And it is just an example of how
incredibly important it is for this body to act to make clear
that that kind of predatory pricing cannot happen going
forward. Right now, we do not know the full scope and range
of--I will be quick--of predatory behaviors going on, but we
have reason to suspect it is far broader than anything we know.
And the opacity of these companies makes it very easy to cross-
subsidize in ways that really crush competition.
Ms. Scanlon. And do you have suggestions about how we can
use reform to combat this?
Ms. Teachout. Well, sure. Overturn the trio of cases that
changed the predatory pricing laws. I mean, this is something
Congress does in other areas. When President Obama became
President, his first bill, the Lilly Ledbetter Act, was
overturning bad Supreme Court interpretation of congressional
statutes. So here again, it is your responsibility to take this
moment and overturn bad Supreme Court interpretation of
congressional statutes.
Ms. Scanlon. Okay. Thank you. I appreciate that. And I do
have to say, I am struck by the fact that when they passed the
Sherman antitrust law, they probably were not thinking about
diaper pricing and did not have witnesses like yourself or
representatives like myself. Thank you to all of our witnesses.
We really appreciate your insights today, and I yield back.
Mr. Cicilline. The gentlelady yields back. I now recognize
the gentleman from Colorado, Mr. Neguse, for 5 minutes, and the
vice chair of----
Mr. Neguse. Thank you, Mr. Chairman, and I want to thank
each of the witnesses for their testimony today and very
thoughtful presentations with respect to the legislative
recommendations that this committee is poised to potentially
make to the full Congress. I would be remiss if I didn't say
first and foremost just how much I have appreciated serving as
the vice chair of this subcommittee, particularly given the
investigation that we have undertaken, and I want to give my
gratitude to the chairman, to Chairman Cicilline, for his
thoughtful leadership. I think the way that he has approached
this investigation and leading, of course, our counsel and the
staff of the committee, and, on a bipartisan basis, working to
try to get to the bottom of these very serious, vexing issues
that impact every consumer in our country, in my view, has just
been a tremendous example of how Congress can work well when we
are working at our best. And so I want to say thank you again,
Chairman Cicilline, and the ranking member of the subcommittee
as well. We appreciate his leadership and, of course, wish him
well in his retirement.
I want to, I guess, perhaps end the hearing in a similar
way in which we started it. The ranking member asked a series
of questions around Facebook, in particular. And I think that
Facebook provides perhaps one of the best examples for this
committee and for the country really to consider in terms of
acquisitions of competitive and nascent threats, you know,
undeniably helping a company amass and maintain market
dominance. And I think that was exposed during the course of
the hearing, of course, that we held in July with the CEO, and
the documentary evidence that this committee was able to
compile during the course of our investigation.
Ms. Hubbard, in your prepared testimony, I believe you
argue, and I think I am putting this accurately, that enforcers
should unwind illegal mergers that they didn't catch. And you
cite Facebook's acquisition of WhatsApp and Instagram as
examples of what you believe could be illegal mergers. I wonder
if you could expound a bit on why, in your view, antitrust
enforcers didn't catch these anti-competitive acquisitions in
real time, because I think it is fairly clear from the
documentary evidence that we have compiled that it was, in
fact, an anti-competitive acquisition, and it was consistent
with Facebook's, you know, modus operandi, if you will, which
Professor Teachout articulates really well in terms of, you
know, copying competitors, acquiring competitors, or
eliminating them.
Ms. Hubbard. Thank you for the question. I think in this
hearing, we have let the enforcers off the hook a little too
lightly. To hear the conversations we have had about the
Google-DoubleClick merger, for example, we said how could we
have foreseen that. All you need to do is read the dissenting
statement of Pamela Jones Harbour. She foresaw everything. So
who is in the majority matters, okay? If we had three Chopras
or Slaughters running the FTC right now, we would be having
vastly different enforcement. So people matter. If Pamela Burns
Harbour had been in charge, that deal may have not gone
through. She was urging for greater scrutiny.
So, you know, why did they miss these mergers? I think they
were trained in the Chicago School ideology, which has been a
failure at enforcing the antitrust laws in a way that protects
anybody. It is the consumer welfare standard, but it hasn't
protected consumers at all, and that ideology is incredibly
narrow. And they look at, oh, Facebook is this kind of a
product and Instagram is a photo-sharing app, and they don't do
any kind of a real thoughtful analysis that, hey, is this a
competitor that they are acquiring. I didn't see any of the,
you know, discussion of, wow, this is a really hard case to
win, and so, you know, even though we think it is a problem, we
are not going to do it. What I saw is they didn't do a thorough
enough investigation. They didn't get the documents, the
documents that your investigation has shown.
If any antitrust enforcer was presented with those
documents, you need to try to bring that case. Even if you
think you might lose, you need to bring that case, so it is a
failure. But the good thing is that it is not too late because
there is no rule that you can't unwind an illegal acquisition
later in the future, so that should still happen. It is very
critically important for our democracy, for elections, for all
kinds of problems that we are seeing that result from Facebook
not having any competitive threat because it acquired its top
competitors.
Mr. Neguse. Well, thank you. You know, I couldn't agree
with you more, and obviously there has been public reporting.
As you know, the FTC is certainly investigating whether
Facebook illegally maintained its dominance in the social media
market through those acquisitions of, you know, 80-some-odd
companies in the course of 15 years. So, in any event, I
certainly share your sentiments. And as somebody who previously
served in a gubernatorial administration in Colorado prior to
coming to Congress, running the State's regulatory department
back there, I certainly can attest that personnel is policy in
every sense of that phrase, and so your point is salient one.
And I guess I am running out of time here, but the last
question I would have for you, Ms. Hubbard, and to the extent
Professor Teachout wishes to opine on this as well. I certainly
read her report with Mr. Stoller in depth, and think their
recommendations are very thoughtful of just what statutory
changes, in addition to potentially overturning, of course, the
precedents that were referenced by Professor Teachout, to
federal antitrust law should Congress pursue to ease
challenging dominant firms, rather ease the dominant firms'
acquisitions of nascent competitors.
Mr. Cicilline. The time of the gentleman has expired, but
the witness may answer the question.
Ms. Hubbard. Thank you, yes. So I think when it comes to
acquisitions of nascent competitors, we definitely need to
reform the standards that are completely broken, but the
easiest way would be to go through a bright-line rules process
for mergers. We can look at the 1968 merger guidelines as a
model for how to do that where it just says, if you have a
certain amount of market power, you are not allowed to acquire
any further companies. And if you want to grow your market
power, you need to do it by investing in products and your
workers, and you need to grow organically. You are not allowed
to do any kind of a merger once you are a certain size.
And these clear thresholds would get rid of the burdens on
enforcers that make it too hard and too expensive to win
mergers. It would also create very clear rules for the
marketplace so that everyone knows what is acceptable. You
know, we need to go further than just little tweaks here and
there. We need actually bright-line rules.
Mr. Cicilline. Thank you. The gentleman yields back. I now
recognize the gentlelady from Georgia, Mrs. McBath, for 5
minutes.
Mrs. McBath. Thank you, Mr. Chairman. Thank you so much for
continuing to bring these important measures before the body
today, and thank you so much to each of you. We are really glad
to be hearing from you today as we continue to examine the
antitrust and also the anti-competitive nature of big tech.
When I had the opportunity to ask questions of the CEOs of
big tech companies, I focused on the harms that were faced by
small businesses. I asked Mr. Bezos about Amazon's treatment of
third-party sellers, small businesses who want to sell on
Amazon. I asked Mr. Cook about developers who want to make
their apps available in the App Store and the users who were
disappointed when their favorite apps just suddenly
disappeared. In both cases, Amazon and Apple exercised immense
control over whose products, whether physical or digital, are
available in their marketplaces. And this leaves small
businesses beholden to their whims as they try to maintain a
business, create jobs, and provide for their own families.
After our last hearing, even more Amazon sellers reached out to
this committee and to my office with the same or similar
concerns. Sellers have told us over and over again that they
feel that they are dispensable.
So, Ms. Teachout, you made recommendations in your
testimony about reforms that we could make. Do you have
anything to add on those reforms that can help third-party
sellers or app developers?
Ms. Teachout. Thank you, and thank you for your very
powerful questioning. As you saw in response to your questions,
the CEOs will always have some reason for kicking off their
competitors because it is better for consumers, but it looks
from the outside like they are using their platform power to
really squeeze and really hurt small businesses. And I just
want to add one thing. We are in the middle of a global
pandemic where small businesses are facing a true catastrophe,
and it is more important than ever that we support those small
businesses in this moment during a time when margins are tight,
if they are there at all. So the most important thing to
protect small businesses is structural separation. The most
important thing for those Amazon sellers is that they are able
to go to Amazon as a place where they sell their wares, but not
feel like they are then obliged to go to the feudal lord of
Amazon and say, to get prioritization, I will use your
advertising, to get prioritization, I will use your Fulfillment
services. And those sellers are legitimately fearful that their
brilliant, creative ideas will be ripped off and then used by
Amazon to compete against them. So structural separation to me
is the simplest and most powerful tool for supporting small
businesses at this moment.
Mrs. McBath. Thank you so much for that answer. Mr. Kades,
do the reforms that you are supporting, actually do they have a
risk of unintended consequences, and if they do, why or why
not?
Mr. Kades. Okay. So I think I actually forgot to turn it
off last time, so I am 0 for 3 today. Thank you for that
question. I think it is foolish for anyone to say I have an
idea for reform, and it is totally costless, and there never
will be unintended consequences, so that is true. But what I
think is also true is when we look at the situation of where
the law is, the cost of doing nothing is tremendous. In some
sense, when we address the question of whether the antitrust
laws are in the right position, this Committee, in a bipartisan
way, already answered yes. Earlier in this Congress, you passed
bills directly trying to address the failure of the courts to
condemn clearly anti-competitive activity in the healthcare
field, both the Pay for Delay and the CREATES Act. Those were
much simpler issues than the types of issues that are flowing
around with tech. Those were cases involving price, and still
the courts are getting them wrong.
So I think if we do nothing, what we are saying is that
government is no longer concerned about regulating dominant
companies and it is just free rein. Can the reforms have
negative consequences? As I said, yes, but I think that is the
decision Congress always makes.
Mrs. McBath. Thank you very much. And one last question for
Ms. Hubbard. Of the reforms that you are recommending, which
ones do you think will do the most to address the harms that
have been faced by these small businesses? As you know, as one
who has been working in gun safety, I know that there is not
one solution to the expansive culture of gun violence. But what
do you believe is a reform that will do the most effective,
efficient, expedient change?
Ms. Hubbard. Yeah, I have to agree with Professor Teachout,
her comment earlier about structural separation. It is just the
most administrable. It is, you know, a preventive solution that
just eliminates the conflicts of interest and creates a playing
field that is level. It just doesn't work to have dominant
corporations, you know, playing the game and controlling it,
too, right? They have to do one or the other. And you just
can't police every little incident because there are so many
opportunities for them to favor their own products and
services, and so many opportunities for them to put the thumb
on the scale that we just can't even see. It is just not
possible to get at all of those through individual enforcement
actions, and that is why I think the structural separation,
which has been done in American history many times in many
industries, is the best solution.
Mrs. McBath. Thank you, and I yield back.
Mr. Cicilline. I thank the gentlelady for yielding back. I
now recognize myself for 5 minutes.
Professor Teachout, I would like you to respond to an
argument that we have heard during the course of this
investigation, that Congress suddenly becoming active in this
antitrust space risks rendering antitrust laws dangerously
political, and that somehow our efforts to sort of get the
policy around antitrust modernized and updated creates some
perception that we are politicizing antitrust. I wonder if you
would respond to that argument.
Ms. Teachout. Economic policy and anti-corruption policy
are arguably the core jobs of Congress protecting the people of
this country from tyrants and allowing for a thriving economy.
There is recent research that Mr. Rahman alluded to showing
that corporate concentration is leading to a transfer of as
much as $14,000 per year from workers to investors. This is a
major driver of inequality. Nobody doubts that labor law is
your job, that tax law is your job, that campaign finance law
is your job. And when it comes to antitrust, antitrust and
anti-monopoly law is about the country sharing its vision of
what a moral, fair, and thriving economy looks like. There is
nothing more congressional than antitrust law.
Mr. Cicilline. I couldn't agree with you more. Thank you.
You said it much more articulately than I could have. Ms.
Hubbard, I would like to now ask you, there obviously is
significant reporting that, and we are all aware that the State
attorneys general, the FTC, and the DOJ are all pursuing
antitrust investigations into the major dominant technology
platforms, and some are reporting that lawsuits may be brought
very soon. Some have also suggested that, you know, Congress
should just wait to see how these cases turn out before
pursuing legislative reform. I, of course, have suggested that
there are two very different proceedings. One is an enforcement
proceeding, which we are not prosecuting, and enforcement
action. As Professor Teachout just mentioned, ours is public
policy development, and the urgency of doing our work cannot be
overstated, and so, of course, we shouldn't await those. I just
want to be sure that I am not off course with that thinking.
Ms. Hubbard. Right, and as you know, I was at the New York
AG's office, and they are part of these investigations, so I
still don't think you should wait for them. And the reason is,
there is so much anti-competitive conduct to go after, that the
agencies are just trying to bite off little tiny pieces that
they can work on, that are just a tiny fraction of the anti-
competitive conduct that is going on. So they are not, you
know, getting the whole landscape of all the different ways
that these companies are abusing their monopoly power to
exclude competition.
The other thing is that antitrust cases take years. So we
have very pressing issues here about small business, about
citizens, about democracy, about speech. We need urgent action
right now in the middle of this global pandemic. We can't wait
5, 10 years for an antitrust case to finish up.
Mr. Cicilline. Thank you.
Ms. Hubbard. And the last thing is we have seen some strong
antitrust cases lately that the judges just completely screw
up. I mean, the New York State AG is soon to block the Sprint-T
Mobile merger. That was a classic antitrust case of three to
two major competitors. It should have been blocked. The
evidence was overwhelming that it would lead to a price
increase under the Chicago School theory of consumer welfare,
and they still didn't win. So we just can't put this in the
hands of the courts. It is too important and too urgent. I do
urge those enforcers to carry on and do their job, but we need
you as well.
Mr. Cicilline. Thank you. And, Professor Rahman, in your
written statement, you note that tech platforms like Facebook,
Google, Amazon, and Apple represent essential infrastructure,
just like the railroads, bridges, and telegraph lines of a
century ago, and you write about the dangers of unchecked
private control over social, economic, and political
infrastructure. And I wonder if you could just speak a little
more about what that kind of infrastructure and the power that
accompanies it means, and why our responsibility in terms of
developing good public policy in this context is so important.
Mr. Rahman. Thank you very much, Chairman. I think like a
lot of the other speakers today have alluded, you know, we are
in such a crisis moment right now in our country. And a central
piece of this is that if Congress doesn't act, what that means
is that we are actually living under the private government, as
Professor Teachout said, the private government of these
private firms and the misapplication of law that we are seeing
from the courts, right? And so essential infrastructure is
exactly that, it is essential. If we don't update the rules of
the road to make sure everybody can actually access that
infrastructure, build the businesses, and engage in the social
activities that it enables, then we are not creating the kind
of economy that we need to be equitable and inclusive and to
create new types of innovation in the future.
Mr. Cicilline. And so if I could just ask for all the
witnesses. As I kind of review both the testimony at this
hearing today, which has been incredibly useful, and your
written testimony, it seems as if the reforms that you have all
recommended, or some part of these, are kind of in five
different areas, and I want to be sure I haven't missed one.
The first is a change of some presumptions in statutes to shift
burdens to parties that both may be engaging in misconduct, but
also have easier access to the information; two, this whole
notion of separation of lines of business, that sort of
structural change so we eliminate what Professor Teachout has
described as this extraordinary conflict of interest, which is
bad for our economy, bad for innovation, bad for a whole range
of other things; three, more rigorous enforcement, which, of
course, we recognize means more resources, staff, and
leadership that enthusiastically and creatively promote
competition policy, and believe in this stuff, and will work
aggressively. The fourth area is a reversal of a number of
court decisions that have either kind of misinterpreted or,
frankly, just changed the intention of Congress as it relates
to important competition policy; and then, fifth, a set of
provisions that may just explicitly prohibit discriminatory
behavior. And, you know, those obviously have some
permutations, but are there other general areas that we ought
to be looking at in this final part of our investigation in
terms of recommendations? Yes, Mr. Baer.
Mr. Baer. I agree. I think that appropriately summarizes
the points. I do think in looking at prohibitions, we also
ought to be thinking of forward-looking rules, you know, of
interoperability, portability. And it may well be we need to
vest, whether it is the Federal Trade Commission or a new
agency, with the authority to do targeted rules that actually
will promote competition. So that is kind of an addendum to
point 5.
Mr. Cicilline. Great. Thank you. We will make that point 6.
It deserves its own.
Anyone else? Yes, sir. Mr. Kades.
Mr. Kades. Yeah, I just want to echo what Bill Baer just
said. I mean, I do think it is really important to think about
part of----
Mr. Baer. That is why I promoted you back then. [Laughter.]
Mr. Kades. I know, right. Too often, we see when people say
the word ``regulation,'' right, they have this theory of
burdening commerce, where, in fact, regulation is just a kind
of jargon way to say these are the rules of the marketplace.
Mr. Cicilline. Right.
Mr. Kades. And so, the FCC, right, the reason, right, they
decided at some point that long-distance monopoly didn't mean
you got to have a monopoly on phones, they said, no, now you
got to have interconnection. And I think a lot of the problems
we are dealing with, whether it be with any of these companies,
is, better regulatory rules really will unleash competition and
unleash it along the lines we want to see.
Mr. Cicilline. And just with the indulgence of my
colleagues, I am just going to ask Professor Rahman. I think he
had his hand up also.
Mr. Rahman. Yeah, thank you, Chairman. Very quickly, I just
had one piece, which is it is important to clarify the
rulemaking authority that the FTC will also need in order to be
an effective enforcer going forward of the kinds of issues that
we have talked about today. That is a dispute right now, and
Congress could help improve that.
Mr. Cicilline. Well, thank you. I have gone way over my
time, so I appreciate the indulgence. Before closing today's
hearing, though, I would like to first just thank the chairman
of the full committee, Chairman Nadler, who has been an
extraordinary supporter of this investigation and an active
participant, and it would not have been permitted to proceed in
the kind of robust nature that it did without his support. So I
want to thank Mr. Nadler for that.
Chairman Nadler. Let me thank Mr. Cicilline for his role in
this. Without your efforts, this would not have occurred.
Mr. Cicilline. Thank you, Mr. Chairman. I also want to take
a moment as a point of personal privilege to thank the members
of the subcommittee on both sides of the aisle who have taken
this work seriously, invested extraordinary amounts of time to
conduct a really thorough investigation. I am really grateful
for that. And I also want to take a particular moment of
privilege to extend my thanks to our extraordinary staff of the
subcommittee for the work that they have done and will continue
to do. I have said this many times before. This is a mighty
staff of 5 or 6 that has done the work of 30 or more, and that
is Slade Bond, Lina Khan, Amanda Lewis, Phil Berenbroick, Anna
Lenhart, and Joe Van Wye. And they have just been
extraordinary, and I know all my colleagues will join me in
thanking them.
[Applause.]
Mr. Cicilline. And I think, you know, they have obviously
been a really important and indispensable part of this process,
and every member on this dais is grateful on both sides of the
aisle for all the work that has been put into it. I also want
to just take a moment to thank my chief of staff, Peter
Karafotas, and my communications director, Richard Luchette,
for their diligence and commitment during this investigation.
And finally, to our witnesses, thank you again. You have
all informed this work throughout and given us a lot to think
about today, and we are grateful for that. And I will end by
just reminding everyone the reason that this investigation is
so important to the future of our country is because our
country has a history of this battle between concentrated
economic power, monopolies, and democracy. We are seeing that
play out in the most extraordinary way and, frankly, in a
dangerous way, and it is incumbent on the Congress of the
United States to fulfill our responsibility to make sure our
economy works and we safeguard our democracy. And this
investigation is a critical part of that, so thank you all.
And with that, the hearing is adjourned.
I am sorry. Members have 5 legislative days to enter into
the record materials and extended remarks.
[Whereupon, at 3:45 p.m., the subcommittee was adjourned.]
APPENDIX
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