By Michael Svedman*
In her recent proposal to break up Amazon, Google, and Facebook, Elizabeth Warren sounds the familiar antitrust alarm. Weak antitrust enforcement has allowed big tech companies to achieve Gilded Age levels of market dominance. They use mergers and proprietary marketplaces to acquire or exclude their competitors. The effect is to squeeze out small and medium-sized businesses, limit competition, and stifle innovation. Even if these firms provide reliable services at a reasonable price, we should still worry about the consequences of such monopolies and the potential harm their distortions cause to consumers. For example, big tech companies can afford to be lazy about protecting our privacy because no viable competitor threatens to capture some of their market share by offering a comparable suite of services while providing users with more robust data privacy decision rights.
All of that makes sense and follows the predictable contours of antitrust rationale. The basic claim is that “[t]oday’s big tech companies have too much power . . . over our economy.” Such a massive agglomeration of wealth and power is unfair or (depending on your preferred normative flavor) inefficient. But Warren also signals a deeper set of concerns — that big tech companies have too much power over “our society, and our democracy.” To be sure, social and political power implicate efficiency, competition, and innovation. What is interesting here, however, is the invitation to think of antitrust as a mechanism for allocating coordination rights as well as a tool to promote competition. In assessing Warren’s proposal, the question is not (only): will breaking up Amazon, Google, and Facebook promote competition and innovation, i.e. fairness/efficiency? The more fundamental question is: how do we want to allocate coordination rights across platform utilities in the tech sector?
In a recent article analyzing the intellectual posture of what she calls “the firm exception” in antitrust law, Professor Sanjukta Paul articulates the assumptions lodged in pro-competition arguments like the one I outlined above. Paul’s key insight is that the prevailing interpretation of antitrust law privileges intra-firm coordination while limiting opportunities to expand horizontal coordination beyond firm boundaries:
“It is conventionally understood that the purpose of antitrust law is to promote competition. Much more fundamentally, however, antitrust law allocates coordination rights. In particular, our current antitrust framework authorizes large, powerful firms as the primary mechanisms of economic and market coordination. Still, the notion that antitrust exists to promote competition has been critical for maintaining its particular allocation of coordination rights. The pro-competition norm has been deployed to purge other normative benchmarks from antitrust analysis, which would if revived pose challenges to the status quo allocation. And of course, the pro-competition norm has served to undermine other coordination mechanisms—such as workers’ organizations, “cartels,” and the public coordination of markets.”
For Paul, recognizing that antitrust always already allocates coordination rights is the first step in arguing that we can and should consciously deploy antitrust in our efforts to reallocate coordination rights. Once we think of coordination rights as a public resource, it makes sense to say that they ought to be allocated in the public interest.
Warren’s proposal may not contemplate an expansion of alternative arrangements for allocating coordination rights. After all, she wants to break up big tech companies to ensure that individual firms would be prohibited from owning both platform utilities and participants on that platform. The new, smaller firms would still enjoy the firm exception rights Paul identifies, and presumably competition among them would promote innovation and benefit consumers.
Yet the proposal involves a dramatic reallocation of coordination rights in the service of competition and of our social and democratic interests as well. Behind the economic case for breaking up big tech companies, we should recognize anxieties about how these actors exert outsized influence over our social and political lives. If we read between the lines, Warren seems to be saying something like the following: when big tech companies can bully cities and states into giving them massive tax concessions, when they can act, in Mark Zuckerberg’s words, “more like a government than a traditional company,” then questions of democratic accountability become pressing. In other words, we should worry that big tech companies can (and do) leverage economic domination (monopoly) into social and political domination (oligarchy).
So of course, using antitrust to break up big tech companies should promote competition and innovation such that the benefits of lower prices and better services accrue to consumers. More fundamentally, reallocating coordination rights across platform utilities gives us an opportunity to submit their distribution to the scrutiny of public policy. Our current arrangements, which allow big tech companies to control both platform utilities and the participants on those platforms, might be bad for fairness and efficiency in our markets. And they might be bad for democratic accountability in our polity. We should think of Warren’s proposal as voicing a public claim to alter those arrangements to ensure that they promote the public’s interests, broadly construed and democratically determined.
* Michael Svedman is a 2L at Harvard Law School and the Executive Article Editor of the Harvard Law & Policy Review.