Three emerging trends in Washington are on a collision course that could not only reshape antitrust law, but also politicize it and overhaul its application and enforcement. This will require each company seeking regulatory review and transaction approval to recraft its approach in this dynamic new environment. Here are the three developments to watch:
- Litigation crackdown – In October, the Department of Justice (DOJ) sued Google. In December, the Federal Trade Commission (FTC) sued Facebook and now reportedly is investigating Amazon. States also are participating in these lawsuits and investigations all of which pertain to allegations of anti-competitive behavior. Smaller tech companies are facing intense scrutiny from the government, too. But if the precedent set by high-profile suits against IBM, AT&T and Microsoft applies, these latest cases will be time consuming and tough for the government to win.
- Cutting off Trump – The backlash, led by Republicans, over Big Tech effectively “turning off” President Trump’s social media megaphone after the Capital riots has been intense and will undoubtedly lead to more oversight hearings. It will also create further impetus for policy change: renewed bipartisan pressure to amend Section 230, which provides tech companies with limited civil liability protections for content appearing on their platforms, as well as fresh momentum in Congress to “reform” antitrust law, already introduced by new Senate Judiciary Committee Chair Amy Klobuchar (MN).
- New personnel – These legislative and oversight efforts may get a boost from the Biden administration, which is considering appointing Columbia University Law Professor Lina Khan to the FTC. Khan was the Democrats’ legal counsel to the U.S. House of Representatives’ investigations of tech firms and is a noted author on reforming antitrust law. The administration has also floated creation of an “antitrust czar” to coordinate antitrust and competition activity across federal agencies. President Biden’s as-yet-unannounced appointment of the assistant attorney general for antitrust already is subject to political jockeying. More than forty groups on the political left have weighed in, seeking to preemptively disqualify anyone from the role who has represented Big Tech companies in the past.
To add even more fuel to the fire, news outlets are bolstering their D.C. reporting ranks specifically to focus on antitrust policy and litigation. Companies that care about competition policy should make particular effort to consider the following:
- The Big Tech antitrust focus makes antitrust more “popular.” For the next two to four years in a highly politicized and deeply divided Washington, antitrust cases and ensuing active legislative discussion will draw in a broad universe of tech companies pursuing M&A or really any large company pursuing a deal with antitrust risk. When talk about antitrust becomes “the talk of the town” it creates a gravitational pull that has a broad impact beyond those companies at the center of the storm.
- Be vigilant for unintended consequences and a proliferation of bad ideas. Tech literacy in Congress may have advanced since 2006 when the late Alaska Sen. Ted Stevens said the internet is, “…not a big truck. It’s a series of tubes.” But lawmakers still struggle to fully understand the adverse implications of their policymaking on smaller technology upstarts, tech investors, intellectual property and the relationship between software and hardware providers. That challenge will be compounded now, with political pressure to refashion antitrust law specifically for the purpose of bringing Big Tech to heel.
- Recognize that the politics are all pushing in the same direction – but for different reasons. On the political left, there’s interest in reducing the market power of Big Tech companies and enhancing consumer data privacy protections. On the right, there’s interest in punishing Big Tech for “censoring” Trump and others. This creates navigation challenges for the Biden administration, which will be simultaneously responsible for enforcing current antitrust law, advocating for its change with Congress and advancing pending litigation and ongoing investigations. This all will have a political dimension, too, since the industry has been politically generous – especially to Democrats.
- Merger education and advocacy will be essential. Tech mergers, fintech mergers and the data and privacy policies of virtually every company seeking approval for deals will come under enhanced scrutiny from this administration. Even the approval of otherwise routine mergers will be politically fraught if interests on the left or the right see a fresh opportunity to advance their political and policy agendas by calling the propriety of the transaction into question. Trade and mainstream media are paying close attention and looking to break news. Companies should seek to mitigate this political risk with sound advocacy and proactive communication.
- Break down internal silos early. Companies will do best when their legal, investor relations, public affairs and communications teams coordinate closely to manage the political, legal and media scrutiny that each transaction approval will require. CEOs and other corporate leaders should empower their teams to plan and coordinate “under the tent” together, well in advance of a potential announcement to mitigate risk and enhance the likelihood of regulatory approval.
The next four years will bring heightened political risk, new ideas and less certainty to antitrust. To borrow a catch phrase from Teddy Roosevelt, one of the early progenitors of antitrust law, companies that fail to update their approach in this new era may be in for a rough ride.