FROM THE WASHINGTON POST | MAY 22, 2023
From Big Tech to Big Pharma, the Biden administration is taking an aggressive approach to antitrust law. It is a risky strategy that could backfire, hobbling legitimate oversight for decades to come.
The Federal Trade Commission, led by anti-monopoly crusader Lina Khan, is at the forefront of this expansion of federal power. For Khan’s FTC, antitrust law has not kept pace with the rapid growth of today’s business giants, especially those in the technology sector. Khan at the age of 34 is part of a cohort of younger scholars and regulators who believe that antitrust enforcement had become lax and that bigness is itself a potential threat to consumers. The original sin, in their view, was the failure to block Facebook’s $1 billion acquisition of Instagram in 2012. In the years since, they contend, the major tech companies have become conglomerates that quash competition, inhibit innovation and harm consumers.
The FTC, the antitrust division of the Justice Department and several state attorneys general have since filed anti-monopoly suits against Facebook’s parent company, Meta, and Google’s parent company, Alphabet. A suit against Amazon is in the works. (Amazon founder Jeff Bezos owns The Post.)
In addition, the FTC this year has tried to prevent Microsoft from buying video game developer Activision Blizzard for $69 billion and has worked with regulators in the United Kingdom to prevent that deal. The FTC argues that Microsoft’s scale in cloud computing and gaming consoles could unfairly stifle competition for years to come.
This new approach is not confined to traditional tech, however. The FTC has also ordered Illumina, a multibillion-dollar company whose genomic sequencing tools were essential to the rapid development of the coronavirus vaccines, to unwind its $7 billion acquisition of cancer-testing start-up Grail. Here, the FTC ruled against its own administrative judge, who argued that the FTC had failed to prove that the acquisition would harm competition, given that Grail’s cancer-screening blood tests have no current competition. In essence, the judge said the commission can’t legally prevent the deal based on the assumption that it would preclude competition at some point in the future. It is a sign of how zealous Khan and her allies are that they took the unusual step of overruling their own administrative judge.
These last two moves represent a radical interpretation of antitrust law. In the past, deals were assessed on whether they presented harm to consumers or to competition. The principle now is that size alone is a red flag because concentrated economic power imperils not just citizen welfare and future innovation but also democracy itself. There might be merit to that, but in the absence of new legislation, it is simply a theory, unsupported by the courts and not backed by law.
What’s more, many judges take the exact opposite position: that the past century of antitrust law starting with the creation of the FTC is itself unconstitutional and that regulators need to be severely curbed if not eliminated. Supreme Court Justice Neil M. Gorsuch, for instance, has written that “executive bureaucracies [have been permitted] to swallow huge amounts of core judicial and legislative power and concentrate federal power in a way that seems more than a little difficult to square with the Constitution of the framers’ design.”
Gorsuch and others, however, are still waiting for the perfect case, a regulatory equivalent of Dobbs v. Jackson Women’s Health Organization, which made overturning abortion rights possible. Now, with Illumina appealing the FTC ruling against its merger with Grail, that opportunity might arise. The case has landed at the U.S. Court of Appeals for the 5th Circuit, which has in case after case been fervent in its passion to curb the administrative state. If the Illumina case ends up at the Supreme Court, it is likely that Gorsuch and other conservative justices have the votes to take a strong stance. And if that happens, instead of curbing the power of large companies, this crop of regulators will have managed to do the opposite.
The lesson here is simple: Don’t overreach; follow due process instead. The evolving nature of companies in a digital world has happened suddenly and ferociously. How we balance the need for innovation and the necessity for competition and fair prices is a vast issue, and yet we are allowing our future to be shaped by a mere handful of appointed officials such as Khan and Gorsuch and their own particular passions. If new laws are needed to redefine monopoly power in a world of Big Tech, then that cannot be left to the discretion of a few regulators and a few judges. It should be defined by legislators, subject to animated public debate and written into law. Right now, we are left with the prospect of true-believer regulators squaring off against true-believer judges in a cage match where each is determined to reign supreme while the rest of society suffers the consequences.