Colgate University’s Lampert Institute for Civic and Global Affairs welcomed Hal Singer, managing director for EconOne Research and senior fellow at George Washington Institute of Public Policy, on Feb. 17 for a discussion and evaluation of renewed efforts by antitrust agencies and lawmakers’ to bear down on tech giants. Singer highlighted the American Choice and Innovation Online Act, the Journalism Competition and Preservation Act, and the ethics of big-tech platforms.
Longstanding antitrust laws regulate competition and prevent monopolies in economic markets, Singer explained. Price fixing, cartel formation, or any type of coordinated behavior across firms’ boundaries are the most obvious and flagrant situations addressed by antitrust legislation. However, these laws cannot condemn a firm simply for “flexing its monopoly muscles,” says Singer, or asserting dominance. Indeed, courts have tended to defer to alleged monopolists who have used certain restrictions or restraints within their firm’s boundaries.
These restrictions can come in the form of self-preferencing, when companies such as Amazon, Google, Apple, or Facebook find merchants that are doing well on their platform, clone ideas and products, undercut the original source, give the clone preference in platform search results, and eventually make the original disappear completely. This practice could, according to Singer, undermine consumers and merchants alike.
Economists have investigated how affected sellers react pre- and post-invasion by these big-tech platforms. “In the Amazon study,” Singer explains, “they found that, when Amazon invades your vertical, the number of products offered by the independent falls by 24.1%.” The independent gives up, realizing it has no chance against Amazon, because it controls the search results.
Although current antitrust laws go after some anti-competitive practices, there is a gap in effectiveness. Antitrust laws are not able to stop companies from cloning an independent entity, giving preference to its own, and disappearing the independent. Legislation discussed by Singer would allow state attorneys general, the U.S. Department of Justice, and the Federal Trade Commission to bring cases against dominant platforms for engaging in this intra-boundary scenario, giving power back to independent merchants in the marketplace.
“The good news is that we don’t have to rely exclusively on antitrust to police anti-competitive behavior,” Singer says. “We should think of legislation that creates regulation as a ‘gap filler’ or complement.”
For more spring 2022 Lampert Institute events, visit the campus calendar.