Recently, Siva Vaidhyanathan, a Media Studies professor at the University of Virginia wrote a good opinion piece on why billion dollar fines aren’t as effective as they used to be at helping maintain healthy competitive markets. His commentary was in response to the recent $5 billion fine levied against Facebook by the Federal Trade Commission and the recently initiated Department of Justice antitrust investigation of Facebook, Google and Amazon.

Photographic depiction of electronic commerce: two hands coming out of computer monitors exchanging a credit card for a shopping bag. Image by Mediamodifier from Pixabay

The article notes how regulators look to the precedent of breaking up AT&T and Standard Oil for ideas on how to address anti-competitive behavior and practices. Like the author, I agree that attempts at making markets involving these tech giants competitive are doomed to fail if the fact that these companies have achieved market dominance by creating monopolistic platforms is not taken into account. Few doubt that the tech giants that dictate so much of what happens with commerce operate in a market in which they have a competitive advantage due to their size, but regulators can no longer ignore the impact of the monopolistic platforms from which they operate. Intentionally or not, these companies have implemented a clever hack of the marketplace which regulators have yet to figure out how to address.

Even though these tech giants argue the market is competitive because there is nothing that they are doing to prevent someone from moving their business elsewhere, these are disingenuous arguments. Worse yet, as Vaidhyanathan notes, these giants:

persuade us to keep going back to them for more and more service until we are completely dependent on them to function as social, commercial, and political animals.

Although there is no doubt that bad regulations have unintended consequences and produce bad outcomes, in the case of the tech giants, continuing a laissez faire approach is bound to keep markets hostile to competition. More dangerously, it will further fragment our society by broadening the chasm between the haves and the have-nots.

As the regulatory rulemaking process plays out, regulators must be vigilant of the tech giants’ attempt to influence the process to their advantage. If the recent history of corporate America is any guide, the giants, with their army of lawyers ready to comply with the new regulations, will try to create hurdles for competitors with more modest legal means. Hopefully, regulators will not lose sight that the desired endgame is to level the playing field so all businesses can compete and consumers can benefit from that competition. Like it or not change is coming to the way the tech industry is regulated. Understanding this new paradigm and planning for it accordingly could make the difference between success and failure.



Copyright © Roberto Veloso, Attorney at Law. All rights reserved.