Fighting New Antitrust Rules Is a Bad Move for Big Tech

By: Brooke Fox, Fiona Scott Morton & Gene Kimmelman (ProMarket)

Sen. Amy Klobuchar recently invoked David and Goliath when discussing her fight to pass antitrust legislation to rein in dominant tech firms. “I have two lawyers. They have 2,800 lawyers and lobbyists,” she said at this year’s Code Conference in September. But executives at those dominant tech firms would do well to remember that Goliath ultimately lost to David.

Whether or not Klobuchar’s legislation makes it to a vote this term, we’ve crossed a Rubicon. Whatever legitimate (or illegitimate) concerns may be raised about the precise wording of the bill, the fact is that Europe has already prohibited dominant tech platforms from thwarting competitors in search services, operating systems, app stores, online retail and numerous other digital markets.

It would be irresponsible for U.S. policymakers to sit on the sidelines and let others set the rules—a fact perhaps recognized by the 242 members of the House of Representatives who voted in favor of the Merger Filing Fee Modernization Act, designed to strengthen antitrust enforcement. While that bill did not single out big tech companies, it passed in spite of significant opposition from the likes of Google and Amazon, a sign that lawmakers are no longer afraid to move against the industry’s wishes.

European lawmakers have levied ever-increasing fines on tech platforms over the years, but not before bad behavior became entrenched, and little has changed in terms of market outcomes. Each time the EU issues a decision against a platform, the platform must design a remedy and present it to the regulator, which usually deems the proposal inadequate and orders the whole process to restart, according to Cristina Caffarra, who leads European economic analysis at Keystone Strategy. “There’s no end to this game, which is played in a situation of significant asymmetry of information,” she said. “So you end up in a situation in which the remedies are completely failing to do anything.”

Not content to let the status quo persist, the European Commission this year passed sweeping new legislation to oversee digital gatekeepers in the form of the Digital Markets Act. The DMA requires digital platforms doing business in the EU to comply with nearly two dozen rules, which prohibit practices such as pre-installing certain apps on devices, obligating standards such as interoperability and constraining the ability of users to move their data between apps…

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