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Legal experts say modest antitrust reforms likely after House report on tech

While a highly anticipated U.S. House antitrust report called for a range of antitrust reforms, including structural separations of major U.S. tech firms, experts expect only modest refinements to current antitrust regulation from the report rather than comprehensive change.

The 449-page report from a Judiciary Committee panel accused major online platforms — such as Facebook Inc., Apple Inc., Inc. and Alphabet Inc.'s Google LLC — of having monopoly power. The subcommittee, which is Democratic led, recommended reforms big and small, from increasing enforcement agency budgets to breaking up firms.

While some Republicans reacted by warning against government overreach, Rep. Ken Buck, R-Colo., released his own report that found some areas of agreement between the two parties. Specifically, Buck supports the need for additional resources and tools for oversight at enforcement agencies. Additionally, Buck's report finds agreement with proposals that would shift the burden of proof for companies pursuing mergers and acquisitions and a recommendation to empower consumers with data portability and interoperability standards.

While the areas of agreement do not include blockbuster changes such as structural separation, antitrust experts believe some of these areas have enough bipartisan support in Congress bolster antitrust enforcement going forward.

"I think at the very least, it's going to mean more agency resources [for the U.S. Federal Trade Commission and U.S. Department of Justice]," said John Yun, who previously was acting deputy assistant director in the economics bureau in the antitrust division at the FTC.

Yun believes the agencies need additional economists and attorneys, among other resources.

Robert Atkinson, president of the Information Technology & Innovation Foundation, a nonpartisan group that focuses on the intersection of innovation and public policy, agrees.

"It's clear the Republicans are going to make some compromises and that they do see that there are some challenges and they're going to go part way towards a compromise," he said. "So if I were to guess what's going to happen, there will be some modest reforms. There could be, and hopefully will be, more money for antitrust enforcers to do a better job," he added.

Sally Hubbard, director of enforcement strategy at the Open Markets Institute, a research and advocacy organization focused on antitrust, said in an interview that the resource imbalance between companies and enforcement agencies is an important issue to address. Specifically, she believes enforcement agencies need more technologists.

"I do think there's a tremendous mismatch of resources between any enforcer and these companies — just because these are the richest companies of all time ... they have tremendous resources that they can bring to bear," she said. "To some extent, their monopoly power threatens making them unregulatable, because they can just withstand any fine, they can just delay and delay and hire as many lawyers as they want," she added.

Facebook famously incurred a $5 billion fine levied by the FTC in 2019 in the wake of the company's 2018 admission that the now-defunct data analytics firm Cambridge Analytica LLC had improperly accessed millions of users' personal information. FTC Commissioner Rebecca Kelly Slaughter, a Democrat, said at the time that the fine should have been larger as evidenced by "the fact that Facebook's stock value increased with the disclosure of a potential $5 billion penalty." The reaction suggests "the market believes that a penalty at this level makes a violation profitable," she said.

Beyond what he calls "modest reforms," Atkinson says he does not think that the "dramatic legislation" that the report recommends will get to a president's desk any time soon, even if the Democrats win control of the Senate in November.

The report represents a radical change in antitrust that he does not see the Senate embracing, no matter who is in control, he said.

As part of recommendations to restore competition in the digital economy, the subcommittee recommended that "Congress consider legislation that draws on two mainstay tools of the antimonopoly toolkit: structural separation and line of business restrictions." Notably, structural separations can include either ownership separations, which require a divestiture and separate ownership of each business, or functional separations, which permit a single corporate entity to engage in multiple lines of business but create hard boundaries between them.

"It's easy when you can write a report that you know isn't binding," said Yun. "But when it now comes down to the business of actually breaking up Google, Facebook, and all these companies — I do think that's going to have a very strong message about the type of economy and the role Congress will play in high tech economy," he added.

Whether Biden or Trump wins the election, the president will "balk at the idea of breaking up these companies," Yun said.

Still, Hubbard, who is the author of a soon-to-be-released book titled Monopolies Suck: 7 Ways Big Corporations Rule Your Life and How to Take Back Control, notes that antitrust issues are one of the rare areas of bipartisan overlap in Washington.

"[Trump's] DOJ is preparing to bring cases against Google right now," she noted of a reported impending antitrust lawsuit against Google. "It's not necessarily the case that a continuation of the Trump administration would dampen any monopoly reform."

Even if Congress takes no action as a result of this report, Yun believes the report will have an effect on the companies' behavior.

"I think they're going to be more cautious in their approach in acquiring firms and certain types of conduct," he said. "That could be a good thing if they're right on the edge of what is anticompetitive … or it could be, a little bit chilling of innovation in that what they were doing is perfectly legitimate and they were actually creating value for consumers and advertisers –— they're going to ease off a little bit on certain dimensions if it will be perceived as sort of lessening competition," he said.

Hubbard, on the other hand, is unsure if it will impact their behavior.

"I think … knowing that there's a cop on the beat is meaningful," she said. "How much it will change their behavior? I'm not clear."