Recognizing the outsize power Big Tech has in the tech marketplace and throughout our daily lives, the Biden Federal Trade Commission, helmed by Chair Lina Khan, has made big headlines for pursuing cases and regulatory changes in an attempt to restore competitive balance to the tech ecosystem.
Khan started off with a bang. She, along with the Department of Justice’s Antitrust division, sought to modernize the merger guidelines that would provide better guidance for courts and scholars to challenge Big Tech’s rampant consolidation of the tech sector. Moreover, she has initiated a proceeding that will evaluate the anticompetitive effects of overly broad non-competes; some of which have the effect of entrapping valued coders and engineers into these large tech firms indefinitely, preventing smaller competitors from availing themselves to their expertise.
But rather than complete these efforts in an incremental, potentially bipartisan manner, the agency has continued to set its sights higher and higher. Let’s just say the FTC has had a tough go at implementing this strategy.
For example, as part of Facebook’s pivot to the metaverse, it planned to merge with Within Unlimited—a virtual reality fitness start-up. Fearing a loss of “potential future competition,” the FTC just expended an enormous amount of its resources to enjoin the merger, not only going to court but starting a concurrent proceeding with one of the agency’s administrative judges. The result? A federal district court outright denied the requested injunction, and now the FTC has abandoned its administrative case too.
And it looks like the FTC is going for a repeat with its challenge to Microsoft’s merger with Activision, the maker of World of Warcraft and Candy Crush. Strangely enough, the fear here is creation of future potential competition, specifically Microsoft and Xbox gaining a foothold against its larger gaming competitors like Sony and Tencent, a Chinese multinational conglomerate.
Even more bizarrely, the agency appears to ignore that the merger would open up more competition in the mobile gaming market—largely controlled by the Apple and Google app stores—by bringing Activision titles, like Call of Duty, to every mobile device. In short, it’s looking like the FTC will be 0-for-2 by the end of the year.
Agency should take incremental steps, not tackle unwinnable battles
Look, reining in Big Tech is a laudable goal. However, it may be time for Khan to turn to tried-and-true ways to accomplish that goal with incremental, ideally bipartisan steps, instead of focusing the agency’s limited resources on unwinnable epic battles.
The first thing Khan should do is finish what’s already on the agency’s plate.
For one, Khan should complete modernizing the merger guidelines. The current guidelines were written before Big Tech was even a thing and without an understanding of today’s technology and modern markets. New guidelines would provide a stable framework for courts, academia, and the antitrust agencies to analyze anticompetitive practices in a more productive manner as cases crop up going forward.
For another, the FTC should conclude its privacy investigation of prominent social media and video streaming companies. More than two years ago, the Commission launched an investigation into the privacy practices of nine social media and video streaming companies — including TikTok, Facebook, Twitter, YouTube and Amazon. And we have yet to see any results, even though all the tech companies mandated submissions are presumably in.
For yet another, the FTC should reexamine pending proceedings to take a more targeted approach that has a better shot of passing legal muster. Take the FTC’s proceeding to ban non-compete clauses. Whatever the general merits, it’s politically divisive, and legally questionable, to think the FTC could really ban even executives being held to a non-compete clause.
In contrast, a really bright idea would be to address Big Tech dominance by going after noncompete clauses for mid-level engineers and workers. It used to be that a talented mid-level engineer could go cut her teeth working a few years at a place like Google, getting experience there and then moving on to a start-up to help them build their company up.
This allows smaller companies to potentially compete with the big guys and ultimately create a more competitive marketplace in a given space, whether that’s search or social or whatever. But the goliath groupers don’t like that idea – Big Tech likes its dominance – so nowadays they lock employees into noncompete clauses that prevent them from any sort of outward mobility. The FTC could change that with a targeted and incremental rule—one that could be bipartisan and legally sustainable.
Going after Big Tech with marquee cases may make headlines, but those failures make big headlines too. To do this and do this right – in a way that doesn’t create legal conundrums down the road – the Commission might want to recognize that incremental, bipartisan victories have the greatest staying power. If you want to have a lasting impact, take it from Aesop: slow and steady wins the race.
Kate Forscey is a contributing fellow for the Digital Progress Institute and principal and founder of KRF Strategies LLC. She has served as senior technology policy advisor for Congresswoman Anna G. Eshoo and policy counsel at Public Knowledge. This piece is exclusive to Broadband Breakfast.
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