Is Biden really prepared to break up Big Tech?

The international media treated US President Joe Biden’s Executive Order on ‘Promoting Competition in the American Economy’, issued on July 9, as a declaration of war on Big Tech’s Big Four – Amazon, Google, Facebook and Apple. Typical headlines went heavy on the war metaphor, including Biden “declares war on anti-competitive practices”, “turns up the heat on tech giants with sweeping overhaul”, and “puts Big Tech on notice” – as well as the predictable but amusing Forbes effort, “Why Biden’s War on Big Tech is Misguided”. 

The Executive Order is part of a slew of anti-monopoly (antitrust) measures initiated in the US over the past year, which also includes appointing leading Big Tech-critical academics to authoritative positions, antitrust lawsuits and Congress proposals for five new laws taking on monopolies.

If each of these initiatives is effectively implemented, they could collectively form an important and welcome check on the power of the biggest technology firms – up to and including potentially ‘breaking up’ some of the conglomerates. 

But each initiative faces significant obstacles, so their successful implementation is far from guaranteed. More importantly, the challenge of reining in the power of Big Tech goes far beyond the economic question of monopolies to issues of privacy, blackbox algorithms and intellectual property rights, the bargaining power of labour, financial regulation, and freedom of expression.

Techlash

While Biden served as his vice-president, Barack Obama was known for being the president who “brought Silicon Valley to Washington”. Obama’s chief political legacy on Big Tech is a lobby-ridden Democratic Party. The Obama-Biden partnership oversaw a wave of mergers and acquisitions in the technology sector that sailed through federal agencies without challenge, including Facebook’s purchases of Instagram (2012) and WhatsApp (2014), and the 2013 decision by the Federal Trade Commission (FTC) to close an antitrust investigation into Google. 

This makes Biden’s professed antitrust ambitions somewhat surprising, but his about-face is to be understood as an essentially populist response to the so-called techlash that has set in across partisan lines in the US. The administration’s approach on Big Tech must also be viewed as part of the ambitious economic reform and public spending programs being pushed by the Democrats, who seem to have – finally – come to the realisation that defending the status quo is not a viable option.

The techlash (a term that appeared in 2013 and grew in popular usage around 2018-2019), is characterised by a growing sense of mistrust of the technology sector. It focuses on tech-specific complaints such as privacy and misinformation, but is fuelled by the underpinning popular anger over extreme and rising economic inequality. Globally, trust in the tech sector has fallen from 77 per cent to 68 per cent between 2012 and 2021. In the US, the backlash against Big Tech has been even more marked, with trust falling from 78 per cent to 57 per cent.

It is a complex phenomenon, one that encompasses the anger of Trump supporters that their hero was kicked off Twitter just as much as, if not more than, the concerns of progressives over monopoly and privacy. This complexity has opened up an opportunity for an uneasy, and often confused, bipartisan agreement that action must be taken to cut the tech giants down to size.

The question of supposed bias by Big Tech against conservatives is a huge factor in shaping broader attitudes to Big Tech firms. In other words, debates about speech have spilled over and are shaping opinions on economics questions. A poll taken in January found that 65 per cent of Americans think Big Tech’s economic power is a problem (59 per cent of Democrats and 70 per cent of Republicans). Overall, 59 per cent support breaking up Big Tech (55 per cent of Democrats and 61 per cent of Republicans). While 55 per cent approved of Twitter’s Trump ban after the January 6 Capitol attack, the breakdown was starkly party-political, with 87 per cent of Democrats and 28 per cent of Republicans agreeing.

Against the techlash backdrop, the five new antitrust legislative proposals in Congress published last year all had both Democratic and Republican co-sponsors. The appointment on June 15 of progressive academic Lina Khan to the five-person FTC was confirmed by the Senate in a 69-28 vote, with 21 Republicans voting yes – through some denounced Biden’s announcement later that day that Khan was to chair the agency as “sneaky”. The Wall Street Journal “lost their minds” in a flurry of outraged articles, with the Intercept quipping, “as Fox News is to AOC, the Wall Street Journal is to Lina Khan”. Facebook and Amazon have requested that Khan recuse herself from any investigations into their firms.

Khan’s appointment as FTC chair was preceded by Biden’s earlier selection in March of another high-profile, progressive Big Tech critic, Tim Wu. Both were former Columbia law professors, while Wu formerly advised Obama on technology issues – acknowledging and taking some responsibility for the failures of that administration. Wu was appointed to the president’s National Economic Council (NEC) to serve in the newly created position of ‘special assistant to the president for technology and competition policy’. Progressives lauded a ‘trustbusting’ trifecta on July 20 when Wu and Khan were joined by antitrust lawyer Jonathan Kanter as the new leader of the Department of Justice’s Antitrust Division.

Both the FTC and the Federal Communications Commission (FCC) are made up of five commissioners, appointed by the president and confirmed by the Senate (the president can select the chair). The FCC commissioners have five-year terms, while the FTC terms are seven years. Biden has yet to appoint a fifth commissioner to an opening in the FCC, which is operating on a 2-2 tie between Democrats and Republicans. While the FTC has a temporary 3-2 balance in favour of Democrats, progressive Democrat Commissioner Rohit Chopra is Biden’s nomination to lead the Consumer Financial Protection Bureau (CFPB). 

It will be a delicate and difficult task to get Chopra confirmed as CFPB director, and fill the FCC and FTC spot with progressives, considering the razor-thin majority the Democrats hold in the Senate – but these appointments will each have a major influence on the ambitions of the agencies.

What’s in the Executive Order? 

Although Biden focused on Section 230 during and after his election campaign, saying he believed the shield in the Communications Decency Act protecting internet platforms from liability for their users’ speech should be immediately revoked, his focus since his inauguration has been economic. The July 9 Executive Order on promoting competition was drafted by Wu.

Leaving aside Biden’s profoundly ahistorical statement when unveiling the Executive Order, where he suggested that capitalism is only exploitative when it is “capitalism without competition,” the order includes several powerful and positive elements on antitrust, net neutrality, and the ‘right to repair’. 

The White House statement praised the bold antitrust agenda of both Roosevelt administrations – Teddy in the Progressive era, and Franklin Delano in the New Deal era – citing Teddy Roosevelt’s break-up of John D Rockefeller’s Standard Oil and JP Morgan’s railroads monopoly. It notes that FDR “supercharged” antitrust enforcement, “increasing more than eightfold the number of cases brought in just two years”.

The Executive Order called for a “whole-of-government approach” to tackling monopolies, and included 72 points outlining a wide range of actions to be taken by 14 federal agencies. It established a White House Competition Council within the President’s office to coordinate this holistic approach to tackling “overconcentration, monopolization, and unfair competition”, and to ensure the implementation of the order’s provisions by the agencies. 

On Big Tech specifically, the text identified the problem of “a small number of dominant Internet platforms [that] use their power to exclude market entrants, to extract monopoly profits, and to gather intimate personal information that they can exploit for their own advantage”. The Attorney General, DOJ and FTC were urged to “vigorously” enforce antitrust laws, and pointedly told that they can legally challenge prior mergers as well as blocking new ones. The Attorney General and FTC chair were also instructed to review and revise merger guidelines.

Significantly, the order identified the disastrous impact of monopsony (a monopoly in the labour market, where there is only one buyer), inside and outside the tech sector, on workers’ wages and conditions. It instructed the FTC to “curtail” the use of non-compete clauses in employment contracts, which prohibit employees that are fired or resign from working for a competitor, and calls for better protection for workers from wages collusion.

The order also instructed the chair of the FCC to re-adopt the net neutrality rules that were adopted by the agency in 2015 by the Obama administration. Net neutrality – the term was coined by Wu in 2003 – ensures that the big internet providers can not favour some traffic and deliberately slow down others. It was repealed in 2017 by the Trump-appointed former FCC chair Ajit Pai, and a court challenge to reinstate it failed in 2019.

The most important signal in the Executive Order is that it goes beyond the traditional question of antitrust and acknowledges the dynamics of surveillance capitalism – without actually using the term. It commits the administration to meeting the “challenges posed by … serial mergers, the acquisition of nascent competitors, the aggregation of data, unfair competition in attention markets, the surveillance of users, and the presence of network effects”.

In this respect, the instruction to the chair of the FTC – to exercise its “statutory rulemaking authority” in areas such as “unfair data collection and surveillance practices that may damage competition, consumer autonomy, and consumer privacy” is the provision with the most transformative potential.

Overcoming obstacles

The presidential executive order is a limited tool and will barely made a dent in the mountain built by four decades of Chicago School-informed interpretation of antitrust law by American courts. Wu is aware of this, and has sought to exploit the small but important cracks in this façade through the competition order. 

“The whole approach of this executive order is to focus on areas where there are strong congressional authorities, often given during the New Deal or the 1950s and 60s, but which are not being fully used,” he said. 

The strategy appears to be based on appointing activist progressives to lead key federal agencies, and empowering them with the political back-up to maximise the use of existing agency powers in rule-making, regulating, investigating and suing monopolies. Yet the phrase that accompanies many of the instructions to federal agencies to make new rules – “as appropriate and consistent with applicable law” – will present a major obstacle.

The example of efforts to regulate Big Tech in the European Union (EU) provides important lessons. Activist leadership of the European Commission’s Competition Department, through Margrethe Vestager, has made an impact, but it is limited. Activist individuals and even activist executive departments or agencies can very rarely bring about structural change singlehandedly, particularly when conservative judiciaries block them at every step.

“Even in a best-case scenario for the new antitrust movement, it will take years, or maybe even decades, to reverse the near-hegemony that conservative economic ideas have established in the judiciary,” writer John Cassidy commented.

Featured image: Mark Makela/Reuters.

Read part two of this two-part series here: American Antitrust Revolution.