By Mark Jamison
It’s becoming clear why neo-Brandeisians like an authoritarian approach to antitrust for Big Tech: Big Tech tends to win when cases are tried on their merits.
Big Tech’s latest win occurred late last week when US District Court Judge Yvonne Gonzalez Rogers ruled in Apple’s favor in Epic Games’ private-action antitrust suit against Apple. Epic — maker of the popular video game Fortnite — filed the lawsuit in an attempt to force Apple to lower its App Store fees, or to perhaps avoid the fees altogether. In the US, private citizens can file antitrust lawsuits if they believe they have been injured by a business practice that violates antitrust laws. Epic’s central claim was that Apple’s App Store is a monopoly that damages Epic through its fees and restrictions on how users can pay for and load apps onto their iPhones.
Judge Rogers disagreed with Epic, ruling that Apple’s large sales volume does not make it a monopolist and explaining that “success is not illegal.” I would have liked for the judge to have said, “Success is to be rewarded, not made illegal,” but the shorter sentence is catchier.
The decision is yet an incomplete win for Apple and its customers: The judge substituted her judgement for theirs when she enjoined Apple from prohibiting Epic from directing its customers to outside payment methods. One of Epic’s complaints was that Apple requires app providers to use the App Store for customer payments, where Apple charges a commission that helps finance its platform and maintain quality control. Via their continued patronage of the App Store, customers demonstrate that Apple’s practice works for them, as it does for large numbers of app developers and other businesses. Rogers’ decision thus removes a successful business option from the marketplace, which will harm customers, but it is unclear how much or in what ways.
Epic based its monopolization argument on weak logic. It argued that Apple’s App Store is a monopoly even though Epic also uses many other platforms including Windows, Mac, Linux, PlayStation, Xbox, Nintendo Switch, and Android. The monopolization claim is also refuted by evidence that game providers that offer apps on mobile phones tend to do so on both iOS and Android devices.
Apple’s win was preceded by a recent victory for Facebook in which a federal judge dismissed the Federal Trade Commission’s (FTC) antitrust suit against the company. The presiding judge found that the agency had failed “to plausibly establish . . . that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services” — the market the FTC argued Facebook had monopolized. The FTC has since amended its case. But as I have explained, the FTC’s monopolization theory remains weak because it misidentifies Facebook’s business model and runs counter to the readily available evidence that users have lots of social media options.
What do these cases have to do with the neo-Brandeisian school (NBS) of thought? Its adherents advocate for an evidence-free, authoritarian approach to antitrust that assumes all highly successful companies are bad. They argue bigness is a curse that threatens our economy and form of government.
The NBS is gaining popularity, as members of the school occupy key posts in the Joe Biden White House, on the Federal Trade Commission, and in Congress. NBS ideas feature prominently in draft legislation coming out of House Judiciary Committee; for example, rather than have antitrust authorities assess actual economics and company conduct, the Ending Platform Monopolies Act would break up a tech company that uses its own platform to sell or promote its products or services. Likewise, the Platform Competition and Opportunity Act of 2021 would simply prohibit startups from selling their businesses to large, successful tech firms (as many aim to do from the outset). These and other draft bills attack large firms regardless of whether their size means they serve customers well or have successfully monopolized their markets through anticompetitive conduct.
For the Apple and Facebook cases, the NBS would have us assume, contrary to evidence, that the companies are guilty — with terrible consequences for the companies’ customers. If their goals came to fruition, NBS proponents would make Apple unable to maintain the iPhone ecosystem that has made many app providers successful and that many customers love. Likewise, Facebook would be forced to divest itself of Instagram and WhatsApp, which were unprofitable before Facebook acquired them. Whether they would remain successful after divestiture is anybody’s guess.
Unfortunately, such negative consequences for consumers do not matter in the NBS. In this school of thought, big is bad, even when big is good for consumers.
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