Can the FTC Break Up Big Tech?

One of the very few issues these days that people on both sides of the issue agree on is “Big Tech.” Both Republicans and Democrats think that major tech companies like Facebook, Amazon, and Google are too big. They believe the government should cut such companies down to size.

Elizabeth Warren made this a big part of her campaign platform. Many other Democrats are following suit. And last month, we discussed how freshman Senator Josh Hawley is trying to make his name by targeting Big Tech. But does the government have the right to do so?

Why Big Tech

In her article explaining why she wants to target Big Tech, Warren issued a scathing rebuke:

Today’s big tech companies have too much power — too much power over our economy, our society, and our democracy. They’ve bulldozed competition, used our private information for profit, and tilted the playing field against everyone else. And in the process, they have hurt small businesses and stifled innovation.

But while Warren criticizes Big Tech for its intrusion on business, Hawley’s criticism is more about political discrimination. Last month at the White House, he said, “I think we need to say to them here’s the deal, Google, Facebook, Twitter, they’ve gotten the special deals from government. They’ve gotten a special giveaway from government. They are treated unlike anybody else. If they want to keep their special deal, here’s the bargain, they have to quit discriminating against conservatives.”

In times as divided as these, one could argue that the agreement of both sides on an issue is actually a good sign. If both Democrats and Republicans are mad at Big Tech, maybe that’s because it’s doing something right.

But that will be no comfort if these politicians break up the companies. The question is: can they?

What Can the Government Do?

In short, the answer is “yes.” Of course the government can break up Big Tech. But judging by the noncommittal words of FTC Chairman Joe Simons, it’s not ideal? “If you have to, you do it,” Simons told Bloomberg. “It’s not ideal because it’s very messy. But if you have to you have to.”

But what, precisely, would force the government’s hand? The history of American antitrust laws started in earnest with the Sherman Antitrust Act of 1890. At the time, Senator John Sherman explained, “f we will not endure a king as a political power we should not endure a king over the production, transportation, and sale of any of the necessaries of life.” His Antitrust Act, which passed almost unanimously, said the following in two sections:

Section 1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal

Section 2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony

The first section has more to do with the case of Big Tech. Traditionally, the government intervenes to break up a company when its growth restrains the ability of competition to grow against it.

So What Now?

Further clarification on the limits of the Sherman Act came from the Supreme Court in 1993.

The purpose of the [Sherman] Act is not to protect businesses from the working of the market; it is to protect the public from the failure of the market. The law directs itself not against conduct which is competitive, even severely so, but against conduct which unfairly tends to destroy competition itself.

But there is little argument that Big Tech companies have actually done that. Yes, Facebook has bought competition like Instagram and tools like WhatsApp. But those purchases were made at a fair price and even approved by the FTC.

Moreover, all of these companies have some form of competition. Google has Bing and Yahoo! While the use of Google may be ubiquitous, alternatives do exist. Amazon has countless competitors, from Ebay to online retail stores like Target and Walmart, to international competitors like Jumia and Alibaba. Facebook has Twitter.

There is no logically consistent argument for the government to intervene and break up these companies. The reality is that politicians on both sides of the aisle have decided they dislike Big Tech companies. But that isn’t a reason to break them up. They will need a better explanation of why they want to divide these companies if they want their actions to hold up in court.