Big Tech Breakup? 21st Century Trust Busting

In 1904, the Supreme Court ruled in Northern Securities Co. v. the U.S. that the use of holding companies to establish trusts was unconstitutional. This case started the trust-busting movement under the Roosevelt and Taft administrations that saw big corporations finally face government regulation. The Sherman Antitrust Act passed a decade previously curbed the anti-competitive trusts, which became synonymous with big business.

During the technology boom of the 21st century, five companies began to corner the technology market: Apple, Amazon, Google, Microsoft, and Facebook. Paul La Monica of CNN Business notes that the five Big Tech companies (plus Tesla and Netflix) now account for "about 25% of the total $38.4 trillion market value for all the companies in the S&P 500". 

The federal government has come to a crucial crossroads regarding regulating these tech giants. The companies have grown to such extreme valuations that they threaten competitive markets in the technology sector. So the question is, can the government keep up with Big Tech?

In a series of cases brought forth by State Attorney Generals and the Department of Justice, the government set its sights on two tech giants — Facebook and Google.

In its first case, the Department of Justice argued that Google violated the Sherman Act by cornering the market for "general search services, search advertising, and general search text advertising." They claimed that Google's deals with mobile phone producers, wireless carriers, and browser developers making them the leading search engine constituted anti-competitive practice. They also claimed that Google monopolizes advertising investment since it is the sole search engine that advertisers use to display content. The courts combined the two separate cases U.S. et al. v. Google LLC and Colorado et al. v. Google LLC. All of these cases seek to highlight the monopolistic practices of Google through their advertising operations and search engine deals.

Texas v. Google LLC also speaks to Google's unfair advertising operations. The case alleges that Google participated in anti-competitive contracts with multiple companies including Facebook.Google's representatives responded by citing the free will of the consumer: no one forces anyone to use their serviceGoogle also argued that these cases would hurt consumers in the long run. Therein lies the linchpin of the conflict about regulating Big Tech, especially concerning a search engine. Google's utility to the general public is inarguable with more than “90% of the global market share for search”. Does regulating a search engine's ability to self-promote constitute an anti-competitive practice, or does Google provide users with the best access to the information?

Similar to the Texas case, the Department of Justice brought another case earlier this year focused on Google's anti-competitive "digital advertising practices." Google uses online advertising auctions to choose which advertisers they want to promote. However, the Justice Department is looking into whether Facebook and Google  coordinated to manipulate the outcomes of these auctions. The Department of Justice may choose to merge this case with the Texas v. Google LLC. 

Most likely due to their name recognition and trillion-dollar valuations, Google and Facebook have been at the center of the government's efforts to regulate Big Tech. Although Big Tech's market share is undoubtedly similar to a trust, it is markedly different as the technology sector advances at a rate that Congressional legislation cannot keep up with. The Department of Justice has just started to address the power of Big Tech.

Using the now over century-old Sherman Antitrust Act to tackle the unique challenges presented by Big Tech has not reaped tangible benefits yet for the government. The Sherman Act existed to stop holding companies and trusts but has been expanded in application to anti-competitive market activity.

President Biden appointed Jonathan Kanter to be the leader of the Department of Justice's antitrust division. Kanter has been a long-time antitrust lawyer focusing on defending the smaller rivals to Big Tech companies in court. In line with this move, he issued an executive order entitled Executive Order on Promoting Competition in the American Economy. In the executive order, he laid out his commitment to promoting a “fair, open, and competitive marketplace”. His executive order cites the Sherman Act, the Clayton Act, and the existence of the FTC as precedents for protecting competitive markets. Biden also nominated Lina Khan to the Federal Trade Commission. Lina Khan has been a harsh critic of Amazon and is the youngest FTC nominee at only 32.

In a case brought against Facebook by the Federal Trade Commission, the government agency claimed that Facebook did not allow competitors proper access to code to "link their services to Facebook-run platforms." In this case, the FTC also took issue with the Facebook acquisition of Instagram and WhatsApp. They claimed that this acquisition hurt the competitiveness of the technology sector, with Facebook opting to buy the companies instead of competing with them. Facebook has refuted this claim, arguing that WhatsApp and Instagram would not be what they are now without their acquisition. However, this FTC case attempted to unravel the sale of WhatsApp and Instagram through antitrust law. A federal judge threw out this case earlier this year as the judge claimed the FTC had not adequately proven that Facebook held monopoly power in the social networking sphere. The FTC refiled this case.

All of these cases highlight a monumental shift in regulating Big Tech. Not only does the government want to limit the power of these tech giants, but they are also considering rolling back some of the acquisitions made by these companies. Through the use of Section 2 of the Sherman Antitrust Act the government has attempted to limit the market share of Big Tech. Section 2 of the Sherman Antitrust Act protects against monopolies and monopolistic behavior by stating that it is illegal for any company to “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”.

Washington D.C. is out of touch with the technology sector. This hard truth was made apparent in the all-too-painful Senate hearing on September 30th of this past year in which Senator Richard Blumenthal (D-CT) asked a top Facebook executive to "end finsta." The bizarre hilarity of this moment is indicative of a more significant cultural problem in Washington:the people making the decisions around the technology sector are generally older than the sector itself. The government must realize that if they want to use antitrust law to combat Big Tech, they need to have younger people who better understand the tech sector onboarded into the government agencies (FTC, Department of Justice, Department of Commerce, SEC, etc.). The Biden administration has shown growth in this department, as Khan, Kanter, and Tim Wu, all nominated to key antitrust positions are 32, 47, and 49, respectively. In the coming years, as it seems incredibly unlikely that Big Tech companies will stop making acquisitions, the use of antitrust law to combat Big Tech will only increase. In the shadow of Roosevelt and Taft's struggle to protect the competitiveness of American economics, the Biden administration will have to use antitrust law to ensure Big Tech does not continue to grow.

Andreas Rivera Young is a Sophomore at Brown University, concentrating in Political Science and History. He is a staff writer for the Brown University Law Review and can be contacted at andreas_rivera_young@brown.edu.