House Subcommittee Gets A Snapshot Of Antitrust In The Digital Age

BY CCIA Staff
September 17, 2010

The House Judiciary subcommittee on competition asked the FTC, several antitrust experts and some industry advocates and critics whether current antitrust rules are working and should be enforced for some of the most innovative companies in the economy.

FTC Competition Bureau Director Richard Feinstein said the existing antitrust laws work in the high tech arena. He said it’s not illegal to have a monopoly – just to engage in predatory and exclusionary conduct like Intel did.

Feinstein said that while his agency had initial concerns about the Google acquisition of Ad Mobile, after a thorough review of Google’s plans and internal documents and a study of competition in that space the commissioners voted unanimously to close the investigation.

Scott Cleland, a blogger representing the interests of Google rivals AT&T and Microsoft, unleashed a rant against the FTC and asked that Congress try get someone to prosecute Google for its recent business expansions.

Google has annoyed several big telecom and tech companies because it offers or plans to offer products from software to phone service for which other companies want to continue charging money. Cleland’s written (but not oral) testimony argued that “free” causes monopolies and that offering free services is bad for the economy and for consumers.

Cleland also insisted that there was sufficient competition and choice for consumers among Internet Access Providers, but not as much among the websites – especially when it comes to advertising on the Internet.

Computer & Communications Industry Association President & CEO Ed Black said he felt like he was in “Alice in Wonderland World” with the way the Internet was being described, which defied reality. He joked that if Google were to find a cure for cancer, its detractors would probably find a way to argue that was bad for consumers.

Black, who has fought antitrust battles for 25 years against companies including IBM, Intel and Microsoft, said, “If Google becomes a threat, I’m going to be there. It’s not there yet. The barriers to entry just aren’t there.”

Geoffrey Mann, executive director of the International Center for Law and Economics at the Lewis and Clark Law School, said aggressive antitrust enforcement can hurt the very innovative companies that are driving the economy. He added enforcement is also problematic because regulators don’t understand the unique issues of this industry may make a mistake.

But Mark Cooper, who represented the Consumer Federation of America, disagreed. Cooper said, “that’s bunk” and expressed his confidence that antitrust regulators could indeed recognize anti-competitive practices in the tech industry.

Cooper made several recommendations on when antitrust regulators should step in. He said they must act swiftly when they see artificial barriers to entry and they should focus on key chokepoints in the tech and telecommunications industry. He stressed that authorities need to defend consumers’ interests – not business models.

Black expanded on how to differentiate between a company having a monopoly versus illegally using their monopoly to block competition. He said authorities should look for locking in customers, chokepoints, attempts by a company to block interoperability or to use IP to edge out competition.

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