A Federal judge dismissed DirecTV’s antitrust lawsuit accusing Nexstar Media Group, Mission Broadcasting and White Knight Broadcasting of conspiring to boost retransmission consent fees.

Senior Judge Kevin Castel of U.S. District Court for the Southern District of New York said in his decision that DirecTV did not have standing under antitrust law because it did not enter into an agreement with Mission or White Knight which would have required it to pay “supercompetitive” fees.

“This ruling sets a dangerous precedent that a victim of price-fixing needs to pay the inflated price before it can make a claim in court," a DirecTV spokesman said.

Nexstar operates stations for Mission and White Knight. In 2022 DirecTV decided not to renew its retrans agreements with Mission and White Night, which resulted in nearly 1 million DirecTV subscribers being blacked out from receiving the stations’ signals via satellite, according to the judge’s decision.

While DirecTV's allegations that the defendant engaged in a price fixing conspiracy were supported and it was able to identify a an actual injury in loss of profits resulting from the blackouts, according to the decision, it is also required to be able to show that the injury was the type of injury antitrust laws were intended to prevent.

“Here, Plaintiff’s injury—lost profits resulting from the blackouts—does not flow from that which makes Defendants’ acts unlawful because DirecTV does not allege that it paid anticompetitive rates but instead made the unilateral decision to abandon [retrans] negotiations,'' the judge wrote in his decision. “Its losses therefore flow from its own choice to exit the market.”

He added that DirecTV is not a competitor with the defendant, but instead a buyer, which makes a difference under antitrust laws.

“Because ‘DirecTV has refused Defendants’ supracompetitive, price-fixed demands,’ it cannot show that its lost profits flow from that which makes defendants’ price-fixing illegal. As such, it has failed to show that it suffered “a special kind of antitrust injury,” according to the opinion.

The judge also declined to exercise jurisdiction over DirecTV’s claims under state laws.

The Justice Department is apparently giving broadcasters some help with one of their top Washington priorities — Big Tech's dominance as an ad platform.

As expected, the DOJ on Tuesday (January 24) said it was filing an antitrust suit against one of the biggest of Big Tech — Google parent Alphabet — over its online ad practices, a move that could lead to Google divesting its ad business and aid TV stations in what the National Association of Broadcasters has called Big Tech’s “stranglehold” on digital advertising and ad rates.

Attorney General Merrick Garland said Tuesday that the suit was necessary to combat Google's 15-year record of anticompetitive, exclusionary and unlawful conduct in the automated ad tech sector to severely weaken, “if not destroy,” its competitors.

Garland said the U.S., as an advertiser, has incurred damages. The complaint seeks compensation, an injunction against challenged practices and divestitures.

According to CNBC, the suit alleges Google “sought to control all sides of the market,” realizing “it could become ‘the be-all, and end-all location for all ad serving,’ ” to the detriment of broadcast and print competitors for ad dollars and eyeballs.

NAB said, through senior communications strategist Alex Siciliano, that it's carefully reviewing the complaint. "For years, broadcasters have been sounding the alarm over the anti-competitive practices of the Big Tech platforms, including Google. Their dominant role in the marketplace has come at a steep price for local news broadcasters, who lose an estimated $2 billion annually by providing their content to these platforms under ‘take it or leave it’ terms. We continue to work with our congressional allies to address these inequities and urge Congress to move swiftly to level the playing field.” 

Reportedly the states of California, Colorado, Connecticut, New Jersey, New York, Rhode Island, Tennessee and Virginia have joined the suit.

A Google spokesperson told CNBC: “DOJ is doubling down on a flawed argument that would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow.”

It is the second antitrust suit the DOJ has filed against Google. The first was filed under the Trump administration in 2020 and claimed the company unlawfully maintained its search and search advertising monopoly through exclusionary practices. 

Also: Meta's Targeted Ad System Now Under Court Oversight

Earlier this month, Google critic and DOJ antitrust division chief Jonathan Kanter was reportedly cleared by the Justice Department to work on cases involving Google, something Alphabet had opposed given that past criticism.

As founding partner of the Kanter Law Group, his online biography boasted that he was “a leader in the effort to advocate for antitrust enforcement actions against big tech companies by federal and state authorities.”

Big Tech also wanted Biden-appointed Federal Trade Commission chair Lina Khan to have to recuse herself from antitrust-related Big Tech issues given her past criticisms, but that didn’t happen either.

The Computer & Communications Industry Association, whose members include a Who's Who of Big Tech, found the proposed remedies too much to swallow.

“Competition for advertising dollars is fierce both on and offline, growing even more so as the global ad market evolves with new competitors and technology,” it said. “The government’s contention that digital ads aren’t in competition with print, broadcast, and outdoor advertising defies reason.

“As an association that has supported government intervention in appropriate technology cases in the past, we find this lawsuit and the radical structural remedies that it proposes unjustified,” CCIA said. “Digital services are competing vigorously for advertising dollars on screens of all sizes, and the complaint appears to disregard these dynamics as well as the macro trends of the global ad market.”

Ditto the Big Tech-backed and funded trade group the Chamber of Progress, which was not pleased with the suit.

The chamber argued Google is not the dominant ad market platform DOJ supposes. “Google’s online ad market share is now at an all-time low, and it just laid off 12,000 employees in the midst of a declining advertising market —so this DOJ case seems pretty disconnected from economic reality,” said chamber CEO and former Google exec Adam Kovacevich. ▪️

The Senate Judiciary Committee has favorably reported the Journalism Competition and Preservation Act (S. 673) to the Senate for a vote, potentially paving the way for broadcasters, newspapers and other journalism creators to share in the revenue their original news content generates for Big Tech platforms.

That came at a business session Thursday (Sept. 22).

The bill, which creates a limited antitrust exemption to allow publishers to collectively negotiate with the largest platforms such as Google or Meta (Facebook), has been modified to clarify that it is about fair compensation for news creators, not what content should or should not be on those platforms.

The measure also provides for outside arbitration if deals can’t be struck.

There is plenty of bipartisan support for the bill, which was able to bring together Sens. Amy Klobuchar (D-Minn.) and Ted Cruz (R-Tex.), who forced the issue on clarifying the bill was not about content, but compensation.

Klobuchar, who worked with Cruz and the bill's lead Republican, Sen. John Kennedy (R-La.), said the bill was never intended to be about negotiating for payment, not for content type. Cruz, though, had been concerned that the bill would allow Google or Facebook to include which type of content they would have on their platforms. Cruz and other Republicans have long argued that Big Tech uses its power to favor liberal content while censoring conservative voices.

She said the bill as approved Thursday (Sept. 22) now makes it clear that “discussions about content are outside of the scope of the bill, and of the bill's narrow antitrust safe harbor.”

“This bill bars Big Tech firms from throttling, filtering, suppressing or curating online content while providing local news outlets with a fair playing field to negotiate against these censorship giants,” Kennedy said.

But not all the senators were praising the final result.

Also: DOJ’s Jonathan Kanter Says Big Tech Needs Antitrust Mole Whacking

Sen. Alex Padilla, a Democrat from Silicon Valley's home state of California, had a number of issues. Top among them, or at least the first he raised before the vote, was that the money secured by broadcasters and other original content creators might not go to the workers, but instead to stock buybacks and executive salaries.

The bill was adjusted to toughen the reporting requirements, which he had asked for, but he said those were still only reporting obligations. Then there was the issue of content. He said the bill was still about content, since its prohibition on Big Tech platforms taking content into consideration in negotiations meant they could be subsidizing disinformation and hate speech on outlets with which they fundamentally disagree. He also argued that the bill would compel payments for “foundational” features of the internet, such as aggregating, crawling or indexing.
Sen. Mike Lee (R-Utah) also had plenty of discouraging words. He said the fundamental flaw in the bill was that it was trying to boost competition by sanctioning the creation of cartels, cartels that antitrust laws “go out of their way to prohibit.” In protesting the bill, computer companies repeatedly called it a cartel creator.

Also: Big Tech Says Media Antitrust Exemption Would Create News Cartels

Lee also said that if the goal was to get new content creators out of the big shadow of Big Tech, it instead tied them financially to the “monopoly rents” of those platforms.

Those concerns notwithstanding, the majority of committee members, Democrats and Republicans, backed the bill and it is headed to the Senate for a vote. ▪️

Big Tech is beating up on broadcast consolidation as it pushes back on a bill that would give broadcasters and other original news creators an antitrust exemption to negotiate with the tech giants that leverage that original content online.

The Computer and Communications Industry Association issued a pull-no-punches statement— the term “cartel” was used multiple times — following the Senate Judiciary Committee’s favorable referral of the Journalism Competition and Preservation Act (S. 673) to the Senate for a vote.

The CCIA said the bill would create a “news cartel” while failing to solve the issue of compensation for original news creation.

Also: Big Tech Says Bill Benefits Big Broadcasters

The bill gives “news content creators” — print, broadcast or digital — an antitrust safe harbor to negotiate collectively with digital platforms like Facebook and Google for carriage of their original content.

While the idea behind the bill is that Big Tech is so big that broadcasters need the scale of joint negotiations to get fair compensation, the CCIA suggested the concentration shoe was on the other foot. “The Computer & Communications Industry Association has defended competition in the marketplace for 50 years and fought media consolidation and mergers including Comcast-NBC and Sinclair-Tribune,” it said.

Also: NAB Praises Progress on Big Tech Bill

“The JCPA continues to be an unprecedented government overreach,” CCIA president Matt Schruers said. “It encourages the creation of a media cartel which will impose link taxes, and it threatens to hamstring digital services’ efforts to moderate dangerous content with ‘must-carry’ obligations.

“While objective journalism is critical to informing voters, inserting federal regulators into private sector business negotiations, mandating carriage of what the government thinks is ‘news,’ and promoting cartels is an irresponsible way to encourage an independent and robust news media,“ Schruers added. ■

Big Tech is a threat to liberty and a big mole that needs whacking, a la the arcade game where the object is to bash as many of them on the head as is possible. That was the message of the Justice Department’s antitrust chief in a fiery speech to the Fordham Competition Law Institute’s 49th Annual Conference on International Antitrust Law and Policy Friday (Sept. 16) in New York.

Assistant Attorney General Jonathan Kanter, who heads the Justice Department's Enforcement Division, told his audience that the digital economy has produced massive monopolists that have the means to exploit their power “more threatening to individual freedom than ever before.”

The goal of regulators, he said, must be to “unplug the monopolization machine in digital platform industries.”

Those regulators are, principally, the Justice Department and Federal Trade Commission, both of which vet mergers. The FTC is also charged with preventing unfair and deceptive business practices and violations of privacy policies.

Also: FTC Signals Imposing Rules Targeting Commercial Surveillance

Using the Whack-a-mole analogy, Kanter said that abuse of power by digital actors is a constant threat. “If we answer one practice, another arises,“ he said. ”If we address one behavior in one adjacent market, monopoly power may be used to extend the moat further around it.”

Kanter said such monopoly power has not been seen in 100 years, meaning the Standard Oil trust that was broken up by the government in the early 20th century.

He had some suggestions for whacking the Big Tech moles more effectively.
Those included better understanding how such monopolies operate and “all of the mutually-reinforcing strategies that protect the monopoly.” Borrowing another analogy, he said, “If we spend a year examining a single tree, no matter how effectively, we will never have a sense of the forest.”

Another suggestion was not to underenforce for fear of over-enforcing. “Monopolies do not self-correct,“ Kanter said. “We have all seen that in digital markets, monopolies self-sustain. Platforms that are fundamentally collaborative become critical trading partners for entire industries, and without competition have greater power to discourage rivalry. I therefore believe we can no longer be so cautious to avoid overenforcement that we intentionally underenforce the law. 

“At the Antitrust Division, we have moved past the error-cost error,“ he added. ”We have been too limited by a self-imposed requirement that we use our most powerful microscopes to examine an exclusionary act before intervening to stop it. We need a wider lens and a greater willingness to pursue and remedy all of the harmful behaviors that make up an exclusionary course of conduct."

The DOJ needs to stop mergers that “tend to create a monopoly,” Kanter said, or that will lead to underenforcement that entrenches market power.

Currently, mergers under a certain size do not trigger rigorous antitrust review. Justice and the FTC are both taking a fresh look at whether that policy has allowed Big Tech to buy up to monopoly by purchasing potential competitors before they get large enough to trigger such reviews.

Also: Sponsors Urge Action on Big Tech Competition Bill

Finally, Kanter put in a plug for the American Innovation and Choice Online Act.

The bill was introduced back in October 2021 by Sen. Any Klobuchar (D-Wis.), chair of the Senate Antitrust Subcommittee and a self-described leading antitrust reformer, and Republican Sen. Chuck Grassley (R-Iowa), the ranking member, who joined Klobuchar at the press conference to press for a vote.

The bill would prevent an online platform from: 1) keeping one business from interoperating with a dominant platform of another business; 2) requiring a business to buy a dominant platform’s products or services in order to get preferred placement; 3) “misusing” a business’s data to compete against it; and 4) biasing search in its favor.

The bill’s targets are chiefly Google, Amazon and Apple, all members of the Computer & Communications Industry Association, which is funding an ad campaign opposing the bill that has blanketed the D.C. airwaves in recent months.

“[L]egislation will be a critical tool to discourage a wide range of exclusionary practices and give would-be competitors confidence that they are protected from retaliation,” Kanter said of the bill. ■

Public-interest lawyers used Netflix’s rise in the video distribution business to argue that the Department of Justice and Federal Trade Commission are particularly bad at predicting the future of digital markets.

Both agencies are seeking input on whether they need to readjust merger guidelines to reflect the rise of Big Tech giants they suggest have bought up to monopoly -- such as Facebook and Google -- by gobbling up potential competitors, including startups, before they were big enough to register on the antitrust radar.

The DOJ and the FTC divide up merger reviews.

Also: Democrats Look to Block, Unwind Big Tech Mergers

In its comments to the FTC, the Washington Legal Foundation, representing public-interest lawyers, did not hide its disdain for both agencies in suggesting they should leave antitrust merger guidelines alone.

“The FTC and DOJ think that they can predict the evolution of digital markets,” WLF told the FTC to its regulatory face, as it were. “This is pure hubris that conflicts with reality and misunderstands how digital markets work. History also shows that the FTC and DOJ have no clue how digital markets will change. What once looked like a monopolist who should be barred from merging with any competitor may file for bankruptcy only five years later.”

To make its point, WLF pointed out that the FTC in 2005 sued Blockbuster to block its purchase of Hollywood Entertainment because it would have given the video-store chain too much market power. Enter Netflix’s announcement two years later that it would stream movies so folks no longer had to trek to the video store or worry about all the copies being snatched up before they got there.

Five years later, Blockbuster filed for bankruptcy. “It’s impossible to predict what will happen in the digital market,” WLF said in the filing. “If it were possible to envision Netflix’s emergence, the FTC would not have sought to decrease competition by ensuring Blockbuster’s demise. But that is what happened because the FTC is lousy at predicting future market share.” ￭

Apple CEO Tim Cook said proposed new privacy and antitrust regulations being teed up could put iPhone users’ privacy and security at risk.

Cook spoke at the IAPP Global Privacy Summit Tuesday (April 12) in Washington.

He said Apple supports a strong, comprehensive national privacy law, but said he is “deeply concerned” about regulations “that would undermine privacy and security in service of some other aim.” That aim would be competition.

In the name of competition, Cook said, some are taking steps to allow apps without privacy protections to circumvent App Store safeguards and “track users against their will.”

One example is the Open Markets Act, which would reduce the control that Apple and Google have over their respective app stores.

Cook countered the argument that new regulations directed at app stores would simply give people more choice and cause no harm. He said taking away a more secure option would leave users with less choice, not more.

He said he wanted to make clear that Apple supports competition that drives innovation and recognizes that supporters of antitrust rules have good intentions. But if Apple is forced to allow unvetted apps onto its phones, he said, the unintended consequences will be “profound.”

He said Apple is obliged to speak up, and would continue to speak up, to convince well-intentioned policymakers not to undermine privacy in the process.

Regulations must be crafted to protect fundamental rights, he said, and there is much to gain if Washington gets it right. ■

In an example of somewhat smaller tech going after bigger tech, Yelp and DuckDuckGo are joining with civil society groups to hold an Antitrust Day April 4.

That is according to one of those groups, Fight for the Future, which is fighting for a future with stronger antitrust rules for Big Tech.

Also: Big Tech 'A La Carte' Bills Would Unbundle Amazon Prime Video

Both the Biden Administration and legislators on both sides of the aisle have drilled down on the largest tech platforms and whether they have been able to buy up to dominance or virtual monopoly by gobbling up potential competitors before the deals are big enough to raise red flags. Critics of those efforts have argued that basically describes the tech startup path to champagne-popping exits and would discourage both those startups and the venture capital that powers it.

In addition to signing on to a letter to Congress supporting various Big Tech targeted bills, the groups will join their voices April 4 to urge yes votes on bills they said will "restore competition, innovation, and choice online."

Participating groups including Consumer Reports, Demand Progress, Public Knowledge, and EFF will also be backing various related initiatives to "amplify" Antitrust Day.

"Reports from the United States and governments around the world reveal that a few large technology companies are abusing their dominant positions in the market to undermine competition, to the detriment of consumers and innovation," said the groups. "The antitrust bills would bar many of the anticompetitive tactics employed by these companies, helping to restore competition in the market, and ensure that consumers are unencumbered in choosing the services they want."

“A bipartisan, overwhelming majority of Americans support strengthening our antitrust laws," said Luther Lowe, senior VP of public policy for Yelp. "It is time for Congress to pass narrowly tailored legislation to curb the most egregious forms of self-dealing by Big Tech. These reforms are long overdue.”

Some of the proposed bills would prevent future buy-ups, but also potentially retroactively break up some past combinations, as well as seek hefty civil penalties for violators. ■

The Biden administration is looking beyond antitrust theories for input on the “first-hand impacts” of media and tech mergers to help guide its planned rethink of merger enforcement.

The Justice Department and Federal Trade Commission, which together divvy up antitrust reviews, will co-host "listening forums," seeking input beyond antitrust experts to consumers, workers, entrepreneurs and others. The forums will be headed by Justice antitrust chief Jonathan Kanter and FTC chairwoman Lina Khan, both of whom are big, Big Tech critics.

Both agencies have sought comment on their enforcement guidelines, which they want to strengthen against illegal mergers, saying that recent evidence shows that "many industries" are more concentrated and less competitive.

Also: Sen. Amy Klobuchar Introducing Big Tech Antitrust Bill

Big Tech deals have been of particular interest in Washington as both the FTC and Congress have been trying to figure out whether the biggest of Big Tech firms got that way by buying potential competitors before they get big enough to trigger deeper antitrust reviews.

Also: FTC, DOJ Suspend Early Merger Review Determinations

The first two forums will be on the food, agriculture and health care sectors, with the April 27 forum on media and entertainment mergers and the May 12 session on Big Tech combinations. ■ 

The Senate has weighed into what was described as an “overgrown standing army” of Big Tech monopolists, with Senate Antitrust Subcommittee chair Amy Klobuchar (D-Minn.) saying to the army of lobbyists that would try to take down a tough new antitrust law under consideration: “Bring it on.”

The bill, the American Innovation and Choice Online Act, is aimed at preventing big online platforms like Apple, Google, Amazon and others from self-favoring conduct that leverages their dominance in search and apps and online commerce to suppress competition. A House version of the bill was also introduced in June, but the Senate version has a number of changes that would have to be reconciled.

Those new parts of the bill include clarifying that some types of “privacy-enhancing conduct” would be permitted, making sure that powerful platforms not publicly traded do not escape the bill’s coverage, and that subscription services like Amazon Prime Video and other streamers were not impacted.

The bill also now requires guidelines to be issued to the business community within nine months and a one-year period for covered platforms to come into compliance.

Klobuchar, a lead sponsor of the bill, said that helped the measure strike the right balance, but the hearing featured much striking out at provisions of the law from both sides.

While the bill did eventually pass out of committee Thursday, there is no guarantee it can achieve the necessary votes in the full Senate. 

While attacking Big Tech is one of the few issues that unites Democrats and Republicans, the bill being marked up by the Senate Judiciary Committee was hardly a bipartisan beatdown of the Big Tech pinata. In fact, it appeared to divide not only Democrat from Republican, but Democrat from Democrat.

There was disagreement on the content of the bill, the consequences — or unintended consequences — of the bill, and the process that got it to markup on Thursday (January 20).

Sen. Mike Lee (R-Utah), ranking member of the antitrust panel, made it clear the bill was not, in its current form, the way to go. He said he could not support it, and he was not alone.

Democratic Sen. Patrick Leahy (D-Vt.) said he still had issues that needed to be resolved before he could vote for it on the Senate floor.

Sen. Dianne Feinstein (D-Calif.) had big problems with the bill's focus on regulating the behavior of the biggest big tech companies — Apple, Google, Facebook and Amazon — while allowing others to engage in the same conduct. She said it could be a “very dangerous” law that could tip the balance of power toward big foreign firms not covered by the bill.

Feinstein said the bill had major security problems because it required companies to take down protections, a complaint lodged by some Republicans. She said she would oppose the bill and said it should have gotten a full committee hearing.

Lee also said one of his issues was there had been no legislative hearing on the bill. He conceded that it had been “mentioned” on occasion in other Big Tech antitrust hearings, but that did not equate with a legislative hearing on the bill itself.

The hearing featured a testy exchange between Feinstein and Klobuchar, with Klobuchar saying one claim Feinstein made about administration concerns with the bill was “not true.”

Lee asked how much pro-competitive behavior could get caught in the bill and end up with the unintended consequence of removal of popular products and services that helped consumers.

The bill potentially fines violators 15% of a company's total revenue, which Lee said would just line government coffers. He said the penalties were not tied to actual harms, and could just push online platforms to stop working with third parties.

Lee also said he was concerned about giving federal agencies sweeping new power to redefine markets. He said that’s something that has never worked and he didn’t see why it would now.

He raised another hot-button issue. He said deep state bureaucrats should not be given control over Big Tech, and said the bill should address Big Tech censorship, rather than giving the keys over to the Federal Trade Commission to control those companies then use it against Republicans.

Klobuchar said she was shocked by some of the things Lee said and that the hearing — in December — where the bill was raised was hardly perfunctory and the Republicans' own witness supported the bill. Klobuchar said there have been four separate hearings related to the issues the bill addresses.

The American Edge Project has taken out ads on Washington media outlets opposing the bill and claiming it could hurt America's tech edge globally. Klobuchar conceded at the hearing that the bill's supporters did not have the money to take out TV ads showing their support, but were behind it nonetheless.

The bill did unite strange political bedfellows Klobuchar and conservative Josh Hawley (R-Mo.). Hawley said the bill goes “right at competitive conduct." Hawley is one of the biggest Big Tech critics. He disagreed with Lee that the bill could, ironically, strengthen Big Tech, though he agreed with the Big Tech/Big Government alliance and about censoring speech.

Klobuchar warned that there would be attempts to delay the bill with a raft of amendments. Lee took issue with that, saying his amendments were an effort to make the bill better, not kill it.

Sen. Thom Tillis (R-N.C.) said the bill was an overreach and needed more work, but said he would not call for a vote on the 40-plus amendments he had filed. His issues included who was covered, what it meant by making “preferencing” illegal and what the consequences of illegal “preferencing” would be. Another 40-some amendments were also withdrawn, but Klobuchar said she would stay there day and night to finish the markup.

Small Hopes for Compromise

While the bill made it out of committee, it was tough to see how there could be a meeting of the minds on exactly the way forward, particularly with the concerns addressed by many Democrats. Some of those Democrats said they could not vote for the bill in committee, others said they would vote for it, but could not vote for it in the full Senate without changes.

Sen. Ted Cruz (R-Tex.) backed an amendment to allow for individuals to sue Big Tech over violations of the new law, pointing out that support was a reversal from the norm, where Democrats push for private rights of action and Republicans oppose, including himself. But Cruz said Big Tech's conduct was so egregious he was ready to “unleash the trial lawyers.”

Some Democrats argued that the bill unfairly targeted conduct by larger players, but Cruz said that the bill was targeted to the large companies because “they were the monopolists.”

He ultimately withdrew all his amendments, saying he looked forward to working on the issue and would vote for the bill out of committee, but reserved judgment on a full-Senate vote.

Cruz used some of his time on bill discussion to agree with Lee that censorship of conservative speech by Big Tech is “pervasive, pernicious and brazen.” Sen. John Kennedy (R-La.) added that he saw Big Tech as a “killing field” for the truth. 

“This bill endangers U.S. digital leadership, and puts consumers’ security and privacy at risk," said Matt Schruers, president of the Computer and Communications Industry Association after the 15-6 vote to report the bill to the full Senate. "Rather than drafting general rules to protect consumers’ welfare, the bill regulates the business models of a handful of companies.  This bill is European-style industrial policy, not competition policy.”

Consumer Reports, which got a shout-out during the hearing over its support of the bill, was understandably pleased it made it out of committee.

“The bill will stop the largest online platforms from imposing their self-serving rules on markets and society," said Sumit Sharma, senior researcher for tech competition at Consumer Reports. "The bill will benefit consumers by making it easier to install, choose, and use alternative apps and online services. It will remove the roadblocks that the largest online platforms have put up to hinder innovation by competitors. We will see more innovation as a result of the bill, which will create more choices for consumers.”■

The Connected Commerce Council (3C), which represents thousands of small businesses with a digital footprint — from juice bars and breweries to consignment shops and tattoo parlors — is pushing back on a Big Tech bill being marked up in the Senate Judiciary Committee on Thursday (January 13).

“Millions of small businesses across the country have embraced digital tools and services provided by American technology companies and say they plan to continue using these tools and services that helped them get through the pandemic," said 3C executive director Rob Retzlaff. “Beltway insiders like Senators [Amy] Klobuchar and [Chuck] Grassley aren’t paying enough attention and seem to not understand how these companies provide affordable, scalable, and secure benefits that small businesses like to use to find success.”

The bill, the American Innovation and Choice Online Act, was introduced back in October by Klobuchar (D-Minn.), chair of the Senate Antitrust Subcommittee and a self-described leading antitrust reformer, and Grassley (R-Iowa), the ranking member. It‘s one of many proposed bills to rein in Big Tech, and not the only one backed by Klobuchar.

The bill prevents an online platform from: 1) preventing a business from interoperating with another platform; 2) requiring a business to buy a dominant platform‘s wares to get preferred placement; 3) “misusing” a business‘s data to compete against it; and 4) from biasing search in their favor.

The bill only applies to larger platforms — like Amazon and Google — defined as “at least 50,000,000 U.S.-based monthly active users on the online platform; or has at least 100,000 U.S.-based monthly active business users on the online platform; or is a critical trading partner, defined as a person with the ability to impede access of a business user to its customers and users or to a tool or service it needs to serve those users or customers.” ■

Technology companies from Amazon to Z-Wave are telling the Federal Trade Commission not to rescind its vertical merger guidelines and enforcement advisory that were adopted in 2020 under President Donald Trump.

The proposal to scrap both is scheduled for a vote at the FTC's Sept. 15 public meeting, and the Democratic majority is expected to approve their exit.

In a Sept. 13 letter to the FTC, the Consumer Technology Association (CTA) said those 2020 guidelines, jointly adopted by the FTC and DOJ, which divvy up merger antitrust reviews, were produced after extensive public input.

Some Democrats had argued that the merger-guideline update under Trump, which was billed as a way to better identify and challenge competitively harmful mergers, still kept a thumb on the scale for those mergers by suggesting they were generally pro-competitive.

Vertical mergers are tie-ups that combine different parts of the same supply chain, such as AT&T with its video services and Time Warner with its content production — a deal that the Trump-era Justice Department tried unsuccessfully to block.

The CTA told the FTC it opposed any move to rescind the guidance, particularly without robust notice and public input on what it said would be a sudden shift away from traditional merger reviews, a shift that would "stifle companies’ ability to plan, invest, and innovate."

"We urge the commission to reject the vote to withdraw the Guidelines and Commentary, or in the alternative, to postpone the vote and provide notice and a reasonable comment period for public consideration and input," CTA said.

The FTC under new chair Lina Khan has signaled it will be looking hard at big tech companies and whether they got that big via buying up to monopoly. That is the FTC's allegation against Facebook in a revised complaint.

Between September 2012 and December 2020, Facebook's share of time spent by users of apps providing social networking averaged a whopping 92% per month, the Federal Trade Commission said.

That was among the new data in the regulator’s amended claim of anti-competitive conduct by Facebook to the U.S. District Court for the District of Columbia last week.

The FTC is claiming that Facebook has become so dominant by following CEO Mark Zuckerberg's plan to buy up to monopoly. It cited his 2008 statement that “it is better to buy than compete” — citing the acquisitions of WhatsApp and Instagram — as exhibits A and B. The FTC called Facebook’s actions an “anti-competitive acquisition strategy with anticompetitive conditional dealing policies, designed to erect or maintain entry barriers and to neutralize perceived competitive threats.”

By contrast, the combined shares of Snapchat, Google Plus, MySpace, Path, MeWe, Orkut and Friendster did not exceed 18% in any month over that time, the FTC said, citing Comscore data. Only Snapchat reached a 10% share, the FTC said.

“Facebook implemented an anti-competitive scheme that prevented differentiated and innovative firms from gaining scale, thus enabling Facebook to maintain its dominance,” the regulator claimed.

The Federal Trade Commission has voted along party lines to rescind its policy statement that it would not require prior notice and approval of mergers undertaken by companies that have settled FTC complaints against previous proposed mergers.

Under that policy, the FTC was still able to require either prior notice of approval, FTC Republicans pointed out, but only of deals that it believed were likely to be a threat to competition and consumers rather than all deals proposed by a company that has settled a previous merger proposal.

Democrats supporting the reversal said the policy tied the FTC's hands when it came to aggressive enforcement of antitrust laws and would save staff time that is currently spent investigating clearly anticompetitive mergers, often undertaken by serial deal filers.

Republicans said the FTC was punishing the companies that had worked with the FTC to settle earlier deal proposals, and thus would discourage such settlements.

That vote came after a similar 3-2 vote earlier this month to rescind an Obama-era (2015) bipartisan policy statement that, using a “consumer welfare” standard, it would only challenge actions that cause or are likely to cause harm to competition, “taking into account any associated cognizable efficiencies and business justifications.”

Both moves were meant to send the signal that the FTC is going to get tougher on merger antitrust reviews.

Thirty-seven states attorneys general -- including both Democrats and Republicans and co-led by New York AG Letitia James -- have filed suit against Google pledging to end what they call its illegal monopoly.

For James it is the second suit against the company this year.

They allege that Google has engaged in anticompetitive conduct, including exclusionary contracts, in an attempt to maintain monopoly control over mobile app distribution and in-app payments.

Among the specific allegations are that the company 1) imposes technical barriers that discourage distributing apps outside the Play Store; 2) does not allow Android to be an "open source"; 3) requires contracts that foreclosed competition; 4) buys off potential competitors; and 5) unlawfully ties use of its pay processor to Google Play distribution.

Also Read: More States Sue Google Over Antitrust Allegations

They say that Google required app developers to use Google Billing for Google Play Store, forcing them to pay up to a 30% commission indefinitely.

“Google has served as the gatekeeper of the internet for many years, but, more recently, it has also become the gatekeeper of our digital devices — resulting in all of us paying more for the software we use every day,” said James. “Once again, we are seeing Google use its dominance to illegally quash competition and profit to the tune of billions."

James also co-led a December antitrust suit against Google, including many of the same AGs. That suit alleged anticompetitive conduct related to general search and advertising.

Also Read: States Sue Facebook Charging Unlawful Monopoly

Other states filing suit were co-leads Utah, North Carolina, Tennessee, as well as Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Florida, Idaho, Iowa, Indiana, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Vermont, Virginia, Washington, West Virginia, and the District of Columbia.

In a blog post in response to the suit, Wilson White, senior director of public policy for Google, said: "[I]t’s strange that a group of state attorneys general chose to file a lawsuit attacking a system that provides more openness and choice than others. This complaint mimics a similarly meritless lawsuit filed by the large app developer Epic Games, which has benefitted from Android’s openness by distributing its Fortnite app outside of Google Play.

"We understand that scrutiny is appropriate, and we’re committed to engaging with regulators. But Android and Google Play provide openness and choice that other platforms simply don’t," Wilson wrote. "This lawsuit isn’t about helping the little guy or protecting consumers. It’s about boosting a handful of major app developers who want the benefits of Google Play without paying for it. Doing so risks raising costs for small developers, impeding their ability to innovate and compete, and making apps across the Android ecosystem less secure for consumers."

The Federal Trade Commission has signaled it is rethinking its enforcement principles regarding its Sec. 5 authority to prevent unfair methods of competition, saying under the current FTC guidance, the commission "has doubled down on the Commission's longstanding failure to investigate and pursue 'unfair methods of competition.'"

In a 3-2 vote along partisan lines, the Democratic majority of commissioners rescinded an Obama era (2015) bipartisan policy statement on its antitrust enforcement.

"[T]he 2015 Statement abrogates the Commission’s congressionally mandated duty to use its expertise to identify and combat unfair methods of competition even if they do not violate a separate antitrust statute," the majority statement read. "Accordingly, because the Commission intends to restore the agency to this critical mission, the agency withdraws the 2015 Statement."

Also Read: FTC Competition Guidance Draws Crowd

In the 2015 statement, the FTC said that, using a "consumer welfare" standard, it would only challenge actions that cause or are likely to cause harm to competition, "taking into account any associated cognizable efficiencies and business justifications."

The 2015 statement also said the commission would be less likely to individually challenge an act or practice as unfair competition if it concluded that "enforcement of the Sherman or Clayton Act is sufficient to address the competitive harm arising from the act or practice."

Republican commissioner Christine Wilson explained her dissent.

"I've said before that what you measure is what you get," Wilson said. "If the Commission is no longer measuring consumer welfare, then by definition, consumers will be harmed by the Commission's change of direction to prioritize other interests. Consumers will face higher prices, less innovation and reductions in quality because, contrary to popular assertions, the consumer welfare standard takes into account price, quality, and innovation."

Republican commissioner Noah Joshua Phillips was equally unhappy. "The Majority’s decision today to rescind the Commission’s bipartisan 2015 Section 5 Policy Statement reduces clarity in the application of the law and augurs an attempt to arrogate terrific regulatory power never intended by Congress to a handful of unelected individuals on the FTC," he said.

He also complained that the vote came only a week after it was announced, "the bare minimum notice permitted by law [and] diminishing the public’s opportunity to give input."

A group of legal experts led by Ashley Baker of the Committee for Justice and Daren Bakst of The Heritage Foundation, agreed with Phillips. "[W]e are concerned that the sudden rush to revoke the 2015 statement foreshadows a broader agenda to radically change antitrust law by greatly expanding the FTC’s enforcement discretion," they said.

Given the pressure on the FTC to crack down on Big Tech, and the history of its new chair, Lina Khan, advocating for that get-tough policy, tech groups were not pleased with the change in policy.

“We are sad to see the FTC move forward with a party-line vote to rescind the Obama-era competition policy statement," said Consumer Technology Association president Gary Shapiro. "This seems to be the first step in moving competition policy away from the consumer welfare standard, which for years has enabled U.S. world-leading innovation by focusing on what is best for consumers rather than legacy businesses using government to protect them from new entrants and innovators. The consumer welfare standard grounds competition policy in objective facts and evidence. By protecting consumers rather than competitors, we ensure antitrust decisions are not subjective or political."

"The FTC’s hasty decision to abandon the consumer welfare standard – especially as we face unprecedented global competition in the tech sector and beyond – is a grave mistake," Shapiro said.

"Today’s partisan decision to get rid of the bipartisan framework adopted in 2015 risks undermining competition enforcement, and represents a step backwards for the future of the FTC as an enforcement agency," said Computer & Communications Industry Association president Matt Schruers.

Apparently, presiding over a media giant that sits astride two continents and multiple distribution platforms isn’t quite enough for Comcast’s second-generation CEO Brian Roberts, who reportedly wants to add little side hustles like Roku or ViacomCBS to keep up with, well, everyone else, despite everything he already has. 

A Wall Street Journal piece Thursday said Roberts wants to beef up Comcast holdings, either with a lot more content, or yet another distribution platform, or perhaps both. Well, of course he does. 

But while buying America’s best-selling streaming hardware maker, or the biggest of Hollywood’s few remaining independent broadcaster/cable/movie studios, makes plenty of business sense for Comcast, it makes far less political sense given current sentiment in Washington, London and Brussels.

A key U.S. House committee this week approved a far-reaching set of antitrust bills that would prevent companies from engaging in conduct that advantages their own products or services on a platform, or puts competitors at a disadvantage, or even that discriminates against similar business users. 

While the legislation largely targets the Big Tech firms whose digital platforms dominate so many parts of our lives, the bills could set plenty of landmines in front of Comcast or other media companies trying to catch up in the latest round of Hollywood consolidation.

To pass, the bills faced down a furious lobbying effort by tech and other business interests, and it’s harder to read their prospects in the evenly divided Senate. But even there, conservatives who might traditionally oppose any kind of business restrictions want tougher controls over social-media and online companies they feel are censoring them. Out of such grievances are cross-party political coalitions crafted.  

And the Senate did just sign off on Lina Khan’s appointment to the Federal Trade Commission. President Joe Biden then named Khan FTC chair, cementing in power a former law professor and Congressional aide who built her reputation calling for an overhaul of antitrust policy in the digital era.

The FTC has already asserted jurisdiction over Amazon’s $8.45 billion acquisition of MGM, on top of another investigation in Amazon’s pricing practices with its third-party sellers. 

Again, it’s easy to understand why Amazon wants to overpay for MGM’s fat library, which it hopes to mine endlessly for Prime Video remakes, reboots and spinoffs that it can own forever. 

But Khan’s ascendance suggests the MGM deal, and any acquisition big enough to stir Brian Roberts’ soul, will get far more than a cursory review and rubber-stamp approval. 

Antitrust concerns aren’t limited to North America either. UK regulators want to bring international streaming services on its shores under the same programming and other strictures facing traditional broadcasters there. The EU continues to aggressively regulate anti-competitive behavior, with most of the tech giants in the middle of various expensive investigations over their practices. 

All of which suggests that what’s happening is a fundamental shift in understanding, among creators and regulators both, of the power of distribution platforms. 

Hollywood always said content was king, presuming that its hot shows would magically open distribution channels desperate to attract users. Then a couple of things happened. First, everyone started making way more good content than any normal human could watch. Second, HBO Max and Comcast’s Peacock got stoned for months when they tried to sashay onto Roku’s platform this time last year. 

This understanding of platform power is also playing out on the game side. This past week, Microsoft’s Satya Nadella used his Windows 11 debut event to throw shade at competing app stores that don’t allow access by competitors. 

Nadella never mentioned by name a certain fruit-associated $2 trillion company (the only one worth that much besides Microsoft), but Nadella didn’t have to, three weeks after the end of testimony in Epic Games’ landmark antitrust lawsuit against Apple over its App Store practices. 

And all of this jockeying is only partly about streaming video and games right now. It’s also about who’s going to control the next generation of devices beyond mobile, in augmented- and virtual-reality devices. 

Amid those kinds of big-picture strategic imperatives, adding Roku and ViacomCBS to Comcast’s quiver seems almost like a retro idea straight out of 2007 or so. But it still isn’t likely to look good to regulators. 

Comcast is already soup-to-nuts in production, distribution, and delivery of video in just about every current form. Truth be told, it’s difficult to figure out what the Comcast octopus doesn’t already do. And that’s exactly why any big deals seem doomed to a difficult birth at best. 

Comcast already has more broadband than TV subscribers, and it’s still the nation’s biggest traditional cable provider. It already owns a Roku quasi-competitor, the Flex streaming box. And the WSJ said Comcast is collaborating with Walmart and Hisense to build branded smart TVs expected to hit store shelves as soon as this winter.

Comcast also has analogues to everything ViacomCBS does, from its own broadcast network to a sheaf of cable networks, a movie studio and TV production unit. On the streaming side, both own major SVOD and AVOD networks already. 

Adding to possible antitrust concerns for the European Union and a newly activist post-Brexit UK, Comcast also owns Euro satellite power Sky and its many production arms.

Brian Roberts faces plenty of pressures beyond a filial sense of duty to build up his birthright, including from activist investor Trian Fund Management LP, which questions Comcast’s current mashup of content and distribution. 

Other investors are unimpressed by Comcast’s growth prospects, pricing its stock at a far lower earnings multiple than competitors Disney or Netflix, whose respective production facilities are a couple of miles either way from Universal City, where NBCUniversal is headquartered. Even No. 2 cable operator Charter Spectrum has a higher multiple, which has to grate. 

The spring was filled with what the consultants like to call M&E M&A, some 410 deals in media, entertainment and telecom, totaling $83 billion in value, according to PwC in its mid-year report on the state of play. 

It was, the report said, “the highest level in years … As these media giants compete with the likes of Netflix and Disney, we expect to see a continued race for content and sports rights, as well as further consolidation among other streaming providers and studios as they seek the scale needed to remain competitive.”

No matter. Now that Biden has scored victories on other legislative priorities, and signaled his regulatory intent with key appointments at both the FTC and the Department of Justice, it likely will be far more difficult to secure approvals for game-changing deals going forward than it was just six months ago. 

At least until we see what happens with the MGM-Amazon deal, media companies may be better advised to hunker down. That’s particularly so for Comcast and NBCU, which have to  white-knuckle it through whatever the pandemic-cursed Tokyo Olympics become next month.

Then, Roberts and his company can figure out where to allocate their capital going forward.

Here’s an idea: instead of sinking tens of billions of dollars into an acquisition that might get tossed out by the Biden Administration, maybe spend more to make your own content, so you can keep up the old school way. Maybe content is king after all. 

The House Judiciary Committee Wednesday (June 23) began marking up a host of Big Tech-targeted antitrust bills that tech companies have labeled a threat to freedom of speech and an existential threat to U.S. competitiveness.

The package includes over a half dozen bills, including one whose name suggests why Big Tech is worried: "The Ending Platform Monopolies Act." That bill would, for example, disallow Amazon from selling its own products in competition to third parties using its marketplace, or prevent Google from favoring certain content in search results.

Also Read: Big Tech Asks Hill to Delay Antitrust Bill Markup

The Platform Competition and Opportunity Act of 2021, which would prohibit the purchase by a Big Tech platform of any other business unless it could prove that it is not purchasing a direct competitor.

The bills would give Federal Trade Commission and Justice Department more tools--and money through boosted merger fees--to oversee antitrust oversight of Big Tech.

But while the Democrats billed the bills as "historic, bipartisan legislation" necessary to rein in Big Tech abuses, Republicans were divided over their potential effectiveness and how much power regulatory and enforcement, they gave the government.

Even one of the bill's co-sponsors said he was now conflicted over how the new antitrust power the FTC and Justice got would be used.

Also Read: Hill Ponders Tougher Antitrust Stance on Big Tech

Still, the fact that there is some Republican support suggests some or all of the bills might actually make it into law, which is probably why tech associations are pushing back so hard  and talking in near apocalyptic terms about that prospect.

Committee chair Jerry Nadler (D-N.Y.) said one of the failures of the Telecommunications Act was that it did not check consolidation of the major communications players, first ISPs and now online platforms.

Ranking member Rep. Jim Jordan (R-Ohio) said the key for Republicans was whether Democrats want to stop censorship of conservative speech online, including that of former President Donald Trump, then made it clear he did not think that would be the result.

Jordan argued that the bills don't break up big tech or stop censorship. Among other things, he said, the bills would give too much power to the FTC, which is now run by Lina Khan, a former staffer to the House Judiciary Democrats.

Jordan said the bills are about Big Tech and Big Government "marrying up and working together" to keep information from the American people.

There may be some things in the bills that are OK, he said, but as a package, they don't solve the problems that Republicans have with Silicon Valley.

Rep. David Cicciline (D-R.I.), chairman of the Antitrust Subcommittee, said the digital marketplace suffers from a lack of competition and that dominant platforms Facebook, Google, Amazon and Apple, abuse that monopoly power with predatory behavior including disadvantaging competitors, including by burying or buying them.

He said the unregulated tech monopolies want nothing to change, but that America "has had enough" and Congress must curb their dominance. He said the bills were the beginning of that process.

Rep. Ken Buck (R-Colo.), ranking member of the Antitrust Subcommittee, clearly disagreed with the Jordan, the ranking member of the full committee. Buck strongly supported the bills and said they were, indeed, bipartisan. He said the legislation was a scalpel, not a chain saw, but that they would hold Big Tech accountable by dealing with the most important aspects of antitrust reform.

He said the bills, which were introduced earlier this month, were the culmination of am 18-month bipartisan investigation into the monopoly power of Big Tech to "routinely use their gatekeeper power to crush competitors, harm innovation, distort and destroy the free market and silence conservatives."

The Computer & Communications Industry Association, whose members include the major platform players, weighed in in advance of the hearing, saying the bills were anti-consumer for "singling out a handful of popular, consumer-centric businesses."

“These bills would harm consumers and thousands of smaller businesses that use digital services to reach worldwide markets," said CCIA president Matt Schruers. They put the U.S. economy and the U.S. position as a leader in innovation at risk. Instead of boosting U.S. innovation to compete with threats from abroad...these bills would disincentivize innovation by affording foreign rivals a free ride on a few U.S. companies’ R&D investments.”

The markup was turning into a marathon at press time. It took almost three hours before the first bill, which increased merger fees, passed on a bipartisan vote 29 to 12.

In an Apple Watch-era version of a stem-winder, Consumer Technology Association president and CEO Gary Shapiro fired back at Big Tech critics Tuesday (June 22), including backers of a bipartisan antitrust legislative package being marked up in the House this week.

In a virtual speech to the Media Institute, Shapiro said the bills were being rushed through without a hearing or testimony because it was politically expedient and that they targeted the same tech companies that rescued the country during the pandemic.

He said accommodating free speech, free markets and tech innovation is one of the most pressing issues facing our nation but suggested all those are at risk, and at an inflection point, due to attacks on tech companies from the left and right.

Also Read: Big Tech Asks Hill to Delay Antitrust Bill Markup

Shapiro said the nation appears less interested in protecting free speech than at any other time, citing "cancel culture" among the threats to the "fundamental shared desire to freely express divergent views."

He cited the defense of a Nazi group’s right to parade in Skokie, Illinois, in 1977 as an example of the kind of protection distasteful speech that appears to be at risk.

Shapiro said social media companies are being pressured by government to take actions that can't be squared with the First Amendment. He cited former President Donald Trump's social media ban, saying that is not in the best interests of the country.

He said barring the President from social media chilled speech and disenfranchised millions of his followers. And while not a Trump fan, he said, neither was he a fan of harmful and divisive" bans under pressure from politicians.  

Shapiro said he was concerned about all the bills in the House antitrust passage — which he said had been rushed through the process without hearings or testimony — but singled out one making it harder for tech platforms to buy other companies. He said that will dry up venture capital and hurt entrepreneurs since one of the ways they get that capital is the potential of a buyout.

The Platform Competition and Opportunity Act of 2021 would prohibit the purchase by a Big Tech platform of any other business unless it could prove that it is not purchasing a direct competitor.

Shapiro said both parties are pushing proposals in conflict with the letter and spirit of the First Amendment. Those include the congressional efforts, via antitrust changes. He also cited a new Florida law that tells platforms what content they can allow.

Also Read: CTA Backs Opposition to Florida’s Big Tech Law

The law limits a website’s immunity under Section 230 of the Communications Act from civil liability over its moderation of third-party content, a point its language makes clear, saying: “social media platforms have unfairly censored, shadow banned, deplatformed and applied post-prioritization algorithms to Floridians.”

He said he supported clear and reasonable guard rails — on things like defamation, slander and infringement, given that businesses prefer regulatory certainty — and it is certain there will be some kind of regulatory pushback on Big Tech, given its bipartisan backing. But Shapiro warned against imposing new liabilities, mainly removing the Section 230 legal liability shield from website moderation of third-party content. He said that would only play into the hands of lawsuit-happy attorneys.

Facebook has filed motions to dismiss the antitrust lawsuits brought by the Federal Trade Commission and state attorneys general.

Most of the nation's state attorneys general, joined by the Federal Trade Commission, last December filed a lawsuit charging that Facebook is an unlawful monopoly guilty of anticompetitive conduct.

The suit alleged the social media giant "thwarted competition and reduced consumer privacy for profit" over a decade.

Also Read: New AG Merrick Garland Has Pledged Strong Antitrust Enforcement

Facebook in its motions said the suits make no credible claim that the company's conduct harmed either competition or consumers.

Regarding the FTC suit, Facebook said the commission has not alleged a "plausible relevant" antitrust market or provided any facts that would allow a court to determine what products are in that alleged market.

As to monopoly power, no plausible allegation there either. The FTC’s complaint contains a single bare, conclusory allegation that Facebook has a market share “in excess of 60%,” which must be disregarded because it is not supported by any facts," it told the court. 

And while the FTC alleged exclusionary conduct, Facebook said that one fails the smell test, too. It said the allegation that Facebook's purchases of WhatsApp and Instagram were anticompetitive is not plausible because the FTC reviewed them both and decided to allow them to close.

Also Read: Trump Sues Facebook

The FTC and Justice are currently trying to decide whether antitrust laws and enforcement failed to capture buying up to monopoly by Big Tech companies gobbling up rivals and potential rivals before they raised red flags with regulators.

Facebook said that the claim it was required to share its proprietary platform with rivals--what in the ISP world is called "nondiscriminatory access"--is precluded by Supreme Court precedent. Then there is the fact that none of the conduct the FTC is challenging has harmed competition or consumers, it argues.

As to the attorneys general suit, let Facebook count the ways it said that one is groundless as well:

"It does not and cannot assert that their citizens paid higher prices, that output was reduced, or that any objective measure of quality declined as a result of Facebook’s challenged actions," the company said. "Instead, the states, even more explicitly than the FTC, ground their lawsuit in public policy concerns — digital privacy, for example — that are not antitrust law concerns."

And if that were not enough, it said the states lack standing even to bring the suit.

Political opposites Sens. John Kennedy (R-La.) and Amy Klobuchar (D-Minn.) have teamed up to try and boost the fortunes of news operations.

The Journalism Competition and Preservation Act would give "news content creators"--print, broadcast, or digital--an antitrust safe harbor to negotiate collectively with digital platforms like Facebook and Google for carriage of their original content.

Similar bills have tried, and failed, to provide that safe harbor before.

Also Read: Sen. Paul Sponsors Tech Pay for (News) Play Bill

Specifically, the bill grants publishers immunity from federal and state antitrust laws for a 48-month period while they bargain collectively with digital platforms.

News content creators are defined as ones with 1) "a dedicated professional editorial staff that creates and distributes original news and related content concerning local, national, or international matters of public interest on at least a "weekly basis; 2) are marketed via subscriptions, advertising, or sponsorship. 

Also Read: News Outlets Promote Value of Local Content

They include operations that provide original news and related content at least 25% of which is current news and related content; or broadcast original news and related content per an FCC license.

The online content distributors publishers get to collectively negotiate with must have one billion active users per month on all their websites worldwide, so it is clearly aimed at the biggest platforms.

Publishers under the News Media Alliance banner have for years been trying to get Congress to give news publishers a limited safe antitrust harbor so they can get tech platforms, Facebook and Google most notably, to pay for use of their content given that they "take most of the advertising revenue sold against that content," adding that "advertising revenue that previously went to the news publishers and allowed them to reinvest in quality journalism is now going to the platforms." 

Also Read: News Media Alliance Slams Google Copyright Campaign

The bill said the joint negotiation is only allowed so long as negotiations are 1) not limited to price (no price fixing); 2) are nondiscriminatory as to similarly situated news content creators; 3) are directly related to the "quality, accuracy, 13 attribution or branding, and interoperability of news;" and 4) involve terms available to all news content creators.

The coordination among bidders has to be "directly related to and reasonably necessary for negotiations with an online content distributor" and [cannot] involve any person that is not a news content creator or online content distributor.

“We must enable news organizations to negotiate on a level playing field with the big tech companies if we want to preserve a strong and independent press," said Klobuchar. "This bipartisan legislation will improve the quality of reporting and ensure that journalists are able to continue their critical work. Our media outlets need a fighting chance when negotiating for fair treatment by the digital platforms where so many Americans consume their news.”

Back in March 2019, in March, the European Union adopted a Copyright Directive that gives news outlets and other content producer more muscle in enforcing their rights over the content they create. U.S. news outlets would like similar muscle here at home. 

“[The National Association of Broadcasters] commends Reps. David Cicilline and Ken Buck, Sens. Amy Klobuchar and John Kennedy and their bipartisan cosponsors for reintroducing legislation allowing news publishers such as local broadcasters to collectively negotiate the terms on which their content may be distributed online [said NAB President Gordon Smith. "For too long, a handful of dominant tech platforms have unilaterally set policies impeding media outlets’ ability to reach audiences, attract advertisers and monetize their news content. The Journalism Competition and Preservation Act would afford news producers the ability to negotiate a fair return for their local journalism that serves America's communities. We look forward to working with stakeholders and members of Congress on passing this legislation into law."

The first Senate Antitrust Subcommittee hearing has been scheduled in the new Congress and look for revamping antitrust laws to rein in Big Tech to a big part of the discussion.

The bipartisan hearing, March 11 at 10 a.m., was announced jointly by Chairwoman Amy Klobuchar (D-Minn.) and ranking member Mike Lee (R-Utah). 

Klobuchar has called for overhauling antitrust law to address Big Tech and its alleged strategy of buying up to monopoly power under the antitrust review radar. Lee also has issued with Big Tech, including Google and the ad markets.

"Our country faces a major monopoly power problem, and at this hearing, we will examine this problem’s scope and the reforms necessary to correct it,” said Klobuchar.

“Just as important as the question of whether we have a monopoly problem," said Lee, "is the question of whether we have an antitrust enforcement problem. I look forward to discussing both of these questions, and possible legislative solutions, with our distinguished panel of witnesses.”

Also Read: Merrick Garland Pledges Strong Antitrust Enforcement

Klobuchar also has issues with enforcement, specifically a lack of resources. At the nomination hearing of Attorney General Merrick Garland, Klobuchar said the Federal Trade Commission and DOJ Antitrust Division were shadows of what they were when AT&T was broken up, and asked Garland if he supported her bill that would provide more resources so they weren't overseeing a merging marketplace with Band-Aids and duct tape.

Klobuchar has said that if anything argued for antitrust law reform, it was DOJ's and FTC's suits against Facebook over its acquisitions of Instagram and WhatsApp?

Witnesses for the March 11 hearing are: George Slover, Consumer Reports; Ashley Baker, The Committee for Justice; Barry Lynn, Open Markets Institute; Jan Rybnicek, Freshfields Bruckhaus Deringer LLP; and Professor Nancy L. Rose, Massachusetts Institute of Technology.

Sen. Amy Klobuchar (D-Minn.) outlined an aggressive plan to legislate a “competition policy” that she envisions will be accompanied by increased antitrust enforcement, especially in the technology and digital platform sector.  In the closing keynote address to the State of the Net conference on Wednesday, she voiced concern that America could “emerge from this pandemic with markets that are more concentrated and less competitive than before this crisis.”

“Even before the pandemic, it was clear that America has a major monopoly problem,” she said. “It's a problem that threatens the strength and dynamism of our economy,” she added, calling it a “plague on our tech market.”

As a member of the Judiciary Committee’s Subcommittee on Antitrust, Competition Policy and Consumer Rights and of the Communications, Technology, Innovation and Internet subcommittee of the Senate Commerce Committee,  Klobuchar is well positioned to lead this anti-monopolist assault.

Klobuchar, in pre-recorded remarks, told the virtual SOTN event that, “Antitrust law isn't the only potential tool we have to foster the kind of competition we need.”  She is pushing the term “competition policy” (a term she uses in her forthcoming book on the topic).

Also Read: Klobuchar Bill Would Provide New Antitrust Tools to Address Edge Giants

“That distinction is particularly important in digital markets, which are relatively new and largely unregulated,” she explained, adding that the new leadership at the antitrust agencies plus the Democratic majorities in the Senate and the House enable policymakers to make such objectives “a priority for the first time in decades.”

She said the government must play a role when so much technology power is “controlled by a handful of companies that have amassed unprecedent power gateways … over our personal data,  power over what ads we see [and] what news we watch.”

Also Read: Michael Powell Pitches FCC Unity

Klobuchar acknowledged that Congress is “not as sophisticated as the companies that we should be regulating.”

“So we need to start by working to strengthen antitrust enforcement and making it more effective,” she explained, noting that she’s heard complaints “about the big tech platforms using their dominance to undermine rivals and limit competition for a long time.”

“Unfortunately, it took years for the antitrust agencies to get serious about enforcement in the tech center,” Klobuchar said.  She noted that recent Justice Department and Federal Trade Commission actions against Google and Facebook, with the support of state Attorneys General, may open the doors for “structural relief.”  She envisioned a “break-up remedy” that could separate assets and engender competition among the offspring, citing her early career experience as a young lawyer working on behalf of MCI during the break-up of the Bell System and the old AT&T.  She contended that breakups aren’t necessarily “radical. They're one way to deal with a competition issue.”

Confronting Judicial Barriers

“It's no secret that our increasingly conservative federal judiciary has been more antagonistic to antitrust enforcement, raising the procedural and evidentiary bar for government and private enforcement,” she fretted, citing a former Justice Department official who observed no plaintiff has won an antitrust case before the Supreme Court in more than 15 years. The Minnesota Senator also pointed out that the DoJ’s roster of antitrust lawyers has dropped from 453 to about 330 during the past 40 years.  At the FTC, the legal staff has receded even further:  from 1,719 to 1,102 during a similar stretch (1980 to 2018).

“How are you going to be able to take on these big tech companies, much less others, if you don't have the resources?” Klobuchar asked. She explained that increased filing fees for megamergers would generate revenue to beef up enforcement staffing.

“If we want our enforcers to be able to go toe-to-toe with the largest, most sophisticated trillion-dollar companies in the world, we shouldn't force them to operate on a shoestring,” she said. Klobuchar cited her proposed “Consolidation Prevention and Compassionate Competition Promotion Act” as a way to strengthen the current legal standards in the Clayton Act by updating legal standard to prohibit anti-competitive mega-mergers. “The bill shifts the burden to those dominant firms to prove that their exclusionary conduct doesn't risk harming competition.”

Google executives are pushing back hard on the latest lawsuit filed by New York and other states Thursday (Dec. 17) alleging anticompetitive conduct in search and search advertising, saying the suit would degrade search and hurt consumers.

Also Read: More States Sue Google

In a background call with reporters, execs for the company said Thursday (Dec. 17) the suit was about forcing Google to redesign its search in a way that would harm consumers by making search results worse, and would harm businesses by making it harder to connect to their customers directly, rather than forcing consumers to work through a range of "middlemen."

The execs said they had been engaging with regulators for years to explain how their business works, and pointed to the Federal Trade Commission's conclusion in 2013, after an extensive investigation and perusing millions of documents, that there was a pro-competitive reason for how their search business was set up and that there was evidence that the reason was to give consumers the optimal search experience.

Also Read: Trump Sues Unlawful Monopolist Google

Google said that it expected the court--the U.S. District Court for the District of Columbia--in the current suit to come to the same conclusion.

They argued that based on rigorous tests, consumers favored "rich search results" and that Google was trying to provide them. It also argued that Microsoft's Bing provided similar features including maps, knowledge panels and direct answers.

They called the allegation that they were trying to keep responses to search queries to themselves "specious," pointing out that Google sends a huge amount--billions of queries--elsewhere and that studies showing otherwise were just wrong, and could be explained by its refinement of queries. It said that it treated different queries in different ways but was always looking for the "moment" when Google could provide the most useful and relevant response to a query.

They also suggested that a lot of the complaints were coming from (Barry Diller's) IAC and that Google was under no legal obligation to help its rivals. 

On that point, they asserted that search was a robustly competitive market, including the fact that much of search had moved to mobile, where apps linked directly to search from IAC companies like Angie's List and Orbitz.com, among the companies complaining about Google.

Google is getting hit with the legal equivalent of a swarm as more states join to sue over antitrust concerns.

A day after a Texas Republican Attorney General-led group of almost a dozen GOP state AGs filed suit against Google alleging monopolistic practices. A New York Democrat AG-led group of 38 more, both Democrats and Republicans, filed a similar suit.

New York Attorney General Letitia James said her state was co-leading the legal charge, suing Google for "illegal, anticompetitive conduct that has sought to maintain its monopoly power in the general search services and search advertising markets."

Also Read: Trump Sues Unlawful Monopolist Google

The latest suit alleges multiple antitrust violations and that Google has maintained its Web behemoth status using multiple forms of anticompetitive conduct.

While the Department of Justice also filed suit against Google back in October, James said the new suit goes further that DOJ's, which focused on exclusionary agreements.

Adam Cohen, director of economic policy for Google, responded to the suit in a blog post.

The New York et al. suit alleges that anticompetitive conduct comprises 1) exclusionary contracts that limit consumers access to competitors; discriminating against specialized search competitors like Expedia and Yelp, including by depriving them of "prime" Google results page real estate and favoring Google's own specialized search; and 3) rigging its search engine marketing tool SA360 by driving advertiser spending to Google, including by making Bing ads appear to perform worse than they actually do.

Also Read: Trump Sues Facebook

The suit was filed in the U.S. District Court for the District of Columbia along with a motion to consolidate it with the DOJ case. It follows by a week one filed by New York and 47 other AGs against Facebook for "stifling competition to protect its monopoly power."

Also on Thursday, the Justice Department said that three additional states, Michigan, Wisconsin and California, had asked to join 11 other states in its October suit against Google. 

“Antitrust laws were designed to prevent consumer harm, and that standard has helped promote innovation," said Matt Schruers, president of computer association CCIA, whose members include Google. "This suit aims to police design choices made that improve Google’s product. Search design has been benefiting from constant redesign and updates, and regulators in the U.S. and abroad have concluded this has improved consumers’ experience. That’s exactly what competition promotes."

“It is great to see a bipartisan coalition of states stand up to Google for abusing its search monopoly,” said Justin Brookman, director of technology policy for Consumer Reports. “For far too long, Google has used its power to harm competition and undermine the digital rights of consumers. It is clear that without intervention, these markets will not become competitive. We hope this lawsuit and others are the start of a much needed and long overdue step up in antitrust enforcement in digital markets."

“Small businesses are hurting, and instead of helping them, these Attorneys General are trying to force middlemen between small businesses and their customers," said Connected Commerce Council President Jake Ward. "In every market, middlemen drive up costs, drive down value and drive small businesses further from their customers. Intervening on behalf of billion-dollar publicly-traded intermediaries insults small businesses and harms consumers. To do so now is nuts."

Most of the nation's state attorneys general, joined by the Federal Trade Commission, have filed a lawsuit charging that Facebook is an unlawful monopoly guilty of anticompetitive conduct.

The suit alleges the social media giant "thwarted competition and reduced consumer privacy for profit" over a decade.

The move comes only days after the  Justice Department sued the company alleging worker discrimination.

Related: Trump Sues Facebook

Over that time, says the office of New York Attorney General Letitia James, the lead AG on the suit, "the social networking giant illegally acquired competitors in a predatory manner and cut services to smaller threats — depriving users from the benefits of competition and reducing privacy protections and services along the way — all in an effort to boost its bottom line through increased advertising revenue."

In total 48 states/commonwealths/territories/districts joined the suit, with Alabama, Georgia, South Carolina and South Dakota the only no-shows among the states.

The FTC alleges that Facebook's purchases of WhatsAp and Instagram were examples of buying an emerging threat rather that competing. 

The FTC vote to file the suit along with the states was 3-2, with commissioners Noah Joshua Phillips and Christine S. Wilson dissenting.

The suit says Facebook's strategy to "build a competitive moat" around its business, as CEO Mark Zuckerberg has said, was to buy potential rivals before they could get big enough to challenge it, and to "suffocate and squash third-party developers that Facebook invited to utilize its platform."

The Justice Department and the FTC have been investigating how Facebook and other Silicon Valley powerhouses grew so large, and whether antitrust laws were unable to capture that strategy of buying rivals while they were small enough that the purchase did not trigger automatic antitrust reviews. 

To remedy that, James and the other AGs want the court to disallow Facebook from any acquisition valued at over $10 million without advance notice to them. 

IT also wants the court block the company from any anticompetitive behavior and provide any additional relief up to and including divestiture or restructuring of companies it "illegally" acquired. 

Facebook is specifically charged with violating Section 2 of the Sherman Act, which "makes it unlawful for any person 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," as well as multiple violations of Section 7 of the Clayton Act, which "prohibits mergers and acquisitions where the effect "may be substantially to lessen competition, or to tend to create a monopoly." 

In response to the announced suit, Big Tech basher Sen. Josh Hawley (R-Mo.) cheered on the possible break-up, tweeting: "The Instagram and WhatsApp mergers with Facebook were anticompetitive, were meant to be anticompetitive, and should be broken up."

The Computer & Communications Industry Association (CCIA), whose members include Facebook, Google and Amazon, was not happy with the prospect of an Instagram/WhatsApp divestiture.

“CCIA strongly supports antitrust enforcement when consumers are harmed," said CCIA President Matt Schruers. " However, the remedy needs to be tailored to the evidence, and not based on an artificially narrow definition of the market.  Unwinding Facebook’s acquisitions of Instagram in 2012 and WhatsApp in 2014 is a drastic remedy that would not only harm consumers but also will have a chilling effect on innovation and the US innovation ecosystem.

“CCIA has supported merger reviews generally as a way for regulators to do analysis and make better future decisions. Refining policy through retrospective merger reviews can be useful for clarity and better outcomes. Using them to declare a ‘do-over’ for regulators when the mergers at issue were approved by the relevant authorities is inappropriate."

“We welcome the lawsuit by the FTC and the coalition of states against Facebook for its pattern of anti-competitive actions," said Justin Brookman, director of technology policy for Consumer Reports, himself a former FTC official. "For years Facebook has grown its dominance and power by acquiring emerging companies seen as a threat to its business and imposing unreasonable conditions on third-party developers. These actions have limited consumer choice, insulated the company from competitive pressures, and resulted in a worse online ecosystem. We hope that actions like this one will start to hold tech giants like Facebook accountable, limiting the amount of power they have on our communications and commerce online, and strengthen digital rights.”

The House Antitrust Subcommittee took on Big Tech Thursday (Oct. 1) in a hearing on potentially toughening antitrust laws to make sure they protect online competition. The subcommittee has been investigating the state of competition in digital markets since June 2019.

Thursday's was the seventh and final hearing as they wrap up their investigation.

And while there were differences over how it should be done--break up or not, for example--there was agreement that something had to be done about Big Tech and the antitrust laws, some arguing that what was needed was better enforcement rather than government "intrusion"--primarily Republicans--others that the antitrust laws needed to be revised or potential new regs implemented--primarily Democrats.

Antitrust chairman David Cicciline (D-R.I.) said that the subcommittee has conducted a top-to-bottom review of Amazon, Apple, Google and Facebook, including collecting almost 1.3 million internal documents and communications. The hearing record totals over 1,800 pages.

The sixth hearing, held in July, featured testimony from the Tim Cook of Apple, Jeff Bezos of Amazon, Jeff Zuckerberg of Facebook and Sundar Pichai of Alphabet (Google). Cicciline said their answers had been "evasive and nonresponsive."

He also said the investigation had found three main problems common to all of those Big Four companies:

1. Each platform is a gatekeeper over a key channel of distribution, which means they are able to pick winners and losers. He said they abuse that power by charging exorbitant fees, imposing oppressive contracts and extracting valuable personal data.

2. Each platform uses its gatekeeper status to protect their own power by controlling infrastructure and identifying potential rivals and ultimately "bought out, copied, or cut off their competition."

3. The platforms abuse, and continue to abuse, their platforms to expand their marketplace power through destructive means such as self-referencing and predatory pricing.

He conceded that each had achieved technological breakthroughs that added immense value to the country and were a testament to core values of the country. But he said the the committee had followed the evidence and the facts, and it led them to a conclusion that Big Tech firms have been allowed to regulate themselves and that the once scrappy underdog startups have grown into the digital era's oil barons and railroad tycoons.

He said the country stood at a crossroads, and needed to determine the best path forward for addressing those competition issues.

Ranking member Jim Sensenbrenner (R-Wisc.), the former chairman who is retiring after 42 years in Congress, said Congress clearly needed to get a grasp on the size of these companies and how they use that power, but that he was not convinced the antitrust laws needed to be changed. He said Congress was ill-suited at micromanaging the economy.

He said he was skeptical of calls to break up the companies, or create a "one-size-fits-all data standard. He thought the antitrust framework still served the American people and that having the government insert itself in their operations was the right course of action. He said enforcement of existing laws needed to be bolstered, which he said was already happening. He cited ongoing investigations by the Justice Department and the Federal Trade Commission and reports DOJ is readying a case against Google.

Judiciary Committee chairman Jerrold Nadler (D-N.Y.) said the investigation bore out his concerns about the harmful effects of consolidation. "Each of the major companies that were part of this investigation, in its own way, exerts dominant control in the digital marketplace that is cause for great concern."

He said his belief that the antitrust laws have to be modernized and strengthened "is greater than ever." He also said enforcement agencies, like the FTC, have the "tools, resources and the will" to vigorously enforce the law."

He said antitrust enforcers "must not pull punches."

As with any Big Tech hearing these days, the issue of censoring the right made an early appearance. In his opening statement, full committee ranking member Jim Jordan (R-Ohio), said to lead off: "Big Tech is out to get conservatives. That is not a suspicion. That's not a hunch. It's a fact."

Jordan was echoing the point he made at the July hearing with the four Big Tech execs.

He complained that Democrats would not make a part of the investigation of the companies "an evaluation of how platforms are censoring speech." He said maybe that was because liberal speech was not being censored. As an example he cited Twitter censoring Sen. Marsha Blackburn (R-Tenn.) a point Blackburn had made earlier in the day on the other side of the Capitol, where the Senate Commerce Committee voted to subpoena the CEO's of Google, Facebook and Twitter after they declined an invitation to testify.

Jordan said Big Tech has gotten away with censoring conservatives thanks to the protection of Sec. 230 immunity from civil liability over moderation of third-party content.

Jordan and other Antitrust Subcommittee Republicans have introduced a bill that would reform the section to narrow  that immunity to specific instances rather than the "otherwise objectionable" category he said has been used to censor political speech. 

The Federal Trade Commission and Department of Justice are seeking comment on a couple of proposed changes to the automatic Hart Scott Rodino (HSR) antitrust reviews, which are required of large mergers (ones valued at at least $94 million).

The FTC and DOJ divide up antitrust reviews, with DOJ generally handling the media merger reviews.

The agencies are proposing to change the definition of the acquiring company to include "associates." It is a way to capture the changes in the financial structure of acquiring entities by expanding the definition to capture "all entities a parent entity controls directly or indirectly and "all associates of the ultimate parent entity.

Currently the rules do not require disclosure of substantive information about the complete structure of the acquiring entities like limited partnerships and limited liability companies. Now the FTC will get info on the entire family of funds because treating them as separate entities "is often at odds with the realities of how fund families and MLPs are managed."

Related: Trump Administration Updates Vertical Merger Guidelines

The FTC, which has long contemplated exempting the acquisition of 10% or less of the voting securities in a company, wants to finally add that exemption to HRS reporting requirements.

But there are exemptions from the exemption. It would not be available to an acquiring company in a vertical relationship with the acquired valued at more than $10 million. "There can be important competitive implications in vertical relationships, and the Agencies have a strong interest in reviewing transactions that create or expand vertical relationships," the FTC said. It would also not apply if the acquiring entity is a competitor to the company it is acquiring, or even has more than a 1% stake in a competitor. 

Related: FTC Expands Merger Approval Lookbacks

Separately, the FTC is looking at whether the HSR review needs to be further modified, including perhaps lowering the $94 million threshold for triggering an HSR review to better capture smaller Big Tech mergers that wind up having large impacts.

Comcast has asked the U.S. Supreme Court to rule on a four-year old antitrust suit brought by ad rep Viamedia that could cost the cable giant up to $500 million.

Viamedia sued Comcast in 2016, alleging the cable operator prevented it from representing advertisers in Chicago, Detroit and Hartford, Connecticut, by gaining control of local interconnects. Viamedia originally sued for $75 million in damages, which were later increased to $160 million. After trebling under antitrust laws and pre-judgment interest, the suit could cost Comcast as much as $500 million.

A lower court dismissed Viamedia’s claim that Comcast refused to deal with the company in 2016 and in 2018 granted the cable operator a summary judgment regarding Viamedia's exclusive dealing and tying claims. Viamedia appealed, and on Feb. 24,  the U.S. Court of Appeals for the Seventh Circuit reversed the lower court decision, adding that Viamedia’s claims were sufficient to present before a jury.

“The Seventh Circuit’s reversal of the district court’s careful and well-reasoned decision dismissing Viamedia’s claims is inconsistent with longstanding antitrust law, including decisions by the Supreme Court and other circuit courts,” Comcast said in a statement. “We’re asking the Supreme Court to correct this error.”

Viamedia had wanted the trial to start as soon as possible. In court documents it had pushed for discovery to begin in June and for the parties to have their first status conference on July 1, with summary judgments by Nov. 4. Comcast asked to stay discovery in a May 18 filing with the Appeals court, adding that it planned to file a writ of certiorari with the U.S. Supreme Court on Sept. 4. 

At the time Comcast said it was confident the Supreme Court would rule in its favor.

“Comcast believes that the Supreme Court is likely to grant the petition because the Seventh Circuit’s decision is inconsistent with the Supreme Court’s leading case on refusals to deal, creates a split with other circuits on the issues of refusals to deal and tying, and presents issues of nationwide importance concerning circumstances when the antitrust laws require competitors to cooperate with one another,” Comcast said in the May 18 filing. 

Also in the May 18 filing, Comcast stressed that the case is legally and factually complex, and that “the current pandemic has made it difficult to move forward with even routine matters in this District and around the nation,” adding that depositions were not taking place, travel was dangerous and the ability to normally conduct business was uncertain. 

“Further, Viamedia’s suggestion that the parties collect, review, and produce four years’ worth of documents in little more than a month would not be plausible even under normal circumstances,” Comcast continued.

As a result, Comcast suggested that the trial be pushed into next year, with the close of expert discovery on April 2, 2021 and the deadline for certain motions moved to May 28, 2021. In an Aug. 18 order, the Appeals Court said it found Viamedia’s shorter proposal “unreasonable and impractical,” and approved the Comcast proposal, provided Comcast submits an appended answer to the court by Sept. 15. 

In a statement,  Viamedia said it will oppose the Comcast Supreme Court petition.

“Comcast seeks to challenge the correct and well-reasoned decision of the Seventh Circuit, which held that Viamedia has jury-ready claims against Comcast for monopolizing in violation of the Sherman Act,” Viamedia said in a statement. “The parties are now engaged in additional discovery in the district court, and we are looking forward to being able to present our case at trial next year. The cable television advertising ‘Interconnects’ were intended to provide for a fair, inclusive, efficient and competitive marketplace for advertisers, cable operators and consumers, which is more important than ever in the face of new challenges to the advertising economy.”

The Justice Department could file an antitrust suit against Google (and YouTube) parent Alphabet as soon as this month, according to The New York Times.

Google's market power and position as the dominant search engine have drawn record fines in Europe, but it has pretty much avoided similar treatment at home. 

RELATED: DOJ's Delrahim Seeks Examples of Online Platform Anticompetitive Conduct

Attorney General Bill Barr signaled at his Senate confirmation hearing that if he got the job he wanted to investigate Big Tech and how it got that way "under the nose of antitrust enforcers." The Times reported that Barr was pushing Justice to file by month's end, while others in the department were suggesting they needed more time to build their case.

President Donald Trump and the Justice Department separately have set their sites on regulating content on social media platforms as Silicon Valley draws unprecedented attention from Washington to match its unprecedented market caps and power over information. 

At a July 29 House Judiciary Committee hearing on whether Google and other giant edge providers are using their power anticompetitively, Alphabet CEO Sundar Pichai said Google is in a long tradition of American innovation, "building products that are helpful to American users in moments big and small." He talked about small businesses using Google to grow. 

As to whether Google is dominant, he said: "Google operates in highly competitive and dynamic global markets, in which prices are free or falling, and products are constantly improving. … People have more ways to search for information than ever before — and increasingly this is happening outside the context of only a search engine." he asserted.

It looks like the Justice Department does not see it that way.

In what could be a preview of Biden administration technology policy, three former Democratic policymakers are recommending the creation of a new independent federal regulatory agency - the Digital Platform Agency (DPA) - to oversee Big Tech’s expanding presence in American business and life. The agency would focus on promoting interoperability and “responsible data practices,” according to the “New Digital Realities” proposal by Tom Wheeler, Philip Verveer and Gene Kimmelman, published last week by the Harvard Kennedy School’s Shorenstein Center think tank.

Although the 62-page paper makes scant reference to “communications” or “media, its implicit message – especially coming from three men who spent most of their careers around the telecom industry – carries strong signals about the impact that Silicon Valley’s new technology giants have on telecom.  They cite “the enormous power of data control in the hands of a limited few tech platforms” and focus on the limited competitive landscape that is evolving. Their report envisions DPA as a “federal agency agile enough to handle the oversight of data abuses and gaps in competition policy, while being capable of establishing corporate duties that promote fair market practices.”

Acknowledging concern about creating a new federal regulatory regimen, the authors explain that “digital technology has become critical to address many of the challenges our nation faces.” The report contends that a new agency is needed, rather than just “bolt on authority to an existing agency” because old agencies are saddled with “cultural commitments” and “legacy precedents.”  

DPA would be built upon a “new congressionally established digital policy” that would avoid rigid utility-style regulation.” It would supersede the “existing regulatory agencies [that] … bring with them decades of operational and jurisprudential precedent that inhibits the ability to address the dynamics of the new digital marketplace.”  The authors contend that an “agile approach to oversight built on risk management rather than micromanagement” would lead to an “enforceable code of conduct for specific digital activities.”

To validate the need for a new oversight agency, the authors charge that the “dominant digital companies” have made their “own rules and imposed them on consumers and the market.”  

“Internet capitalism" should be grounded in "public interest expectations,” they argue, suggesting that DPA would be able to sue companies – similar to the role performed by the Consumer Financial Protection Bureau.

'Not a Replay of Industrial Era'

The “New Digital Realities” report is laden with tech-centric examples, such as how Artificial Intelligence could blow away traditional industrial and operating models, which filter throughout the economy.

“American policymakers’ reluctance to impose regulatory oversight has, in large part, been the result of the digital companies’ successful campaign to portray government regulation as stifling their ‘permissionless innovation’ and the wondrous products that have resulted,” the report contends. “At the federal level there has been no meaningful legislation addressing new technology since the Telecommunications Act of 1996, which principally dealt with networks, not platforms. Regulators are stuck with statutes that not only are from a pre-platform era but also are based on industrial era assumptions rather than policies that reflect internet era realities.”Wheeler, Verveer and Kimmelman insist that, “It is time to assert that there must be governmental oversight of the digital platforms. It is no longer acceptable for the companies to make their own rules.”

And they emphasize that public oversight of digital platforms “cannot simply be a replay of what worked in the industrial era.”

The report laments that, “For the last two decades digital companies have successfully sold the notion that government oversight of their activity would stymie innovation. The success of this lobbying has allowed the companies to maximize benefits to investors through the denigration of personal privacy, consumer rights, and the supposedly all-American concept of competition and competitive markets.”

“The failure to protect the public interest in such matters has added to the destruction of the public’s trust in government as Americans observe the inability of their representatives to do anything about obvious harms,” the report concludes.

It accuses the dominant digital platforms of becoming “governments unto themselves with the ability to impose their own set of rules on economic activities and consumer choices.” It also laments “the Silicon Valley mantra ‘move fast and break things.’”  That approach has “failed to take into consideration the consequences of such actions.”

No Sense Yet of Where Proposal Goes

Despite the blue-ribbon Democratic credentials of the authors, there is no buzz yet on how or if it will play in Washington’s turbulent, unknown 2021 landscape.  As such, it is a passionate, fact-laden trial balloon with high powered professionals pulling its strings.  

Wheeler was the former FCC Chairman and an advisor for the Obama Presidential transition; earlier in his career he served as CTIA and NCTA president and a venture capital executive. 

Verveer was Deputy Assistant Secretary of State for International Communications and Information Policy in the Obama administration; earlier he served as Chief of the FCC’s Cable TV, Broadcast and Common Carrier Bureaus and prior to that was the first lead counsel in the Justice Department team that led to the Bell System break-up; he also worked at the FTC and in private practice. 

Kimmelman, currently a Senior Advisor at Public Knowledge, an activist policy group, had been president/CEO of Public Knowledge and prior to that was Legislative Director for the Consumer Federation of America.  He also served as chief counsel for the Justice Department’s Antitrust Division and as Chief Counsel and Staff Director for the Antitrust Subcommittee of the Senate Judiciary Committee.

They acknowledge that the “dominant digital platforms have and will continue to oppose the imposition of competition in the digital market.”

Their report characterizes such stances as “opposition to the creative dynamism that produces economic growth and good jobs.”

“The dominant companies that grew out of dorm rooms and garages today choke off the ability of new innovators to do the same thing.”

The report contends that a new agency is needed, rather than just “bolt on authority to an existing agency” because old agencies are saddled with “cultural commitments” and “legacy precedents.”  

“The DPA should have a ‘digital DNA,’” they insist, rather than the “analog DNA” that pervades existing regulatory units.  This would require commissioners and staff “with specialized technological experience and capabilities.” It cites the early days of the FCC, the Nuclear Regulatory Commission and the Commodity and Futures Trading Commission as historical precedents of agencies built with special skills and talents. The report envisions hiring computer scientists and appointing commissioners with demonstrated expertise in the management of the digital environment.

They even go into details about the potential structure of DPA: it would be headed by three presidentially appointed, Senate-confirmed commissioners, one of whom will be Chairman. The Commissioners should have staggered five-year terms and no more than two commissioners may be members of the same political party.

“The prevailing practice of appointing former congressional staffers to commissioner posts should be avoided absent the appointee having digital experience beyond Congress,” the report argues.

“’Digital DNA’ also means that in establishing oversight of the internet platforms it is insufficient to repurpose statutory expectations established in the industrial era,” the report emphasizes.  “Digital market activities require marketplace expectations built around digital technology and its capabilities.”

The Trump Administration has released its new internal guidelines for how the relevant agencies will review vertical mergers, with an eye toward better identifying and challenging competitively harmful mergers, though critics of the process say the guidelines still keep a thumb on scale for such mergers. 

Vertical mergers are ones that combine different parts of the same supply chain, an AT&T with its video services and Time Warner with its content production, for example, which DOJ tried unsuccessfully to block.

The Justice Department and Federal Trade Commission divvy up merger antitrust reviews, with Justice usually getting the media mergers. This is the first time they have issued joint guidelines and the first major revision since 1984. 

The two have been working on a draft of new rules for some time, including putting them out for public comment. The FTC vote to release the new guidelines was 3-2 along party lines, with Democratic commissioners Rohit Chopra and Rebecca Kelly Slaughter voting no. 

Related: DOJ, FTC Schedule Vertical Merger Workshops

Historically, vertical mergers have not frequently been challenged, but Department of Justice antitrust chief Makan Delrahim has made it clear there remain antitrust issues with vertical mergers, as was evidence by Justice's attempt to block the AT&T-Time Warner deal.  

“These new Vertical Merger Guidelines provide transparency in the important area of vertical merger analysis,” said Delrahim.

FTC chairman Joe Simons called them "an important step forward in maintaining vigorous antitrust enforcement," and said they "reaffirm our commitment to challenge vertical mergers that are anticompetitive and would harm American consumers." But he also said they essentially reflect current enforcement policy, and in that sense are a transparency move to give businesses a heads up. 

In her dissent, commissioner Slaughter said one reason she voted "no" was that the guidelines refused to explicitly disavow the "false assertion" that vertical mergers are almost always pro-competitive. 

She did say there were positive changes including eliminating the "quasi-safe" harbor based on market share. The draft guidelines had signaled that a vertical merger is unlikely to be challenged if the merged parties have less than a 20% share of the market, as well as its discussion of raising rival's distribution costs as a potential competitive harm, which was a key point in DOJ's attempt to block AT&T-Time Warner, as well as its discussion of the purchase of firms that are the most likely potential competitors. That has been a key DOJ concern with Big Tech firms and whether they had bought themselves up to monopoly by purchasing potential rivals early, before it raises antitrust review. More than one venture capital-backed tech startup has launched in hopes of getting bought out for big bucks. 

Where the guidelines fell short, she said, were "(1) the over-emphasis of the benefits of vertical mergers; (2) failure to identify merger characteristics that are most likely to be problematic; (3) the treatment of the elimination of double marginalization (“EDM”); and (4) the omission of important competition concerns including buy-side power, regulatory evasion, and remedies." 

Related: DOJ, FTC Spar Over Roles in Antitrust Reviews

Delrahim signaled this week that the revision is basically updating the guidelines to square with its investigative practices and approach over the past few years, as a way to provide "greater predictability." 

Joshua Stager, senior counsel for New America’s Open Technology Institute, agreed with Slaughter that the guidelines were underwhelming, calling it a missed opportunity for real change. OTI opposed the Comcast/NBCU, AT&T/DirecTV and AT&T/Time Warner deals, all of which passed muster, either with the relevant administration or the courts. 

“These guidelines haven't changed since 1984, during which time competition has waned and inequality has worsened," Stager said. "We hoped the FTC and DOJ would use this process to make our antitrust laws work better for the American people. Unfortunately, the new guidelines miss the mark. Rather than refresh outdated thinking, the new guidelines gloss over critical issues and ignore the risks of vertical mergers, particularly in digital markets."

Big tech critic Sen. Josh Hawley (R-Mo.) has big issues with Amazon.  

Related: Hawley Slams Apple, Tik Tok 

The senator has asked Attorney General Bill Barr to open an antitrust investigation into Amazon and what he says could be "predatory and exclusionary" practices.  

That was spurred by a report that it was "stifling competition by culling data from the platform's sellers to launch competing products under its own private label, a practice he called an existential threat to small businesses already facing the existential threat of a pandemic.   

Related: Attorney General Barr Slams Big Tech's Sec. 230 Carve-Out 

“Abusing one’s position as a marketplace platform to create copycat products always is bad, but it is especially concerning now,” he wrote Barr, according to a copy of the letter supplied by Sen. Hawley's office. “Thousands of small businesses have been forced to suspend in-store retail and instead rely on Amazon because of shutdowns related to the coronavirus pandemic. Amazon’s reported data practices are an existential threat that may prevent these businesses from ever recovering.” 

The Justice Department is currently investigating how Big Tech got that way and whether it was through circumvention of antitrust laws, or perhaps a loophole in the law that needs fixing. 

Related: The COVID-19 Crisis Hits the TV Industry 

Hawley pointed to a European Union investigation of Amazon's use of data to target third-party sellers and cited testimony from former employees and internal documents that support the conclusion that Amazon "abuses its position as an online platform." 

Amazon has said it now has policies preventing this, but Hawley counters that what it says in that policy, and what it does in practice "are two different things." 

Related: DOJ's Rosen Signals Possible Action if Big Tech Proves 'Innovation' Threat 

And during the COVID-19 pandemic, that could be the difference between life and death for small businesses, he suggests. "Thousands of small businesses have been forced to suspend in-store retail and instead rely on Amazon because of shutdowns related to the coronavirus pandemic. Amazon’s reported data practices are an existential threat that may prevent these businesses from ever recovering...I ask that you look into this issue and open a criminal antitrust investigation of Amazon." 

The prospect that "third parties [could] undercut...federal enforcement decisions" - such as the pending T-Mobile/Sprint merger - is one of the greatest concerns in the new antitrust environment, Assistant Attorney General Makan Delrahim explained in remarks to the monthly luncheon of the Media Institute in Washington on Wednesday (Feb. 5). He reminded the policy-centric audience that the Federal Communications Commission, the Department of Justice and many states approved the merger last year. But then attorneys general from 10 states and the District of Columbia sued to prevent the alliance; a decision is still pending.

"So, we have two specialized federal agencies reviewing the T-Mobile/Sprint transaction" and deeming it legal, Delrahim said. "Yet, we have a minority of states and the District of Columbia trying to undo that relief across the entire country. If you find this situation odd, you’re not alone."

"We often work closely with our state attorneys general partners in enforcement actions," he continued. "Here, however, a small group of state attorneys general did not reach consensus." Delrahim contended that such actions are "incompatible with the orderly operation of our antitrust merger laws and telecommunications regulations. It creates the risk that a small subset of states, or even perhaps just one, could undermine beneficial transactions and settlements nationwide."

Delrahim fretted, "That any state, or even any individual, can undo the nationwide relief secured by the federal government and approved by a federal court."

"That would wreak havoc on parties’ ability to merge, on the government’s ability to settle cases, and cause real uncertainty in the market for mergers and acquisitions," he added, noting that "Permitting states to undermine federal enforcement also would be contrary to congressional intent."

The AAG's passionate example emphasized the core of his remarks, which focused on DoJ's efforts to "reform" and "modernize" the Antitrust Division's merger review process.

"As a benchmark to measure success, we committed that we would aim to resolve most merger investigations within six months of filing," Delrahim said. After about 18 months of efforts, he said current initial merger reviews take about 5.4 months, and for cases that involve any challenge "the average time to notification is 5.7 months."

Steering Clear of Tech Examination and Media Issues

Delrahim ducked questions about DoJ's broad antitrust investigation of major digital platform firms (Google, Amazon, Apple and Facebook), announced in July. Initially, the agency expected to complete that probe by the end of 2019.

Early this week, Delrahim was recused from the Google portion that probe because of a potential conflict of interest. Before joining DoJ, Delrahim in private practice represented Google in its 2007 acquisition of DoubleClick, an ad-tech firm.

Separately, Delrahim touched briefly on the long-pending examination of the 1941 consent decrees affecting BMI and ASCAP music licensing agreements. Last year, he said that DoJ expected to decide by the end of 2019 whether those restrictions should be amended, eliminated or maintained as is.

On Wednesday he would only say that the agency's review is not comparable to its November 2019 termination of the half-century-old Paramount consent decree affecting studio ownership of exhibition facilities.

The House Antitrust Subcommittee will hold a field hearing on online platforms and market power Jan. 17 in Boulder, Colo. 

That is according to the University of Colorado Law School, which will be hosting the hearing. 

Related: House Continues Deep Dive into Digital Antitrust 

The Subcommittee is chaired by David Ciccilline (D-R.I.) but the vice chair is Joe Neguse (D-Colo.), who arranged for the road trip. Ken Buck (R-Colo.) is also a member. 

The school indicated that several "top executives" will be testifying, but did not say whom. 

“Through the Subcommittee’s investigation, it has become clear that the dominant online platforms have tremendous power to shape and influence online commerce,” said Rep. Cicilline. “This hearing is an opportunity to hear directly from a diverse group of innovative companies that are forced to rely on these platforms as gatekeepers to reach consumers and the online marketplace.”

Congress, the Justice Department and the Federal Trade Commission are all looking into the size and power of online platforms including Google and Facebook and Twitter and how they got that way.  

Journalists who want to cover the hearing in person--it will also be live streamed--must apply by Jan. 15.  The hearing was not on the committee's web site at press time but a school spokesperson said they had gotten the go-ahead to announce it .

The House Judiciary Committee Antitrust Subcommittee heard from two major players in the government's review of Big Tech and whether the antitrust laws have kept up with their exponential growth, but not before the legislators had staked out their own positions. 

The toughest rhetoric came from Democrats decrying consolidation and what they said was lax enforcement. 

Subcommittee Chairman David Cicilline (D-R.I.) pulled no punches, he said the extreme concentration of online platforms may have some benefits, but they were clearly using their power to set market terms that enrich themselves and make it impossible to compete. 

He said the power they wield is in some measures unprecedented, while government regulators have been paralyzed.  

Full committee chairman Jerry Nadler (D-N.Y.) echoed that criticism. He said they were at a critical moment when a handful of dominant companies control "commerce, content, and communications." He got specific, pointing out that Google had over 90% of search, Facebook over 80% of social media revenues, and Amazon over half of online commerce. 

He said that anticompetitive consolidation has had devastating effects on a free and diverse press as well as the survival of startups. Both talked of lax merger enforcement in the U.S. vs. more muscular oversight overseas. 

Ranking member Jim Sensenbrenner (R-Wis.) was concerned but less harsh in his assessment, a view echoed by other Republicans. He said that it was important not to overreach or punish success or suppress innovation or limit consumer power. 

Witnesses for the hearing were Department of Justice antitrust chief Makan Delrahim and Federal Trade Commission Chairman Joseph Simons in the latest hearing Wednesday (Nov. 13) in a series of hearings, Online Platforms and Market Power, Part 4: Perspectives of the Antitrust Agencies. 

Delrahim and Simons both talked about their ongoing, separate, investigations into Big Tech and antitrust, but both talked about the actions they had already taken in the digital space, and would take future action if their investigation warrants. 

On the issue of enforcement, Simons conceded that the FTC was resource-restrained so it focused on cases it had a better likelihood of winning, adding that if it had more money, it could pursue more cases. 

Simons was asked about Europe's opt-in consent regime and whether the U.S. should take a similar approach to federal privacy legislation. He said he was concerned that could backfire, entrenching the largest players even more at the expense of newer entrants because with consumers faced with a barrage of opt-in decisions on data use, the larger, more familiar, players are the ones most likely to get that consent in part because users may not want to spread their information so widely. 

Sensenbrenner agreed that the U.S. needed to beware the unintended consequences of efforts at protecting privacy or passing federal legislation. 

Federal Trade Commission Chairman Joseph Simons has assured Congress that its review of how the antitrust laws should apply to high-tech conduct is not a one-off task force, but a new litigation division ready to pursue anticompetitive conduct by the edge, including getting at digital platforms through their impact on privacy.

He made it clear that antitrust issues are raised not only by pricing but by reductions in product quality, which could include privacy, he said.

That came at a budget hearing in the Senate Appropriations Financial Services and General Government Subcommittee May 7 and after questions have been raised about the possible need for a new antitrust approach to social media, whose cost to the consumer may seem to be zero, but is in fact in data privacy and control.

Related: Delrahim Says FAANG Monopoly May Not Necessarily Be Bad

Subcommittee chairman Sen. John Kennedy (R-La.) pointed out that there has been some debate over whether edge providers have avoided antitrust scrutiny over their conduct and growth through acquisitions because as a free service there are not issues with pricing and that perhaps the FTC has not been sufficiently attuned to other consumer harms other than raising prices.

Simons said the FTC's new high-tech antitrust task force, which is part of the bureau of competition, is not temporary, but is basically another litigation division in that bureau. He said its mission was to focus on high tech, particularly digital platforms, looking at both transactions and conduct.

Related: Sen. Klobuchar Looks to Tighten Clayton Act Triggers

He said he expected the division would be bringing cases, which would just continue if and when it found more such cases.

Kennedy wanted to know when such cases against digital platforms might be coming, but then adjusted the question to when Congress would know what the FTC's policy toward edge providers and antitrust would be.

Simons said antitrust policy was irrespective of the task force, which is to "stop anticompetitive conduct and anticompetive mergers that either result in price increases, reductions in product quality, which would include privacy, and reductions in innovation. 

Aside from a promise that net neutrality will be the focus of the House Communications Subcommittee's first hearing this year, nary another word was spoken at Tuesday's State of the Net conference about the controversial access issue. 

Indeed, federal and local policy-makers and industry advocates shunned traditional concerns about network infrastructure and telecommunications policy, which had been dominant issues at the 15th annual event of the Internet Education Foundation, with the cooperation of the Congressional Internet Caucus.

Rather, the focus was on the platforms — especially Google and Facebook — which have become gatekeepers for the expanding range of online services and transactions. 

Along with the concerns over platform dominance came an array of calls for strong policies to protect privacy and to quash anticompetitive maneuvers. FCC commissioner Brendan Carr offered predictable cheerleading for 5G (Fifth Generation) wireless services, and demands for tight cybersecurity in the evolving digital ecosystem were woven through the conference. 

House Antitrust chairman David Cicilline (D-R.I.) opened the program with strong words about Google's perceived anti-competitive behavior, both as a gatekeeper and for its buying splurge in which it has gobbled up smaller firms. This "concentration of power" creates "pernicious impacts on a free and diverse press," Cicilline said, especially "in the absence of a competitive marketplace." He cited reports on Google's ability to manipulate traffic on its ad networks as well as with its readers and users. All of this affects "legacy news companies and digital publishers alike," Cicilline said. "The free and open internet ... is incompatible with this trend toward centralization online."

"It's vital that the House Antitrust Subcommittee takes up these matters in a top-to-bottom investigation [to determine] whether use of market power harms the competitive process online," he said. "We cannot have a democracy without a free and diverse press"....one that gives publishers "a level playing field to negotiate with dominant platforms."

Cicilline used the attack on Google as prelude to announcing that he is reintroducing the “Journalism Competition and Preservation Act," which he had submitted last year. The bill would create safe harbor for news publishers to negotiate business arrangements collectively with Google, Facebook and other platforms. Cicilline said his subcommittee's hearings will "build a record to document anti-competitive behavior to develop a deep understanding of these markets in exploring every tool for preventing" abuses by platform operators.

The News Media Alliance (formerly known as the Newspaper Association of America, and prior to that as the American Newspaper Publishers Association) quickly commended Cicilline's plan, calling it an effort toward assuring "fair compensation for use of news content" from publications.

FCC Preps for 5G, FTC Ready to Take on Vertical Integration

Carr opened his presentation praising 5G by noting that, "Some carriers are telling us we already have it" -- a line that drew a bemused, knowing chuckle from the audience. Carr said, "We're now beginning to see" the long-promised convergence of services "in practical ways." He predicted that 5G "will unleash...new waves of innovation."

Much of Carr's speech focused on the "real challenge" from China, which he said has deployed 5G at five times the pace of the U.S., a timely comment in the midst of the Huawei controversy. He stopped short of promising special consideration for U.S. 5G projects, but he cautioned against establishing policy barriers.

"I want to let the private sector compete" without restraints from local government agencies, on topics such as tower deployment, he said. Carr stressed that, "2019 will be the year of 5G," which will trigger "massive infrastructure" construction and "lots of new jobs."

FTC commissioner Rebecca Kelly Slaughter used her time in the spotlight to refute the "prevailing belief" of recent years that vertical mergers are good.

"We have to look skeptically at all the claimed benefits of vertical mergers," she said. Federal review of merger plans should make "parties substantiate the benefits... and we should bring enforcement actions if we believe" actual performance does not match the promises.

Assistant Attorney General Makan Delrahim, who heads the Justice Department's antitrust activities, also acknowledged the need for new ways to evaluate mergers. He cited recent Google acquisitions, especially those involving advertising programs. Delrahim sought to align it with the current Department of Justice evaluation of broadcasting mergers, and how they may affect advertising operations.

Delrahim indicated that future examinations could assess online and broadcast advertising within a local market as direct competitors, despite the platform differences. He said, "New entrants are important" and emphasized that "light regulation" is vital, although, "We have to be very careful" about each. In response to a question about "How did tech get so big?" the antitrust chief replied, "Big isn't necessarily bad" — especially if it creates a product that consumers want, he said.

Delrahim also opened the discussion of privacy, cautioning that his "biggest concern" about privacy legislation is that the legacy companies will be able to shape the discussion and eventual policy-making. Based on his experience with their skills, they could create barriers that will impede start-ups and maintain privacy regulations from which the existing companies will benefit.

Data Privacy: National or State Protections?

Rep. Suzan DelBene (D-Washington), a member of the House Ways and Means Committee and the Internet of Things Caucus and co-chair of the Women's High Tech Caucus, said Congress "has a responsibility" to assure that consumers have a clear understanding of what happens to their data.

Her remarks followed a series of SOTN presentations about the fragmentation of privacy policies, with very strict ones emerging at the state level, such as the California Consumer Privacy Act. Panelists could not agree on whether such rules will put excessive burdens on companies and whether the standardized measures can be enforced. Several speakers urged Federal action lest conflicting state privacy rules create a diametric dilemma for companies that operate in multiple jurisdictions.   

As for the allied matter of cybersecurity, Rep. Jim Langevin (D-R.I.) called for a national framework for assuring the safety of all segments of the network infrastructure, from artificial intelligence to weapons security. Langevin, a member of the House Armed Services Committee, the Cybersecurity, Infrastructure Protection and Innovation Subcommittee and co-chair of the Congressional Cybersecurity Caucus, emphasized the need for training and expanding the cybersecurity work force and for coordinating government/private sector activities.

Eighty different committees and subcommittees on Capitol Hill now have some jurisdiction over cybersecurity, he explained. "As Congress, we will have to move with greater agility, including oversight and reform" to stave off the growing potential attacks.

The U.S. Department of Justice has given a heads up on its plans to appeal the June U.S. District Court decision that paved the way for the completion of AT&T’s $108.7 billion merger with Time Warner, claiming in a court filing that the presiding judge in that case ignored “fundamental principles of economics and common sense,” in approving the deal.

U.S. District Court Judge Richard Leon ruled on June 12,  after a six-week trial that the government had failed to prove its case that the merger would not be in the public interest.

Related: AT&T Completes Time Warner Purchase 

AT&T completed its merger with Time Warner two days later, on June 14, but agreed to hold the Turner assets, including CNN, TNT and TBS, separately until Feb. 28, 2019, in case the Justice Department decided to launch an appeal.

Leon had urged the government not to appeal his decision, but on July 12, Justice said it would seek to have his ruling overturned. 

In a brief filed with the U.S. Court of Appeals for the District of Columbia Circuit Monday, Justice said that most vertical mergers are pro-competitive or competitively neutral, but AT&T-Time Warner is different in that it would meld a top programmer and distributor.

“This merger’s combination of Turner’s competitively significant programming content with the vast distribution footprint of DirecTV, among other circumstances, makes this the exceptional vertical merger whose effects are to lessen competition substantially,” DOJ said in its filing.

DOJ had argued in the past that the merger would allow AT&T to substantially raise prices, would increase the potential for programming blackouts and would give AT&T an advantage over other distributors. All of those arguments were rejected by Judge Leon.

Related: Justice Pushes for Expedited AT&T-Time Warner Arguments 

But DOJ said the Judge failed to recognize a fundamental principle of business: that companies would do everything possible to maximize profits.

“The district court’s determination that Time Warner would not exercise increased bargaining leverage post-merger also erroneously rejected evidence that a merged AT&T-Time Warner would maximize profits of the firm as a whole by imposing higher programming costs on rival distributors,” DOJ said in the filing. “The court’s analysis rested on a fundamental misunderstanding of the principle of corporate-wide profit maximization: it treated the principle as a question of fact that must be proved ‘reasonable’ in light of the record evidence.”

AT&T has vowed to fight the appeal, and in a statement showed no signs of giving up the battle.

“Appeals aren’t ‘do-overs,’” said AT&T general counsel David McAtee in a statement. “After a long trial, Judge Leon weighed the evidence and rendered a comprehensive 172-page decision that systematically exposed each of the many holes in the Government’s case. There is nothing in DOJ’s brief today that should disturb that decision.”

AT&T is expected to file its own brief with the D.C. Circuit by Sept. 20. Both sides are scheduled to submit final briefs in October, at which time oral arguments would begin. 

WASHINGTON — The Supreme Court decision on credit card fees notwithstanding, tech giants such as Google and Facebook could face antitrust scrutiny from the Justice Department if they are deemed too anti-competitively big or powerful when viewed through a lens of consumer welfare.

Related:  Supremes Decision Could Give Tech a New Edge

In a speech at a Federalist Society conference, antitrust division chief Makan Delrahim said at the core of antitrust law is that “enforcers [such as Justice] and courts continue to rely on the latest economic tools in order to improve their understanding of what may, or may not, constitute harm to competition and, ultimately, to consumers.”

He pointed to the Microsoft case of two decades ago.

“You may recall that around that time, many had argued that antitrust had no role in the dynamic software industry, and that Microsoft could not possibly violate the antitrust laws as a matter of conservative ideology,” he said.

Microsoft had argued that bundling its Explorer web browser and Windows operating system was an innovative new product. Judge Thomas Penfield Jackson saw it as a monopoly, and Delrahim agreed.

He said that not only was the case decided correctly, but that it was a testament to the idea that “the consumer welfare standard remains the goal, while our economic tools and their applications to new business models and digital markets continue to evolve.” Delrahim credited that approach to Judge Robert Bork as outlined in his 1978 book, The Antitrust Paradox, the 40th anniversary of which the Federalist Society was celebrating.

The News Media Alliance is calling on Congress to give its members the power to negotiate collectively with edge behemoths so they can claim some of the ad dollars bypassing them on their way to Google and Facebook.

In an op ed Monday (Feb. 26) in the Wall Street Journal, Alliance president David Chavern said that Rep. David Cicilline (R-R.I.) plans to introduce a bill that would give news publishers an antitrust safe harbor that would allow such collective negotiation with "big tech platforms."

The Alliance represents about 2,000 publishers, mostly newspapers.

Related: FTC Could Cast GAze on Big Tech

"The news business is suffering," Chavern wrote, "but not because people don’t want news. They do—more than ever. The problem is that the money generated by news audiences flows mostly to Google and Facebook, not to the reporters and publishers who produce excellent journalism."

He said that digital duopoly now grabs 83% of all digital ad revenue growth and 73% of U.S. digital advertising, according to a CNBC report.

“Facebook and Google have become the primary and de facto regulators of the news business, and governments around the world are starting to recognize the danger,” Chavern said, while the Federal Trade Commission failed to act on a 2013 inquiry into the pair's "anticompetitive practices," he said, adding that the least the U.S. government can do is get out of the way and let news outlets try to protect themselves and their audience.

The timetable for the government's suitagainst the proposed AT&T-Time Warner merger in the U.S. District Court for the District of Columbia is taking shape.

Related: DOJ Suing to Block AT&T-Time Warner Deal

There will be a Dec. 21 status hearing before Judge Richard Leon to go over scheduling issues, procedures and the like.

No big news is expected out of that hearing.

The trial is scheduled to begin March 19, 2018, unless the sides can settle before then.

Justice wants AT&T to spin off the Turner programming assets, arguing they give the combined company the incentive and opportunity to disfavor competitors.

AT&T and Time Warner have signaled such a spinoff is a nonstarter and offered up what amounts to their own behavioral conditions, though Makan Delrahim, who heads the antitrust division signaled Justice would be looking for more divestitures and fewer behavioral conditions, suggesting the latter remedy was over-regulatory, as well as essentially allowing an illegal merger under conditions that were hard to monitor.

Analysts say AT&T’s declaration that it would offer distributors arbitration when Turner carriage deals expire—and its promise of no blackouts for seven years—if its acquisition of Time Warner goes through answers one of the government's biggest objections to the deal.

AT&T disclosed the offer on Tuesday in response to the Justice Department’s suit looking to block the merger on antitrust grounds.

Related: AT&T, Time Warner Accuse DOJ of Selective Enforcement

In a research note Wednesday (Nov. 29), MoffettNathanson Research analysts Craig Moffett and Michael Nathanson called AT&T's arbitration and no-blackout gambit clever.

“In a single commitment, AT&T has gotten to the very heart of the DOJ’s case,” the analysts say. "This commitment captures the very essence of the so-called 'non-exclusivity provisions' of the erstwhile Program Access Rules about which we have written so frequently in the past.

“And by making the commitment irrevocable, they have alleviated the take-it-or-leave-it nature of the decision that would otherwise have faced Judge Leon,” Moffett and Nathanson say. “This both reduces pressure on Judge Leon – he no longer has to consider the deal as if it has no behavioral remedies whatsoever, as would have been the case absent this commitment – and increases it, as it now becomes much harder to reject the deal when AT&T is committing to exactly the same behavioral remedy to which Comcast committed (and for the same amount of time).”

The analysts say it would be tough for the Justice Department to argue that AT&T would be able to raise the wholesale price of its content to competitors when it is agreeing not to use the weapon that gives it the most leverage, and most hurts consumers.

Haier America Trading, the U.S. operating unit of China's Haier Group, a TV and appliance manufacturing company, has filed an antitrust lawsuit against LG Electronics, Samsung Electronics, Panasonic, Philips, the Columbia University Trust Committee and MPEG LA for "monopolization" of ATSC (Advanced Television Systems Committee) patents and for "conspiracy" to force Haier to pay a higher license fee to use the technology, which is at the core of the digital TV standard used in the U.S., Mexico, Korea and other countries.

Zenith Electronics, LG's U.S. subsidiary which holds patents, is also named in the suit.

The antitrust lawsuit, filed quietly in New York last week, is seen as retribution for the lawsuit filed in March by MPEG LA, the patent pool licensing organization. MPEG LA accused Haier of breaching its agreement to pay the ATSC licensing fees. Haier had deemed the fees ($5 per set) unfair and announced last year that it would cease payments at the end of 2016. The ATSC receiver royalty dropped to as low as $1 in January. Haier claims that the ATSC license fee is "150%-200% higher than comparable technology licenses in Europe."

Haier alleges that the "unreasonable pricing" does not reflect the falling price of ATSC tuners. It also charges that MPEG LA has "attempted to maintain its excessive royalty rate by adding 'broadcasting' patents, which it characterizes as "improper royalty stacking."

Some observers believe that Haier's antitrust lawsuit could mark the beginning of legal battles against its competitors, especially the Korean companies LG and Samsung.

Related: Roku to Keep Haier’s Roku TVs Updated

News of the lawsuit emerged in Korean business publications late last week. Spokesmen and attorneys for all of the companies contacted by Multichannel News, including Haier, LG, Samsung, MPEG LA and ATSC, either declined to comment on the current case or failed to return calls.

The case only deals with the original ATSC digital standard; it does not involve the emerging ATSC 3.0 standard.

In its 48-page complaint and request for a jury trial, Haier contended that patent holders cited in the suit hindered fair competition by colluding with MPEG LA. Industry observers told Multichannel News that they didn't understand why Haier picked on the five organizations that are members of MPEG LA; nine of the member companies have patents on various ATSC features.

Overall, 38 organizations belong to MPEG LA, including CableLabs, Cisco, Apple, Google and Dolby, none of which are involved in Haier's complaint.

Haier had 3.4% worldwide TV set market share in 2016, slightly higher than its 2015 share, according to Statista. By comparison, the global shares for other major TV makers in 2016 was 21.6% for Samsung, 11.9% for LG Electronics and 5.6% for Sony.

“MPEG LA along with LG, Samsung, Philips, Panasonic and other licensors have conspired in restraint of trade to affect, raise, fix, maintain, and stabilize prices in the downstream product market by demanding an excessive, non-FRAND royalty rate for the ATSC standard,” according to Haier's complaint. FRAND refers to Fair, Reasonable And Non-Discriminatory terms in a voluntary licensing commitment, often used by standards organizations in patent licensing.

In its suit, Haier claims that it "attempted to negotiate license agreements ... on FRAND terms" with Samsung and LG, both of which said that it must obtain licensing from MPEG LA.

Related: MPEG LA Looking to Fill ATSC 3.0 Patent Pool

Among the 12 claims that Haier makes in its filing -- some directed at all of the defendants, others aimed at only two or three of the patent holders -- are charges of restraint of trade, nonessential patent misuse, expiration dates for the licenses and breach of "good faith and fair dealing."

Haier said it "will suffer irreparable injury" because of the alleged antitrust discrimination and asked the court for "treble damages" of the amount "to be proven at trial" for the defendants' actions.

There is no timetable for the new filing or for the MPEG LA's March suit against Haier.

The president has tapped a Justice Department vet to vet mergers as assistant attorney general atop the Antitrust division.

The White House signaled late Monday that it intended to nominate Makan Delrahim for the post.

Most recently Delrahim was deputy assistant and deputy counsel to the president, joining the DOJ in January from a Los Angeles law firm, where he had been partner.

The White House did not identify the firm, but according to OpenSecrets, which tracks the professional movements of government employees, it was Brownstein, Hyatt, which has represented Comcast, NCTA: The Television & Internet Association and Dell, among others.

Before that, during the George W. Bush Administration, Delrahim was deputy assistant attorney general for the DOJ's Antitrust division and the Attorney General’s Task Force on Intellectual Property. He is also former chief counsel on the Senate Judiciary Committee.

Justice's Antitrust Division gets most of the Hart-Scott-Rodino antitrust reviews of media mergers, including its current review of the AT&T-Time Warner merger, which Trump, as a candidate, threatened to try to block. In the interim, the pro-business, anti-regulation Trump has come more to the fore, raising the odds that that threat was more about his anger at the media in general than an anti- merger philosophy.

Consumer Watchdog has asked the Federal Trade Commission to file suit against Google on antitrust grounds over its Android operating system.

The call came after the European Union initially concluded this week that Google had abused its dominant position in search by putting restrictions on Android device manufacturers and mobile broadband ISPs in violation of EU antitrust rules.

Consumer Watchdog says Google has the same power and employs the same practices in the U.S. "“Our antitrust enforcers need to step up and do their job instead of letting the Europeans do it for them,” said John Simpson, privacy project director for Consumer Watchdog.

The FTC investigated Google's search practices but closed that investigation in 2013. There was talk earlier this year on Capitol Hill about asking the FTC to reopen that investigation given new concerns about Google favoring its own content in local search.

The Computer & Communications Industry Association—whose members include Google, Microsoft and Yahoo!—sent up a "be careful what you wish for" warning flare following the EU decision. “The [European] Commission needs to be careful, as challenging the contractual provisions that allow open source operating systems to compete against proprietary software can backfire. If not careful, the Commission could harm competition, not foster it.

“While we can appreciate the European Commission’s desire to be vigilant about investigating competition issues, the market for apps and services is extremely competitive," CCIA said. "At first blush, it is difficult to see the contracts identified by the Commission as being competition problems. In fact, they have clear procompetitive motivations."

Technicolor’s acquisition of Cisco Systems’ consumer premises equipment unit isn’t off to the best of starts.

Brazil's competition authority, CADE, said it has fined Technicolor and Cisco Systems BRL 30 million (US $7.2 million) for “gun jumping" on the transaction prior to CADE’s approval.

Technicolor and Cisco Systems announced the closing of the $600 million transaction on November 20, 2015, in which Technicolor took over Cisco’s Connected Devices unit, which makes set-tops cable modems and gateways.  

“The integration of the Cisco Connected Devices assets is starting immediately and the strategic collaboration agreement between Technicolor and Cisco is now moving into the implementation stage,” they said in the press release, adding that the transaction “has closed in all operating geographies, with the exception of Brazil, where closing remains subject to local approvals, and Colombia where Cisco Connected Devices’ operations have been carved-out pending a decision by the antitrust authority.”

CADE referenced that PR in its gun-jumping fine announcement, holding that excerpts from the release were “considered sufficient proof of gun jumping.”

"In addition, Cade discovered the incident on their own, having been notified by the company just three days after the publication of the press release," Cade reporting commissioner for the case, Paul Burnier, said, according to an English-translated version of the Cade announcement.

CADE said another question was raised by the “carve-out” agreement referenced by the companies – “ a contractual term with the intention to isolate the effects of a global transaction in jurisdictions where the transaction has not yet been approved by antitrust authorities,” CADE explained, adding that most antitrust authorities don't accept them because they usually aren't effective and are difficult to monitor.  

Cade said Cisco and Technicolor have agreed to pay the fine. Cisco and Technicolor have been asked for comment.

Update: A Cisco spokesman responded Thursday with this comment:

"Technicolor and Cisco acted in good faith when we isolated Brazilian operations during the transaction’s close, believing we could meet all global antitrust requirements and complete the transaction in Brazil when local regulatory approval was received. Both companies proactively reported the transaction close and carve out to CADE, and cooperated fully with CADE’s related investigation.

We acknowledge CADE’s announcement yesterday and accept the terms of the settlement. Both Technicolor and Cisco respect local law, and view the terms of the settlement as an additional commitment to our operations in Brazil." 

Brazil, he added "is an important market for Cisco, and we are very committed to the market’s long-term success." 

Update: Technicolor issued this statement on Friday (Jan. 22): 

"The Brazilian market is extremely important to Technicolor.  We are committed to being a good corporate citizen in this market. Based on the absence of antitrust issues with United States, Canada, Netherlands, Ukraine and Colombia, Technicolor was confident about receiving regulatory approval from Brazilian authorities.

"The decision by Technicolor and Cisco to carve out of Brazil – in order to respect and accommodate the Brazilian regulatory authority's timelines -- was made in good faith. It was publicly announced as well as reported to CADE. Technicolor accepts the terms of the settlement, and respects Brazilian laws."

Technicolor and Cisco announced the deallastJuly, noting that it also calls for them to create a strategic partnership that will allow both companies to develop and deliver next-gen video and broadband technologies, with a specific focus on Internet of Things (IoT) solutions and services. A long-term patent cross-licensing agreement is also factored into the deal.

Prior to the closing, Technicolor tapped former Alcatel-Lucent exec Luis Martinez Amago as president of its Connected Home division for the North American market, supporting Technicolor’s business with the region’s cable operators, telcos, satellite service providers and OTT players.

The proposed $2.1 billion merger of Arris and Pace Plc took a step forward after receiving unconditional clearance from The Superintendence of Industry and Commerce in Colombia.

Arris said that approval follows pre-conditional clearance in Germany, South Africa, and Portugal. Arris and Pace shareholders have already approved the deal.

Arris said completion of the deal remains subject to the expiration or termination of the waiting period under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the satisfaction of similar merger control requirements in Brazil, along with the satisfaction of other customary closing conditions.

Arris expects the deal to close in late December or or the first quarter of 2016 amid additional requests from the U.S. Department of Justicethat could pin conditions on the deal that call on Arris to divest part of the optical transmission business of the combined company. 

The U.S. District Court for the Southern District of New York has denied Viacom's petition to dismiss Cablevision's antitrust suit against the programmer.

Cablevision sued Viacom in February 2013 for requiring it to pay for 14 networks Cablevision said its customers did not want -- including Palladia, MTV Hits and VH1 Classic -- in order for it to have access to "must-have" “core” nets like MTV and Comedy Central.

Cablevision says that is block booking and a per se violation of antitrust laws.

"To survive a motion to dismiss," said the court," "a complaint must plead 'enough facts to state a claim to relief that is plausible on its face.," the court concluded.

Cablevision has met that standard, and that the block booking claim is properly subject of a market power analysis--Viacom argued that the block booking doctrine had been abrogated, but the court was not buying it.

“We are gratified the Court has ruled that Cablevision has stated a valid antitrust claim against Viacom for illegal channel tying," Cablevision said in a statement. "We continue to believe that Viacom’s tying of its popular networks to carriage of its lesser-watched ancillary networks is illegal, anti-consumer, and wrong. We look forward to further pressing our case at the next stage of the proceeding.”

"Cablevision has..pleaded facts sufficient to support plausibly an inference of anticompetitive effects," the court said. "For example, Cablevision alleges that if it were not forced to carry the Suite Networks, it 'would carry other networks on the numerous channel slots that Viacom’s Suite Networks currently occupy.' Cablevision also alleges that Cablevision would buy other “general programming networks” from Viacom’s competitors absent the tying arrangement. Viacom’s motion is therefore denied to the extent it seeks dismissal of Cablevision’s per se tying claim for failure to allege anticompetitive effects."

That means the court agrees that those are at least potentially anticompetitive effects.

Cablevision also asked for an injunction to prevent Viacom from conditioning the licensing of the core networks on licensing the other nets. Viacom said that demand was unfounded and unfair. The court said it was too early in the process to address that Cablevision demand, but did not rule it out down the line.