Antitrust and Tech: What a Trump Administration Should Change
One of the Biden administration’s most significant impacts on U.S. technology and innovation has been its aggressive shift in antitrust enforcement, with Big Tech companies its most prominent target. How much this focus might change under the second Trump administration will depend on many yet-to-be-determined factors, but there are a number of prospective, substantial changes that advocates for free markets and innovation can hope for.
State of Play in Major Tech Antitrust Cases
First, it is worth quickly revisiting the state of play in major tech-focused antitrust cases, as the new administration will inherit a number of active federal lawsuits against the largest technology firms. These cases include a Federal Trade Commission (FTC) enforcement action against Amazon for how the online giant ties its retail and fulfillment platforms together via Amazon Prime, and a long-simmering case against Meta that seeks to unwind its decade-old acquisitions of Instagram and WhatsApp.
The U.S. Department of Justice (DOJ) Antitrust Division, for its part, has two open cases against Google—one for its supposed monopolization of internet search, and the other for its supposed monopolization of digital search advertising—and a case against Apple for its allegedly illegal monopolization of smartphones by refusing competitors equal access to certain products and features.
While it would be unusual for a change of administration to produce major adjustments in cases that are already underway, new leadership at both the DOJ and FTC could potentially affect the government’s willingness to settle cases rather than further pursue time-consuming and expensive trials. It is also possible that a new administration might seek different remedies in any ongoing cases that courts find in the government’s favor.
Khan-servativism
This brings us to perhaps the most consequential aspect of the new administration’s antitrust direction. It is highly likely that current FTC Chair Lina Khan, whose official term of office expired in September, will be replaced, assuming she does not step down first. Khan has become the face of the progressive Neo-Brandeisian movement, which seeks to expand antitrust enforcement drastically in order to dismantle corporate power across the economy. Along with her counterpart at DOJ, Assistant Attorney General Jonathan Kanter, Khan has rapidly scrapped and replaced key agency resources, such as merger guidelines and pre-merger filing rules. Additionally, Khan’s FTC has generally de-emphasized economic analysis and consumer welfare as guideposts for when to bring antitrust complaints.
Khan’s aggressive approach to scrutinizing mergers and pushing the boundaries of existing antitrust law has won her praise, not only from progressives on the Democratic side of the aisle, but also from some populist conservative Republicans, including Vice President-elect J.D. Vance. However, critics worry that Khan’s aggressive approach to expanding the FTC’s power has undermined decades of careful bipartisan consensus at the Commission, raised repeated concerns about low morale and mismanagement at the FTC, and over-extended the agency’s authority to the point that it may invite courts to more strictly limit the Commission’s reach. Indeed, the backlash against Khan’s activist tenure as FTC chair has caused enough alarm among congressional Republicans that it seems likely that President-elect Donald J. Trump will be compelled to nominate a replacement.
But even after Khan departs, it is too early to tell whether the Trump administration will return to a more mainstream approach to antitrust enforcement based on the long-accepted consumer-welfare-centric model or head down a more populist road. Even if the former position wins out, it is worth noting that several of the existing antitrust complaints against the tech companies actually began during the first Trump administration, and that lingering populist antipathy toward Big Tech make it unlikely to expect a total about-face in the pursuit of those cases.
What is Done by Fiat Can Be Undone
Even if Trump 2.0 leans into a more expansive, populist approach to antitrust enforcement than have previous Republican administrations, there are many recent changes in antitrust enforcement that a pro-business administration should seek to reverse. An easy first step would be to rescind President Joe Biden’s “Executive Order on Promoting Competition in the American Economy,” which encouraged a whole-of-government implementation of a “big is bad” approach to competition policy, and which explicitly invited the FTC to stretch the limits of its rule-making and antitrust enforcement authority.
Although the Khan era’s institutional and reputational damage to the FTC will take time to repair, most of the more radical changes under Khan’s reign can and should be quickly undone. Most important is reestablishing a degree of certainty surrounding merger reviews, so that businesses can resume merger and acquisition activity without undue delay and with a clearer understanding of what might get them flagged for antitrust review. To achieve this goal, the new joint FTC and DOJ merger guidelines should promptly be rescinded and replaced. This is especially important action for promoting continued investment in technology startups, which rely heavily upon the option of acquisition by larger firms as an exit strategy for prospective investors.
In addition, under Khan’s tenure, references to consumer welfare were largely scrubbed from the merger guidelines and the FTC’s mission statement, and this should be quickly reversed. Such a change would refocus U.S. antitrust efforts back within the law and economics framework that has proven successful for decades. Similarly, the FTC’s 2022 policy statement that set forth an unduly expansive vision for regulating competition via Section 5 of the FTC Act (and which eliminated bipartisan language from 2015 affirming the consumer welfare standard) should be revoked.
Standing Up Against Europe’s Competition Craziness
Another important step that the incoming administration could take would be to immediately prohibit U.S. antitrust-enforcement agencies from encouraging, and even collaborating with, European competition authorities. Over the past decade, the European Commission has approved several new regulatory frameworks meant to impose their own vision for the digital economy upon the global technology sector. Instead of trying to push back on this European Union (EU) regulatory overreach, the Biden administration largely either stood by or sought to imitate their approach.
In particular, the 2022 EU Digital Markets Act (DMA) represents nothing less than an attempt to subjugate the world’s largest technology companies—nearly all American—to the kind of competitor-welfare antitrust framework that has hamstrung European innovation in the digital sector. As a bonus, the DMA provides another route for cross-Atlantic bureaucrats to extract billions of dollars in fines from U.S. companies for business practices that are legal under U.S. antitrust law.
As the House Oversight Committee’s recent staff report on “The Federal Trade Commission Under Chair Lina Khan” has revealed in detail, the FTC not only has moved its own antitrust enforcement toward an imitation of the DMA, but agency authorities actually have coordinated with EU competition officials and cheered on efforts to target U.S. tech firms. In fact, according to the report, the FTC was so heartened by Europe’s efforts that it also “has relied on European authorities to effectuate its enforcement goals where its authorities under U.S. law likely do not provide the FTC’s desired outcomes.”
Coordinating with foreign bureaucrats on how to target American companies is well beyond the pale, and the new administration should emphatically warn FTC and DOJ enforcers that their duty is to enforce American laws for American consumers, not to serve as enforcement lackeys for Europe’s extraterritorial designs.
Encouraging U.S. Leadership in AI Development
If for no other reason, the incoming Trump administration should seek to restrain unnecessary antitrust intervention into our tech sector (whether by U.S. or EU authorities) in order to ensure that government does not endanger U.S. leadership in the development of the next-generation artificial intelligence (AI) and machine learning systems that could define the economy of the future. Many of the very same technology companies that progressives and populist conservatives are eager to break up are among the global leaders in developing the computational power necessary for AI preeminence.
Such restraint could not come too soon. Already, the FTC has opened an antitrust investigation into Microsoft’s relationship with AI pioneer OpenAI, while the DOJ has launched an action against chipmaker Nvidia for its supposed monopolization of the hardware and software powering many of the world’s leading AI computational systems. The incoming administration should examine these inquisitions into our leaders in one of the world’s most important emerging technologies and only pursue these investigations further if there is a serious, necessary case to be made. Otherwise, diverting the attention and resources of our homegrown AI leaders to an endless antitrust investigation is a remarkable self-own and a gift to foreign competitors, especially China.
Hopefully the incoming administration will consider these changes and more to U.S. competition policy in order to promote continued U.S. leadership in technological innovation.