Breakdown: Antitrust’s hipsters go mainstream

WASHINGTON (Reuters Breakingviews) - This hipster is going mainstream – at least, in the usually un-hip world of competition regulation. Advocates of a broader definition of antitrust, factoring in issues like data usage and inequality, are on the ascent in Washington. If they get their way, big technology firms will suffer. First, the progressive thinkers will have to contend with some antitrust squares in high places.

Signage is seen at the Federal Trade Commission headquarters in Washington, D.C., U.S., August 29, 2020.


Competition watchdogs in the United States tend to focus on the so-called consumer welfare standard, which identifies anti-competitive behavior as that which hurts customers, typically by raising prices. But around 2017, progressives began to push for a more expansive view that would take into consideration the way companies’ behavior impacts socio-economic problems like low wages and unemployment.

This was “hipster antitrust,” claimed former Federal Trade Commissioner Joshua Wright and ex-Republican Senator Orrin Hatch. By using a term that generally denotes someone self-consciously anti-establishment, they derided competition policy that they say tries to address societal ills, lacks traditional economic analysis and generally sees big as being bad without any evidence.

Lina Khan is one who might argue otherwise. The Columbia University law professor is in the frame for nomination to the panel of antitrust watchdog Federal Trade Commission, according to Politico. She has written that the consumer welfare standard falls flat with online platforms like, where low prices help to entrench dominance, and that data and other factors should also be considered.

Khan also contends that monopoly pricing paid by consumers benefits powerful companies and then eventually ends up as capital gains and dividends for the 1%. Airline mergers and agricultural monopolies and oligopolies have raised consumer prices above competitive levels but lowered prices that suppliers can charge below market levels, she argues, transferring hundreds of billions of dollars each year to the economic elite.


A wider antitrust lens is helpful in understanding the dominance and market effects of companies like Facebook and Amazon. Although Facebook is free for users, consumers have still been hurt through the misuse of their data, such as when consulting firm Cambridge Analytica obtained the data of millions of Facebook account-holders without their consent.

Barriers to entry also become higher in technology because of network effects in which platforms become more valuable as they pick up more users, and companies like Amazon and Facebook become gatekeepers that other companies must please to get access to those customers. That breeds conflicts of interest. For example, Amazon is a platform for third-party sellers but also competes with them with their own branded products.

But the big tech firms aren’t the main causes of inequality and unemployment – and to tie such issues together risks alienating lawmakers who are in other ways keen to see Silicon Valley regulated more robustly, like Hatch. Amazon founder Jeff Bezos is one of the richest people in the world, but then so is investor Warren Buffett, whose investment firm Berkshire Hathaway is a big shareholder in Apple but grew rich through low-tech businesses like insurance and railways.


If Khan is confirmed to the FTC, she will be a guiding force at the agency that reviews acquisitions by Facebook, Amazon and others. There are five commissioners altogether, but under President Joe Biden, Democrats would hold the majority, including the still to be named chair.

In some areas, she will find a receptive audience. Even Republicans, including Donald Trump’s antitrust chief at the Justice Department Makan Delrahim, have argued for including control of data and conflicts of interest in antitrust reviews – for example, forcing companies to divest data as part of merger concessions. The FTC can influence company behavior through its antitrust guidelines, deal reviews and enforcement cases.

The ascent of the hipster threatens to put a de facto moratorium on acquisitions by Facebook, Amazon and others. Last year, Facebook did 10 deals, according to Refinitiv, including acquiring customer-relations platform Kustomer for about $1 billion. Apple was even more acquisitive with 13 transactions, mostly small startups like podcast firm Scout FM, which had just three employees, according to Crunchbase.

That will hurt the big tech firms, but it’s not good news either for startups that have relied on companies like Apple for their growth. Healthcare is one sector where scale matters and young companies have already been hurt by the pandemic. Nearly 88,000 U.S. startup employees have been laid off since Covid-19 hit the United States a year ago, according to’s tracker.


The biggest threats to antitrust hipsterdom are the courts, which have tended to uphold the more narrow definition of antitrust that focuses on prices. That could help Google and Facebook, which face government antitrust lawsuits.

Then there’s Congress. Democrats may push to reform competition laws, like lowering standards for what amounts to market concentration. Big Tech is a bipartisan target, but it may still be tough to get enough agreement to push changes through since Biden’s party has only a one-vote majority in Senate votes, where bringing new issues to a ballot often requires a 10-vote margin.

That doesn’t mean Big Tech can relax. By hiring people like Khan and Silicon Valley critic Tim Wu, who joined the White House as an aide at the National Economic Council, Biden is sending a signal that sizeable acquisitions are off the menu. And while judges may still ultimately stick to the old way of sizing up antitrust abuses, regulators may be less willing to settle before cases find their way to court. For Silicon Valley executives and investors, it all adds up to a big pain in the hip.


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