President Joe Biden last week signed an executive order calling for regulatory changes to spur competition across the economy as a way of fueling the post-pandemic recovery. But the underlying problem remains that the nation’s antitrust laws are outdated — as illustrated in recent court decisions failing to rein in Big Tech abuses because they don’t fall neatly under laws that were written generations ago to address abuses in industries like oil and steel.
Legislation pending in Congress seeks to remedy that, updating sometimes century-old antitrust laws to specifically address the issues raised in social-media markets and in other new realms. The campaign is being driven primarily by Democrats, but Republicans who claim to cherish the magic of the marketplace and the positive benefits of economic competition should be on board as well.
Biden’s sprawling executive order, unveiled Friday, calls on federal agencies to update their guidance on examining proposed mergers and other activities in industries like banking, airlines and pharmaceuticals. It urges regulators to allow prescription imports from Canada to increase competition in drug pricing. And it would give farmers and car owners the right to repair their vehicles (or have their own mechanics do it) without voiding warranty protections. That issue has been a big one for farmers who don’t want to be at the mercy of manufacturers’ repair schedules.
These and other provisions could indeed foster more competition in the economy, but because it’s an executive order, its scope is limited. It can’t take on the biggest competitive issue in the economy right now: the stranglehold of the Big Tech sector by a few mammoth players. The challenges of that issue were dramatized last month when a federal judge threw out two antitrust lawsuits against Facebook that had been brought by the Federal Trade Commission and more than 40 states.
The plaintiffs alleged the social-media giant holds a monopoly over social networking. The judge’s rejection of that argument was less an exoneration of Facebook than an illustration of the inadequacy of the nation’s antitrust laws to address issues unique to the modern tech sector.
For example, one measure of traditional antitrust violations is whether customers get hit with inflated pricing — but Facebook’s users generally don’t pay anything at all, since the network’s business model is primarily advertising-based. The judge noted that factor as a difficulty in proving an antitrust claim against the company. Reformers counter that when social-media companies lack adequate competition, users can face harm in non-financial ways, including the misuse of private information.
The point of the pending legislation is to update antitrust laws to recognize those kinds of factors so customers who get fed up with a given platform’s performance have viable competitors to consider. That’s the very essence of open competition, and it should garner bipartisan support.
This editorial originally appeared in the St. Louis Post-Dispatch.