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Biden finds an ally against Big Tech

July 13, 2021, 6:02 PM UTC

The Biden administration is taking on U.S. tech giants, first by installing Federal Trade Commission chair Lina Khan—an antitrust hawk—and now by signing a sweeping executive order that tackles antitrust and tech acquisitions.

And the European Union has taken notice.

The E.U.’s top technology regulator, Margrethe Vestager, praised President Biden’s recent executive order and new FTC chair Lina Khan during a Washington Post Live event on Monday.

“We do not have a global competition enforcer, but we have global companies,” Vestager said, when asked if companies like Facebook and Amazon were too big to regulate.

While the U.S. has typically let Amazon, Facebook, Google, Microsoft, and others grow and command markets with little intervention, the E.U. has been left to regulate consequences of that growth. And it has been effective at that role, shown in how quickly regulators grappled with the importance of personal data protection and instituted General Data Protection Regulation (GDPR) across the E.U.

But so far, both U.S. and E.U. antitrust action against tech giants has been largely ineffective. After four years and $10 billion in disputed fines, the E.U.’s antitrust lawsuits against Google are still being fought in court. Google has already accounted for the loss of cash for the fines in its 2018 and 2019 financial filings, as it was set aside in a holding account as part of the agreement. It then made a $41 billion profit in 2020, effectively erasing any doubt that even exorbitant fines would meaningfully change how the company operates.

In the U.S., the FTC almost got its antitrust case against Facebook thrown out entirely by failing to even define Facebook’s market share, and now has until the end of July to refile its main complaint.

Even when regulators have “won,” there’s little to show in terms of meaningful change. Let’s take the Google example further, and look at one of the first antitrust cases that have actually stuck. The company settled with French authorities for prioritizing its own ad-selling tools in its ad-campaign dashboard in early June, to the tune of $270 million. A drop in the proverbial bucket. But the real victory, those regulators said, were the business practice changes: Google was forced into a three-year agreement to give competitors more data and have its ad metrics platform integrate a little better with others. There was no admission of guilt, and the settlement is only binding in France.

This is great for French ad-tech firms, but it does little to actually address Google’s behavior at large, or even beyond 2024.

However, French authorities also levied a $593 million fine on Google today for failing to reach deals with news sites to license the use of news content. The government gave Google a two-month window to negotiate future contracts.

It’s unclear what international cooperation may look like in this context, but the U.S. and E.U. both have complimentary strengths. The E.U. has no shortage of bullishness and political apparatus to pursue large antitrust cases, and has shown it can force through enormous, forward-thinking legislation to rein in tech companies. GDPR shows that tech companies are willing to bend to accommodate the E..U’s 450 million residents, rather than ceasing operation in that economic zone entirely.

And while the U.S. has taken a comparatively glacial approach to tech legislation, it has a new mandate from the Biden administration’s latest executive order to regulate past mergers that have let these companies become so dominant.

At the very least, we might get a definition of a monopoly for an age of products that are used by billions of people every day.

Dave Gershgorn

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When Amazon and the feds fight, Netflix wins. President Biden's executive order targeting tech mergers may put extra scrutiny on Amazon's $8 billion acquisition to buy MGM Studios. That would be a relief for Netflix, writes Hollywood Reporter's Eriq Gardener. Since the MGM purchase mainly would fill Prime Video's shelves with more exclusive content, a block of that acquisition lets Netflix keep a competitive advantage.

Here's more from the article:

If the FTC takes Biden’s tip and pulls back on Trump-era guidelines for vertical mergers, that could hurt Amazon’s prospect for acquiring MGM and transforming its Prime service into Netflix’s toughest competitor. (Not that FTC chair Lina Khan needs any more reasons to stick it to Amazon.) And if the DOJ begins scrutinizing proposed mergers for how they impact labor markets, that could hold ramifications for WarnerMedia-Discovery or any other future tie-up that could threaten Netflix’s ability to win the streaming wars.



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