Yahoo Finance’s Alexis Christoforous, Brian Sozzi, and Alexis Keenan discuss the House Democrats’ plan to break up big tech, and what impact it will have with John Yun, Director of Economic Education at the Global Antitrust Institute at George Mason University.
BRIAN SOZZI: Welcome back to the First Trade. House Democrats are outlining their plan to break up Big Tech. In a new 449-page report, they're calling for dramatic reforms that could permanently change Apple, Amazon, Facebook, Google, and others, Companies they say have too much power.
With us now is John Yun. He's the director of Economic Education at the Global Antitrust Institute at George Mason University. He's also a former acting deputy assistant director at the FTC. Yahoo Finance's Alexis Keenan, who's been covering this story very closely for us, is also here with us as well. Let me start with you, John. Does it seem like the right way to fix Big Tech, in your view?
JOHN YUN: So, yeah, you know, you have to give them credit for the thoroughness in which they've looked at everything. But it kind of is surprising, given the amount of weight of evidence they've received on both sides that it was so one-sided. So to answer your question, I don't think that's very well served if we sort of look at one narrow view, which is everything they're doing is anti-competitive.
It didn't seem like there was any nuance. So I would say that type of approach is most likely going to get us wrong answer.
ALEXIS KEENAN: Hi, John, Alexis Keenan here. Now, you testified before the subcommittee back in September more than a year ago now, and you had said that you think the current laws that are on the books as well as the enforcement mechanisms through the FTC, the DOJ are sufficient to handle the mergers and acquisitions that come before these big tech companies. Yet, the subcommittee really came down hard on the FTC. Did they change your opinion at all as to whether a legislative fix is needed or more of an enforcement fix?
JOHN YUN: So, yeah, I did-- I wasn't convinced. Because given the level of evidence that they presented in the report, certainly, and maybe there's others that will be produced later, I didn't think it was at the level to show that the FTC has been making errors or the DOJ. Now, they're going to do something, it looks like, coming up.
But in terms of the past, their 2013 Google investigation, which was a big part of what they scrutinized the FTC-- the DOJ, and the FTC looked at the Facebook-Instagram acquisition. Neither of those episodes, to me, really captured the full flavor of what the agencies did. Because it's sort of easy to look ex post and say the result wasn't quite right when exanatide agencies I think are really doing a ton of sophisticated work.
So I wasn't really convinced by the report and their dismissal of the agencies.
ALEXIS CHRISTOFOROUS: John, what about the argument that these companies are a monopoly? I mean, on their face, I think folks would agree. But when you look at their arguments, Amazon's going to say, we're not even the largest retailer in the world, right? That belongs to Walmart. Apple actually only controls a fraction of the cell phone market if you look at it worldwide, right, outside the US. So is it right to call these companies a monopoly?
JOHN YUN: It might be. So what I always ask my students in my classes is, they're a monopoly over what? What exactly are we saying that they're a monopoly or controlling? Now, they label something like, for example, they say outright that Facebook is a monopoly over social media. My question then is, what do we mean by that?
Social media is quite a big bucket. It includes YouTube and TikTok and Snap and Pinterest and a host of other types of platforms. So when I see that, I just-- I get worried. And Alexis, you mentioned Amazon and its commerce and a monopoly over third party sellers online. You know, we're starting to really narrow what exactly they're a monopoly over.
Take BMW, they're a monopoly over BMW cars. And I don't mean that to be flip, but the more we narrow these areas of commerce, of course they control that. And so the more relevant question to me is, is it a significant area of commerce in which they control And prevent others from competing? That's, to me, the larger question.
ALEXIS KEENAN: Hi, John, I also want to ask you about the narrow reading that the courts have been allegedly applying to their evaluation of anti-trust cases. The committee said that, look, without more power given to us through our common law system so that we can actually call these things anti-competitive monopolies, our hands are tied behind our back. What do you say to that?
JOHN YUN: Goodness, you know, it's hard to say, you know. There's different perspectives of the law and what is hampering them. To me, current anti-trust jurisprudence allows complete flexibility for agencies, courts, and third parties to bring action if they find true anti-competitive conduct. I think what's happening, rather, is saying, look, the typical channels that we go through, we're not able to prove anti-competitive harm. Consequently, we need to supplement that with legislation or changes to the law and presumptions.
And I find that that's kind of puzzling. It's kind of like moving the ball to the 20-yard line and seeing if they can score a touchdown. I think they should move the length of the field if they want to score the touchdown, and I think that gives due process to the companies and also protects consumers from arbitrary third party complaints against competitors they just can't beat.
So I worry about those types of, sort of, external imposition of rules on an antitrust law that has developed since the Sherman Act in 1890 in a way that I think is fair to almost all the parties involved.
BRIAN SOZZI: All right, let's leave it there. John Yun, director of Economic Education at the Global Antitrust Institute at George Mason University. Good to see you, and good to see you again as well, Yahoo Finance's Alexis Keenan.