Congress is poised to consider new antitrust regulations against Big Tech firms. The left and right both hold bones of contention with social media and tech firms, particularly on the issue of how they moderate user content on their platforms.
The irony is that the right and left are in direct conflict with each other; conservatives want Big Tech to stop suppressing center-right speech while the liberals want Big Tech to do more to censor or even silence center-right voices.
As we’ve written about previously, both houses of Congress are considering bills that aim to punish Big Tech using antitrust law. Some of the measures have advanced committees with bipartisan support.
Make no mistake that a few bills will not fix the content moderation concerns that most Americans have. Instead, they would expand the federal government’s regulatory power in ways that won’t protect market competition but will likely reduce the services consumers enjoy and depend on as well as raise prices.
Furthermore, there’s a desire to shift the decades-long standard that guides antitrust law from being consumer-centric to something else. If history is any indicator of what increased regulations will do, Americans will come to regret this legislation.
History lesson: Greater regulations lead to higher prices
Phil Gramm, a former chairman of the Senate Banking Committee, and Christine Wilson, a Republican-appointed commissioner at the Federal Trade Commission, penned a must-read Wall Street Journal op-ed today that examines the history of antitrust regulation. In short, greater regulation increased prices for consumers while deregulation delivered lower prices:
By the mid-1970s, evidence of failed regulation was overwhelming. America’s largest railroad, Penn Central, went bankrupt from overregulation. Planes flew half-empty, and travelers paid more for federally regulated flights than similar intrastate flights. President Jimmy Carter, Stephen Breyer and Ted Kennedy led bipartisan rejection of Progressive-era regulations for railroads, trucking, communications and airlines.
Deregulation unleashed a wave of innovation. The cost of moving goods fell by an astonishing 50% as a share of gross domestic product over 40 years. Airfares dropped 50% on a per mile basis, while air cargo surged from 5.4% of shipments to 14.5% by 2012, making air transit for people and packages a routine part of American life. Similar miracles occurred in telecommunications as landlines and phone booths faded. As the government was deregulating markets to the benefit of consumers, the courts and antitrust enforcers adopted the consumer-welfare standard with similar results.
Antitrust bills will raise costs for American consumers at the wrong time
Inflation is at a 40-year high. Now is not the time for Congress to implement policies that will hike prices.
Yet, a new study by NERA Economics, commissioned by CCIA, finds these proposed antitrust bills would cost the U.S. economy up to $319 billion over time. Those costs would ultimately be passed on to consumers and business users of the five targeted companies—Google, Apple, Facebook, Amazon, and Microsoft— “in the form of higher retail costs and the loss of free and valued services.”
And as we have written about, the report confirms that the bills would require certain tech companies “to divest, discontinue, or fundamentally restructure some of their service offerings” such as Amazon Prime. Changes to or even the end of Amazon Prime would harm consumers by up to $22 billion per year–a loss of $148.47 for each current Amazon Prime member.
Tech innovation has been nothing short of miraculous over the past few decades. Amazon went from selling online college textbooks to delivering anything to anyone just about anywhere at very low costs on the same-day for some items. Facebook progressed from a list of college student headshots on a white screen to one of the biggest consumer marketing companies while offering individuals, businesses, and social causes a platform to find and cultivate relationships with customers, supporters, and donors worldwide. These platforms have fueled entrepreneurship in America while making it possible for individuals up and down the economic ladder and across the political spectrum to communicate.
That said, innovation has not come without costs and challenges. Big Tech companies–some more than others–have proven their willingness to use their platforms in ways that censor and suppress certain ideas and viewpoints. Whether its the concerted suppression of the Hunter Biden laptop story during the 2020 election cycle or Covid-19 information during the pandemic, the blatant bias exhibited by some of these companies has been detrimental to the public trust not a safeguard of our elections or health.
Nonetheless, a tremendous amount of free speech occurs every day. When it comes to content moderation, do we really want lawmakers controlling Big Tech companies and telling them companies what content to permit and what to censor or silence (beyond that which supports criminal activity)? And, is using antitrust enforcement–meant to protect market competition–the right tool to address content moderation?
Bottom line
American families and small businesses are battling rising prices right now. New antitrust bills will increase government regulation and that in turn will drive prices up and popular services out. Conservatives will not be guaranteed better speech protections either. This is not an outcome that anyone in Congress should support.