Fireside Chat With U.s. Doj Antitrust Division Chief of Technology & Financial Services Section Aaron Hoag

• Jurisdiction: United States,Federal
• Citation: Vol. 30 No. 1
• Publication year: 2020
• Author: By Karen E. Silverman
• topic: Antitrust and Competition,Business of Law,Technology

FIRESIDE CHAT WITH U.S. DOJ ANTITRUST DIVISION CHIEF OF TECHNOLOGY & FINANCIAL SERVICES SECTION AARON HOAG

By Karen E. Silverman¹

The 29th Annual Golden State Institute was honored to host a fireside chat with Aaron Hoag, the U.S. Department of Justice Division Chief of the Technology and Financial Services Section, on civil antitrust enforcement and competition issues in the technology space.

MS. SILVERMAN: Thank you very much. Aaron and I worked together for a number of years on bar-related stuff and on casework, so it's my very great pleasure to have the opportunity to talk to you today.

Aaron started the antitrust division in 1997 in the mergers task force. He was briefly in the front office and then moved over to, I will also call it "net tech," but it's the technology and financial services section in 2003 and then rose to lead that section in 2016, and for any of you who have worked with Aaron wouldn't be surprised to witness his rise to leadership in that area.

Over the time that Aaron has been working in the department, the prominence of technology and technology-related questions has only accelerated, and Aaron's worked with it. So we're going to have a conversation about that. We are at a moment where antitrust and technology is probably, for the first time in my long career, an interesting social subject. We get asked at every cocktail party that we go to sort of what's going on. So we're going to talk about what's going on.

And before we talk about whether the antitrust rules and laws and enforcement practices are up to the task of technology, which they are, but I would like to ask you to address, is technology different from other industries in ways that are important to antitrust enforcement? How is technology different?

MR. HOAG: Well, first of all, let me just say thank you for having me here. It's a wonderful time to be back in San Francisco. Thank you, Peter, for having me. We worked together very closely on a trial that we did out here in San Francisco. I see some of my colleagues from our San Francisco office here today too, which is wonderful. We worked with them very closely looking at technology matters.

I also have to add my standard caveat since I'm at a career manager level that these are my own personal views today, so views, my own opinions don't necessarily affect all the policies and practices of the Department of Justice.

But let me turn to your question, which is kind of a great one and great stage-setting question. I personally tend not to think of technology cases as being in some kind of fundamentally different form of antitrust law than the rest of the antitrust law we practice, but I do think that there are some characteristics that we see in the technology markets that can sometimes come up in non-technology markets, but maybe are a little more frequent there.

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We see certainly as a very popular topic in antitrust circumstance the presence of direct and indirect network effects and sort of the relevance that that can have for the analysis in the antitrust front. There is a lot of focus on two-sided markets, multi-sided markets and platforms, and while you can obviously see those kinds of markets elsewhere in the industry, they are very prominent in the tech space. They do have an effect on the analysis. You see the kinds of entry barriers you see in tech are certainly different in a way than they are in other markets. You don't talk about entry barriers in terms of how much did it cost to build this plan that makes this product and how many do you need to build and when you have the economies of scale. Because you're not asking yourself, is it timely and likely sufficient that someone could take this plant to make this many widgets or steel or paper or whatever. You're asking if someone can invent it, create this product, and get it out there in this marketplace.

So the kinds of questions and the way you approach those can be quite different. I also think when you see some characteristics, the level of dynamism in these markets can vary and vary widely in the tech markets. They have a reputation for being very technology innovative, and there are always new developments and new products and new things coming out into the marketplace, which can result in a lot of change, but in some markets you see maybe that even when there is a lot of innovation, you don't necessarily see different players in the market share as well. Those are a few of the factors I think what makes it a bit different.

MS. SILVERMAN: What about the one we always say too, is the speed at which technology changes. That can lead us into the next question. Obviously, I would like us to anchor a little bit of where Aaron sees the ongoing debate about how the antitrust laws really map on to from an enforcement perspective, technology markets and the standard by which we typically evaluate competitiveness and largely transactions, but also conduct. So we can talk about the consumer welfare standard, but also just the pace at which technology happens, how does that impact your thinking and what kinds of standard you use?

MR. HOAG: I think it has a significant impact when you're looking at any particular transaction, right? Because if you're looking at a particular deal, and you hear the arguments coming from both directions. Both that antitrust law is too slow, therefore, can't keep up with the pace of innovation, or that innovation is so fast—you used to hear this argument maybe a lot more than you do today, that there's so much innovation, things are taken so quickly, there's not even a need for antitrust enforcement. That's perhaps today's debate as it was back 20 years ago when I was in law school and people were just using Microsoft and the like.

MS. SILVERMAN: Right. Let's talk about the consumer welfare standard and how you're thinking about the sort of core principles, prime objectives of antitrust enforcement and how that maps onto tech questions.

MR. HOAG: Yeah, I think it continues to map very well. I mean it is a very lively topic of debate. You see folks pushing out there, pushing...