AuthorLao, Marina


The power of today's tech giants has prompted calls for changes in antitrust law and policy which, for decades, has been exceedingly permissive in merger enforcement and in constraining dominant firm conduct. Economically, the fear is that the largest digital platforms are so dominant and its data advantage so substantial that competition is foreclosed, resulting in long-term harm to consumers and to the economy. But the concerns extend beyond economics. Critics worry, too, that the large platforms' tremendous economic power poses risks of social and political harm and threatens our democracy. These concerns have prompted discussions of ways to reinvigorate section 2 of the Sherman Act.

One of those suggestions is no-fault monopolization, a theory that dispenses with the conduct requirement of monopolization. Much of the appeal of no-fault monopolization, first considered in the late 1960s through the 1970s, is that it would sidestep the difficult "bad act" and "anticompetitive effects" requirements of section 2, which are particularly difficult to prove in digital platform markets, for reasons that the Article addresses.

This Article discusses why no-fault monopolization would he inadvisable, though stronger section 2 enforcement is long overdue. Rather than adopt an approach with uncertain results that might do more harm than good, I suggest more modest changes tailored to specific problems that could nevertheless reinvigorate section 2. They include greater vigilance in identifying improper conduct, and seeking a steady widening of the scope of exclusionary conduct through bolder choice of cases, moving toward greater flexibility in the analysis of anticompetitive effects, and overcoming some of the skepticism surrounding the legitimacy and value of qualitative evidence, including intent evidence.

TABLE OF CONTENTS INTRODUCTION I. THE NO-FAULT MONOPOLIZATION MOVEMENT, 1969-1980 II. THE AGE OF DIGITAL PLATFORM MARKETS AND NEW BRANDEIS A. Conservative Antitrust from 1980 B. Dominance of the Largest Digital Platforms: Network and Lock-in Effects, Enhanced by Personal Data C. The New Brandeis Frustration with Section 2 Doctrine 1. The Conduct Requirement and the Consumer Welfare Standard 2. The Failure of Antitrust, Including Section 2, to Address Social and Political, and Other Noncompetition Harms III. NO-FAULT REFORM EFFORTS WOULD BE MISPLACED A. Erosion of the Economic Foundation Underlying No-Fault Theory of Section 2 Liability B. Other More Appropriate and Less Risky Instruments for Addressing Social and Political Ills C. Other Vexing Issues 1. The Complexity of "Power": Monopoly Power in a Relevant Market vs. Absolute Measures of Power ("Bigness") 2. The Problem of Discretion 3. The Need for Legislation IV. REINVIGORATING SECTION 2 THROUGH EVOLUTION OF DOCTRINE AND POLICY A. Focus on Identifying Exclusionary Conduct, and Seeking an Incremental Expansion of the Scope of Exclusionary Conduct B. Greater Flexibility in the Analysis of Effects 1. Drawing Inference of Consumer Harm from Evidence of Harm to the Competitive Process 2. Elevating and Promoting the Theory of Long-Run Innovation Harms, and Creating Presumptions C. Respecting Qualitative Evidence D. Intent Evidence CONCLUSION INTRODUCTION

After decades of judicial and agency permissiveness in merger enforcement and in the application of section 2 of the Sherman Act, (1) the law that prohibits monopolization, many are calling for a new antitrust equilibrium. (2) Industrial concentration has risen steadily in many business sectors in the United States, (3) as have firm profits. (4) The evidence also suggests a weakening of competition (5) and at least a link between increased market power and widening economic inequality in this country. (6) Emergent economic literature, moreover, reveals that large firms can wield monopsony power in the purchase of labor in local markets,' which could partially explain the stubborn stagnation of wages in the past few decades even when, as now, unemployment is low. (8)

Much of the widespread anxiety over excessive private power is focused on the largest digital platforms--primarily Facebook, Google, Amazon, and Apple. (9) Economically, critics fear that these dominant platforms could foreclose competition by quashing innovation through various strategies such as application cloning (10) or acquisitions of nascent start-ups. (11) A related fear is that the large platform companies could use their troves of user data to gain early insights into consumer trends, which would allow them to identify and forestall nascent competitive threats. (12) Or, their data advantage could simply be so substantial that it forecloses entry. (13) But the concerns extend beyond economics. Critics worry, too, that the large platforms' persistent dominance poses risks of social and political harm and threatens our democracy. (14)

Unsurprisingly, this angst over the power of the largest tech firms and its potential economic and political implications has prompted discussions of ways to strengthen merger control (15) and to revive section 2, a law that has lost much of its potency since the early 1980s. (16) One of the ideas mentioned in connection with section 2 approximates "no-fault" monopolization--that is, dispensing with the conduct requirement of a monopolization cause of action. (17) The no-fault theory, which appears to underlie Senator (and presidential candidate) Elizabeth Warren's recent policy proposal to break up Amazon, Google, Facebook, and Apple, (18) was first considered in the late 1960s through the 1970s. (19) Initially endorsed by many antitrust intellectuals of the day, including Donald Turner, Philip Areeda, Oliver Williamson and others, a number of ambitious no-fault initiatives introduced during this period ultimately failed. (20)

The end of the 1970s ushered in the current modern (or conservative) era of antitrust, which favors a limited role for antitrust especially in the context of section 2, effectively ending the no-fault conversation. Courts adopted demanding standards and burdens of proof that made section 2 liability very difficult to establish. (21) And the government rarely brought monopolization cases after the 1970s, United States v. Microsoft Corp. being a notable exception. (22) This relative inactivity on the section 2 front, (23) coupled with a permissive merger policy, contributed to a perception that antitrust law is not up to the task of tackling dominance issues today, particularly those involving the largest technology platforms.

Frustrations with the limits of antitrust in this regard on the part of some critics brought forth a new movement, sometimes called New Brandeis antitrust (or sometimes, pejoratively, "Hipster" antitrust). (24) Although loosely unified by a strong distrust of the largest technology companies and a shared belief that modern antitrust law has abandoned its populist roots, New Brandeis proponents are a varied group who hold different views on how antitrust should be reformed. (25) One suggested framework carries echoes of earlier no-fault proposals, by eliminating the exclusionary conduct requirement of section 2 when excess market power is shown. (26)

Current monopolization doctrine in the United States requires proof of a firm's monopoly power in a relevant market, and its use of improper ("exclusionary") conduct to create, protect, or enhance its monopoly. (27) The conduct must also have an "anticompetitive effect." (28) A no-fault monopolization theory as a deconcentration tool for the technology platform markets would be a radical, paradigm-shifting move that would require legislative action. I argue that reform efforts in this direction would be misplaced for various reasons, at least at this time. If the suggestion is economically motivated, then it would be prudent to have some reliable evidence, not just a rough judgment, that the economic benefits of dispersing the platforms' power outweigh the losses, before any attempt is made to restructure some of the country's most creative and successful companies. (29) If the motivation is to address a variety of noneconomic harms, such as threats to our democracy, including the problems of "fake news," privacy intrusions, and rising economic inequality, then it is doubtful that no-fault, or antitrust generally, is a particularly good tool to address these serious, but noncompetition-related, problems. (30) Tax, labor, privacy, and consumer protection laws; and education, job training, social insurance, and other governmental programs directly tailored to the problems at issue would likely be more effective while at the same time imposing fewer collateral costs. (31)

Furthermore, to the extent that simplicity is the goal, a no-fault approach may prove disappointing as it raises some troubling questions for which there are no easy answers. For example, important issues relating to when no-fault rules should be triggered, what the appropriate measure of power should be, and whether discretion in enforcement should be permissible are all difficult to resolve, rendering the solution hardly as effortless as it might seem. (32)

A better solution, in my view, would be to retain the conduct and effects requirements, but work toward a more activist vision of section 2 through an evolution of law and policy in a more pro-plaintiff direction. (33) This could mean greater vigilance in identifying improper conduct and seeking a steady widening of the scope of exclusionary conduct through bolder choice of cases. (34) Moving toward greater flexibility in the analysis of anticompetitive effects, an approach that was implicitly endorsed in United States v. Microsoft Corp., (35) would be helpful as well. Additionally, the current ineffectualness of section 2 stems largely from the high burdens of proof imposed on plaintiffs, combined with the inherent difficulty of proving dynamic harms. (36) In light of that...

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