Too Big to Nail? Legislative Solutions to Big Tech Monopolies in an Age of Relaxed Antitrust Enforcement.

• Author: Alen, Samuel T.

"These companies are all hailed for their innovation and progressive ideals, seemingly ushering in an age of friendly, people-loving multinational corporations ... Why would these companies try so hard to appear socially progressive? After all, most people already expect large corporations to favor profits over customers. The answer is that these carefully constructed images are shrewd and calculated decisions made in response to the threat of antitrust enforcement." (1)

1. Introduction

   As major technology companies--such as Amazon, Apple, Meta, and Google--continue to increase their market share and influence through horizontal acquisitions and vertical integration, concerns of monopolization have grown alongside them. (2) Businesses and consumers alike suffer the effects of monopolization because controlling an ecosystem of products and services forms barriers to competition for producers and subverts meaningful consumer choice. (3) Further, the rise of social media as the dominant form of interpersonal communication implicates free speech and free press issues when a handful of companies make up virtually the entire public forum while holding the power to temporarily--and even permanently--silence users without running afoul of the First Amendment. (4)

   Following the Sherman Act's passage in the late nineteenth century, the government's first attempts to limit consolidation and anticompetition showed little reservation. (5) Despite the Supreme Court interpreting a "rule of reason" into the Sherman Act in the early twentieth century, the executive branch remained vigilant in its enforcement actions for most of the twentieth century. (6) The late twentieth century and the start of the twenty-first, however, saw a marked relaxation of the standard, especially regarding vertical agreements and integration. Now, in the vacuum of diluted policy and nonenforcement, large tech companies have built momentum toward monopolization virtually unchecked. (8) Nonetheless, legislators introduced a series of bills in June 2021 to reinvigorate and modernize U.S. antitrust law by addressing, among other issues: the use of vertical integration to favor a company's own products on a platform it controls, disfavoring competitors' products; the conflicts of interest surrounding vertical integration that incentivize the discriminatory practices in the first place; and companies' efforts to lock in customers by imposing restrictions on data transferability between platforms. (9)

   This Note analyzes the historical successes of antitrust law enforcement and how the series of court decisions to veer away from strict enforcement has led to tech giants' expansion at the expense of consumers, businesses, and society. (10) After outlining the purpose and early implementation of antitrust policy, this Note contrasts those early court decisions and the spirit of early antitrust laws with later cases that relaxed the standards of enforcement. (11) This Note then details the current issues raised by tech giants, focusing on how antitrust law has failed to meaningfully correct their harmful anticompetitive conduct. (12) Having identified the companies' problematic behaviors, this Note then outlines the pending legislation introduced to combat those behaviors. (13) Focusing on particular policy ideas within the bills--protecting consumers and small businesses and promoting innovation and fair competition--this Note explains how Congress can correct failures in antitrust enforcement by implementing these new policies. (14) Finally, this Note concludes by proposing that, if enacted, these policies would: (1) benefit smaller businesses by reducing barriers to entry and encouraging fair competition; (2) benefit consumers by removing some of the free choice restrictions created by tech ecosystems; and (3) to some extent

   Antitrust and Platform Monopoly, 130 Yale L.J. 1952, 1955-56 (2021) (describing divided Congress and DOJ relying on existing litigation-based approach while updated method needed). ameliorate points of political division, as both parties have interests--albeit differing ones--in curbing tech monopolies' influence. (15)

2. History

   1. Origins of Antitrust Law

      1. Objectives of Early Antitrust Laws

         The term "antitrust" derives its literal meaning from opposition to monopolies, or "trusts." (16) Before formal codification in American law, however, the concept of imposing legal penalties for monopolization owes its origins to English common law. (17) While colorful terms such as "dead victuals" have departed, the essential purpose of preventing businesses raising prices through monopolization has remained at the heart of antitrust-like laws throughout their history. (18) Nonetheless, proponents of a freer market--namely, the ambitious traders and businessmen of the day--consistently opposed any interference with trade both in England and the American colonies, often with substantial success. (19) Even when the citizens of the nascent states in the late eighteenth century showed strong interest in legal condemnation of monopolization, and state governments acknowledged that sentiment and enacted laws to curb monopolies, lack of enforcement led to regular evasion. (20)

         Both the people and their government representatives held a fundamental desire to codify limits on monopolies and the associated practices that raised prices, going so far as to enshrine their condemnation in multiple state constitutions. (21) This fundamental desire, though, stood at odds with an equally essential notion in American society: the freedom of contract. (22) Rising unrest in the late 1800s opposing increased inequality, however, indicated Congress must address and balance the two interests--fair competition and freedom of contract--with some form of legislation. (23) Thus commenced the genesis of American federal antitrust law via extensive debates--centered on protecting consumer welfare by keeping monopolists in check--in the 50th and 51st Congresses. (24)

         An important first step was to define the problem: What should be the central target antitrust law must focus on? (25) This definitional question required a consensus on the meaning of the term "monopoly," and the acknowledgment that companies could achieve monopolies by both predatory (illegal) means and competitive (legal) means. (26) In both the original text of Senator Sherman's antitrust bill and its heavily amended final form, the Sherman Act addressed both the "situation" of unreasonable market domination and the "type of conduct" deemed unfair and oppressive in the market. (27)

      2. Additional Antitrust Law Developments

         Before delving into historical enforcement of antitrust laws, it is productive to consider two impactful laws passed in the fifty years after the quintessential Sherman Act: the Clayton Act and the Robinson-Patman Act. (28) The Clayton Act arose from congressional sentiment that the Sherman Act was too lenient. (29) The Clayton Act made illegal particular anticompetitive acts--such as price discrimination and anticompetitive mergers--in contrast to the much broader provisions of the Sherman Act. (30) Further, the Clayton Act exempted labor organizations and added a private right of recovery for those harmed by monopolistic practices, thus protecting workers' rights and creating more opportunities for those negatively impacted by monopolies to seek redress. (31) The Robinson- Patman Act, like the Clayton Act, expanded antitrust protections to include small businesses in price discrimination cases, rather than just consumers. (32)

   2. Progression of Antitrust Policy Enforcement

      1. Early Enforcement

         The early cartel cases brought under the Sherman Act--typically in the oil and railroad industries--demonstrated the Court's initial hardline approach to enforcement of the nascent law. (33) The Supreme Court strictly interpreted section 1 of the Sherman Act, forbidding even reasonable restraints on trade. (34) The Court dismissed the question of whether everyday business contracts--like non- compete agreements or restrictions ancillary to the sale of property--were violations by concluding that such restraints on competition were outside the scope of the Sherman Act and were therefore excluded from the absolute prohibition on trade restraints. (35)

      2. Bifurcating Antitrust into Per Se and Rule of Reason Analyses

         The early twentieth century saw the Sherman Act's application split into two categories of analysis: per se (applying to inherently illegal conduct) and rule of reason (allowing reasonableness as a factor in evaluating questionable conduct). (36) Throughout this period and into the mid-twentieth century, the Court relegated strict per se enforcement to a few defined categories of conduct-- price fixing and territorial divisions. (37) The per se rule, though applying to progressively fewer cases, retained its value by offering clear guidelines both to companies aiming to avoid violation and to judges trying to apply a very broad statute since judges could spare themselves the fact-heavy rule of reason analysis by simply identifying the presence of a forbidden agreement. (38) The widely applicable rule of reason emerged as the dominant method of antitrust analysis because, as long as price fixing or territorial allocation had not occurred, the purposes and effects of the conduct required a fine-tooth, fact-specific comb to spot the types of violations Congress intended to target. (39)

      3. Vertical Restraints, Mergers, and Tying

         i. Vertical Restraints

         Vertical restraints--or limitations to competition along the manufacture- distribution-retail chain--were likewise initially subjected to the strict per se rule. (40) Just as use of the per se rule waned in horizontal cases, so too did the rule fall out of favor in vertical cases, which followed a similar path toward the more popular rule of reason economic analysis. (41) In vertical cases where the Supreme Court explicitly overruled a...