Internet companies too big? FTC chair says more than market share counts

Maureen Ohlhausen, acting chair of the U.S. Federal Trade Commission. (Photo: Gage Skidmore)

SAN FRANCISCO — A speech Tuesday by the acting chairperson of the Federal Trade Commission pushes back, hard, against a growing clamor among those who fear Internet companies are getting too big.

Speaking at Georgetown University in Washington D.C., Maureen Ohlhausen said that the public must ask itself whether unelected government bureaucrats are the best qualified to pick the winners and losers in high tech markets.

The speech comes as a narrative has begun to emerge among some critics who charge that companies such as Amazon and Google have become so large they are monopolies that threaten competition.

As Ohlhausen put it in her speech, the fear is that “we are spiraling towards a dystopian future where a few giant technology companies will ultimately gain sustained control over our economic lives.”

She emphasized that as acting chair of the Federal Trade Commission, the views she expressed were her own and do not necessarily reflect the views of the FTC.

Nevertheless, the speech before the Global Antitrust Enforcement Symposium clearly showed her, and presumably some at the Commission's, view of antitrust regulation through a lens that extends beyond market share.

Current U.S. antitrust regulations focus on consumer welfare. Ohlhausen said technological platforms don't necessarily win simply because they had a big portion of the market at one time.

As an example, she cites concerns over AOL's merger with Time Warner, which back in 2000 raised specters of a competitive bottleneck in content, as AOL controlled much of the dial-up Internet market. Today it is often thought of as one of the worst mergers of the dot.com era and AOL has been completely overshadowed by other companies.

The litmus test, for her, is that antitrust enforcement must turn on the specific facts on an individual case, with the focus of actual likely harm to consumers. The goal, she said, is to "protect free and open markets for the benefit of consumers."

While Ohlhausen doesn't name any company names, the two looming elephants in the room are Google and Amazon, both of which have been the targets of increasing concern by groups such as the New America Foundation and others who have accused them, respectively, of controlling what's published and destroying entire ecosystems of distribution.

The argument of those concerned about the increasing power of certain digital platforms over daily life is that they can both control the information and goods consumers have access to and, once their monopoly is assured, raise prices because they will have no competition.

U.S. antitrust rules have come to focus solely on the potential damage to consumers, so if prices remain low, the damage to distributors and other middle-men, and the potential damage to the entire nation's commercial infrastructure, is not considered.

Lina Kahn, a fellow at the non-partisan New America Foundation’s Open Market initiative, told USA TODAY in June that an example of the danger is that Amazon is emerging as a gatekeeper of who wins and loses in the ecommerce world because it gets to choose what sellers are highlighted on its website.

Despite that, because its choices have resulted in convenience and lower prices for consumers, it has avoided all regulatory hurdles, she said.

“It is as if Bezos charted the company’s growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them. With its missionary zeal for consumers, Amazon has marched toward monopoly by singing the tune of contemporary antitrust,” Kahn said.

Ohlhausen's argument is that as long as monopolies are gaining customers through merit rather than by short-circuiting competition, they are acceptable, an agreement she echoed from a ruling on a 2000 anti-trust suit brought against Microsoft.

She also argued that even if a company were to artificially lower its prices to drive other companies out of business, as soon as it sought to raise prices when it had the field to itself, other companies would pop up online to steal its market. "As long as entry remains, possible predation makes no economic sense," she said.

Ohlhausen ended her speech by saying that she was neither "a champion of today's leading Internet firms nor their foe."

Rather, she, and the FTC, have "vigorously supported policy positions that they sometimes love and sometimes hate."

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