Key GOP lawmaker lays out ‘non-starters’ for Big Tech antitrust reform

By Lauren Feiner | CNBC | October 6th, 2020

A key GOP lawmaker who has been an ally to Democrats on the House Judiciary antitrust subcommittee plans to release his own report laying out “common ground” and “non-starters” for antitrust reform in technology, according to a draft copy of the report obtained by CNBC.

The report by Rep. Ken Buck, R-Colo., first obtained and published by Politico, is written in response to the report led by the Democratic majority culminating a 16-month investigation into AppleAmazonFacebook and Google. While Buck said he supports many of the findings of the majority’s investigation and recommendations, he told CNBC in an interview Tuesday he wrote the response because he could not sign onto the majority report, which includes proposals he believes to be too broad.

The main report has not yet been released after two delays involving new information about Facebook and further discussions between Democrats and Republicans, a source told CNBC on Monday.

A spokesperson for subcommittee Chairman David Cicilline, D-R.I., declined to comment on Buck’s draft report. The Democratic majority plans to brief Democratic presidential nominee and former Vice President Joe Biden’s team on the report’s findings Tuesday, CNBC confirmed after Axios first reported the plans.

Buck said in the interview he is “very pleased” with how antitrust enforcers in the Trump administration have “moved forward.” He said “there are some questions” about how a Biden-Harris administration  would approach the issues, referencing Vice Presidential candidate Sen. Kamala Harris’ reported close ties to tech executives as a Democrat from California. The Biden campaign was not immediately available to comment.

The House panel’s investigation was launched in June 2019 as a bipartisan endeavor. Buck has repeatedly said in interviews it has remained a coordinated effort. But his report shows that even a Republican who has seemed most open to reform is reticent to endorse some of the bolder proposals Democrats are considering.

The divergence leaves an opening for the powerful tech companies to oppose legislation that could place greater regulatory burdens on their businesses or even force them to break up. But Buck told CNBC Tuesday that if anything, his response should concern tech companies even more because it shows there is significant agreement on many key recommendations.

“I think it’s clear that there will be a bipartisan effort to make reforms in the antitrust area,” Buck said, “And if I was one of the tech companies I would see this week of Democrat and Republican responses as very concerning because there is clearly a bipartisan conclusion that these companies are acting anticompetitively and that [there’s] bipartisan consensus on many of the reforms that are necessary.”

In the draft report, Buck wrote that he agrees “in principle” on the findings of the report, but “cannot endorse all of the legislative recommendations offered by the majority.”

“We will work with the Chairman in a bipartisan fashion to help enact the legislative solutions where we can agree,” the draft report says. “However, we are concerned that sweeping changes could lead to overregulation and carry unintended consequences for the entire economy. We prefer a targeted approach, the scalpel of antitrust, rather than the chainsaw of regulation.”

In the draft report, Buck lays out the following as areas of common ground he’s found with the Democratic report:

  • Additional resources for antitrust enforcers.
  • Creating rules that ensure users can transfer their data between platforms.
  • Shifting the burden of proof in merger cases to make it more possible for antitrust agencies to bring successful merger challenges.

Also under the “Common Ground” section, Buck lays out areas where he’d like to see more expert feedback, according to the draft report, before installing potentially onerous regulations. These areas for further exploration include:

  • Leveraging monopoly power from one market to threaten a separate market.
  • Predatory pricing.
  • Revitalizing the “Essential Facilities Doctrine,” whereby a company with monopoly power must allow competitors “reasonable use” of a facility it owns if those competitors rely on it to succeed in the marketplace.
  • How platform monopolies should be allowed to make design changes to their services.

Buck also lists several “non-starters” in the discussions:

  • A “Glass-Steagall for the Internet,” or a type of structural separation that would force large data firms to distinguish different lines of business. Buck calls this “a thinly veiled call to break up Big Tech firms,” according to the draft report and writes, “We do not agree with the majority’s approach to pass a Big Tech Glass-Steagall Act,” referring to the 1933 law that separated commercial and investment banking.
  • Eliminating arbitration clauses and removing limits on class action lawsuits. The draft report says the idea is “rife with unintended consequences,” saying arbitration provides important protections for small businesses, though “there is room for Congress to reevaluate some portions of arbitration clause policy.”
  • Creating a “regulatory regime” to create rules governing “equal terms for equal service” to prevent platforms from self-preferencing. The draft report claims this would reduce innovation and harm small businesses.
  • Removing “barriers” to private antitrust enforcement by excluding antitrust arbitration clauses from contracts. The draft report says Congress should focus on removing barriers for antitrust agencies to move forward with enforcement, rather than do so for private enforcement.

In addition to the “non-starters,” Buck’s report criticizes the majority report for not tackling the issue of potential censorship and political bias online. Buck told CNBC Tuesday that alleged platform bias was a “symptom of the overall problem” with tech competition. Conservative lawmakers say tech platforms such as Facebook and Google-owned YouTube stifle conservative speech, an allegation the tech companies have repeatedly denied.

Buck’s report shows that regardless of the areas of agreement, there will be a long road ahead for lawmakers to reform antitrust laws, even as the companies they have investigated face potentially imminent competition lawsuits.

“It would be a mistake to look at my response as a criticism of the majority report,” Buck said. “I think that it’s natural that Republicans have perhaps a different point of view on some of the recommendations than the Democrats, but overall,  I think you really see a united effort to deal with the problem of anticompetitive behavior by these Big Tech companies.”