Applying anti-trust law to Big Tech will take years to figure out

Applying anti-trust law to Big Tech will take years to figure out
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The potential of a forced breakup of Facebook, Amazon and other organizations can be attributed to our modern formulation of antitrust law, which focuses on actual harm to consumers rather than a theoretical threat to market competition.

For the first 50 years of antitrust law, the question judges asked was whether fair competition was possible when one or a handful of large companies dominated the market place. For instance, a pie maker in Utah complained that large national bakeries could fill freezers and shelves with pies at low prices, effectively pushing smaller companies to the side. The U.S. Supreme Court sided with corporate bakers, in the case of Utah Pie Co. v. Continental Baking Co., in 1967.

Then a ground-breaking legal scholar named Robert Bork considered the matter and concluded that anti-trust law — as applied at the time — was not really about making sure there was healthy competition. Instead, it skewed to protect companies that chose not to compete. Were the companies at the mercy of one or two dominant players when it came to price and choice? The idea took hold, and that is the way regulators, lawmakers and judges look at antitrust laws.

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Fine-tuning how to apply anti-trust law against Big Tech will take years. In the meantime, the Justice Department is reviewing a pending merger between two of the largest printing companies in the United States, Quad Graphics and LSC Communications. The antitrust division is asking whether the creation of a single company capable of printing 1 million editions of weekly magazine will mean publishers will be at the mercy of only one printer.

The reality is more complicated; print is in real trouble. Many publications exist only online now. With fewer daily newspapers, there are fewer vehicles for printed advertising. Many of us have shelved printed books and use e-readers. The stream of ads that bombard our devices, based on algorithms created by Facebook and similar companies, have taken the place of full-page ads in newspapers and magazines.

In response, a lot of print companies have been forced to close their doors or agree to be acquired by larger firms over the last 10 years. As the trend toward electronic publishing continues, consolidations are the only way the print sector can purge its overcapacity and streamline its operations.

And why are the companies doing this? To offer customers more options and more choices. Integrating the capabilities of existing companies leads to more efficiency. That often means more reliable and competitively priced services for customers. Consolidations also make it easier to adopt new technologies for production and distribution.

In essence, it is customers that are benefitting from the industry’s quest to survive.

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But even with the mergers and downsizing in the print sector, there are still hundreds of mid-size and large printing companies. As the industry rearranges itself in the era of digitization, a lot of these companies band together to get pieces of large print jobs. Publishers of books, catalogues, as well as the government, have learned to allot sections of these jobs to various printers. Accordingly, the idea that the Quad-LSC merger will leave only one large print company in place is simply inaccurate. If anything, the merger might be essential to the industry’s ongoing reinvention. Large, mid-sized and smaller printers all have a stake in this. And so do the newspaper and magazine publishers who sincerely want it to be economically feasible to preserve print.

The juxtaposition between the government’s growing resolve to curb the power and control of online giants and its scrutiny of the Quad-LSC merger is stark. In the case of Facebook, Google, Amazon and the others, customers have become the product.There are real questions about whether consumers have actual choices or are simply steered into fulfilling their algorithmic profile. In printing, customers can readily save money by joining the march to online platforms, or they can work with printing companies on a mutually agreeable way to keep the presses rolling.

Antitrust law is not a servant to theoretical concepts of competition that go back a century or more. It serves the interest of consumers. Today, we are in the midst of an information revolution — we are figuring out how content is consumed. Quad, by merging with LSC, is trying to give customers choices and prices that reflect today’s market realities. That is the essence of competition. Printers are competing with technological platforms that many see as hegemons. Government lawyers should not stand in their way.

Gerard Scimeca is an attorney and vice president of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.