Reforming Antitrust and Regulation for Big Data Platforms Will Require Drawing a Fine Line Between Good Business and Bad Behaviors

New Antitrust Regulations Addressing “Big Tech” Monopolies Should be Based on How the U.S. Met Similar Challenges Over a Century Ago

Washington, D.C. — Reforming the nation’s century old antitrust regulation is critical to ensuring a fair marketplace, and limiting the harm monopolistic practices can have on American consumers. However, the dire need for updated legislation does not mean Congress should pass legislation that is not carefully thought out for the long-term.  Today, the Consumer Federation of America is releasing a new report, Pragmatic, Progressive Capitalism, which provides a comprehensive review of the successes and failures of previous antitrust efforts.

“It is not easy to draw the line between good business practices and bad market behavior; however, the efforts of Louis Brandies in the past, linked with Joseph Stiglitz analysis of the digital revolution provides a blue print for thoughtful, effective antitrust legislation,” said Dr. Mark Cooper, CFA’s Director of Research and report author.

“In examining the size and scope of ‘Big Tech’ we are at a critical junction. The steps we take today can either further inhibit free market competition or open the door for more pro-consumer competitive products and services,” added Cooper.  For that reason, CFA has released a new report identifying the faults of the current legislation and how to solve this ongoing, and pressing, issue.

The report examines the decades around the turn of the 20th century, when the U.S. adopted the two pillars on which a uniquely American and remarkably successful political economy was built – the Interstate Commerce Act of (ICA) 1887 and the Sherman Act of 1890. These two acts were quickly extended to the telecommunications sector, which is at the heart of the contemporary debate, with the Mann-Elkins Act of 1910, which extended the authority of the ICA to telecommunications.

The report dives into the complexity of the current situation and concludes that the policy principles needed today to prevent big data platforms and big broadband networks from strangling and distorting the development of the digital communications sector are the same principles applied to ensure the success of the 2nd Industrial Revolution in America a century ago. The Brandeis-Stiglitz model of pragmatic, progressive capitalism meets the challenge.

  • It seeks to construct guardrails and guidance to promote competition and innovation in decentralized markets and orient capitalism in a direction that promotes and furthers the fundamental economic, social and political values of society, while ensuring consumer benefits and providing consumer protection.
  • The process must be pragmatic and flexible to accommodate the dynamic economy, based on analysis of the real-world functioning and impact of each sector, implemented by experts who have not only the skill, but the authority and resources to implement policy to pursue the goals.
  • Political developments should be democratic and participatory, endeavoring to have political development support the evolving economic structure.

The details must be worked out through antitrust and regulatory practice, but clear statements of goal, reform of processes and identification of the factors to be considered will speed and direct the development of oversight to protect consumers, while preserving the dynamic, digital economy.

  • Common law is the basis for Antitrust; it should be the basis for regulation.
  • Clear obligations should be imposed, e.g. a duty to deal (nondiscrimination)
  • Statutory and precedential obstacles to vigorous enforcement by antitrust and regulatory agencies should be removed.
  • Statutory mandates should be avoided, but oversight authorities should be allowed to impose “strict” prohibitions where evidence justifies such actions.
  • As a starting point, utility-like regulation is too restrictive on entrepreneurial activity, while horse and buggy competition misunderstands the nature of the technology and minimum efficient scale.
  • The discussion of regulation also suggests a “new” form of participatory governance, to enhance the involvement of citizens in rulemaking, which is a clear update of Brandeis’ support for industrial democracy.

By articulating the logic of progressive capitalism and demonstrating its success over the course of a century, this paper endeavors to give the electorate confidence in understanding that we do not need to reinvent or reimagine capitalism. We need to get back to what worked so well for so long in the past.  The long history shows that the model of pragmatic, progressive capitalism has not only been remarkably successful over a century and a half, it is as American as apple pie.

Contact: Mark Cooper, 301-384-2204