Big Tech and Antitrust

The debate over “Big Tech” and antitrust has intensified. On one side are those who consider certain Big Tech companies monopolies that reduce competition and exploit their users’ data. On the other side are those who believe that competition in the technology market is flourishing, particularly when considering a worldwide market, and that Big Tech empowers its consumers; after all, many users never pay financially for social media use.

In addition to these economic considerations, Big Tech has raised a host of social and political concerns over speech, democracy, and power. Is Big Tech suppressing speech? Should it suppress more speech? Does it even matter if private companies “suppress speech”? Does Big Tech have too much control over our elections or none at all? What power does Big Tech wield over our lives, if any?

On April 15, 2021, the Federalist Society’s Chicago Lawyers Chapter hosted a panel of antitrust experts to discuss these issues and more.


Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.

John Adams:  Good afternoon, everybody. My name is John Adams. I’m the President of the Chicago Federalist Society, and I also practice antitrust law in Chicago at Eimer Stahl. We appreciate you spending time with us today to discuss an increasingly intensified debate over antitrust law.


A few weeks ago, Major League Baseball pulled its All-Star Game out of Georgia in response to the state’s newly enacted election laws. In reply, and just this week, a group of Senate Republicans announced a bill to break up MLB’s monopoly by eliminating its statutory antitrust exemption. Their bill follows recent statements from Senator Bernie Sanders, who said to Congress that it should reconsider the same antitrust exemption after MLB interfered with Vermont minor league teams this year.


A few months before, during the heat of a presidential election, big tech companies suppressed a New York Post story about Hunter Biden that could have embarrassed then candidate Joe Biden. Again in reply, Republican members of Congress raised antitrust concerns and held a series of hearings with the CEOs from major technology companies.


Democrats have also sounded the alarm about concentrated power in Silicon Valley firms. Last month, President Biden named big tech critics Professor Tim Wu to his National Economics Council and Ms. Lina Khan to the Federal Trade Commission. Both adhere to the so-called New Brandeis movement of antitrust law that emphasizes competition policy as a democratic check on corporate power.


This movement stands in sharp contrast to the prevailing view of consumer welfare championed by believers of the Chicago School of antitrust law. While the current norm focuses on promoting efficiency that results in lower prices for consumers, some of the New Brandeis movement believe in restructuring markets when power becomes too concentrated. 


Now, whenever Chicago School of thought or practice is challenged, us in Chicago have to host a discussion and a debate about the merits of those complaints. And we have two members on our panel from Chicago that I look forward to hearing more about. 


As we can see all around us, antitrust law has become a dominant way of analyzing and framing sweeping economic and cultural changes taking place in our country today, and the analyses and solutions proposed by law and policy makers carry no clear political or ideological labels. Conservatives, libertarians, progressives, and more all worry about concentrated power, though for different reasons and with different solutions.


Soon, our public laws and courts will take these issues of concentrated economic and cultural power head on. As Justice Thomas just predicted two weeks ago in Biden v. Knight First Amendment Institute at Columbia University, our courts will have no choice but to address how our legal doctrines apply to digital platforms and concentrated power in big tech.


So what should our courts do? How should our public laws react? What are the economic and cultural issues with big tech, if any? What power does big tech wield over our lives, if any? To help us answer these vexing questions is an excellent panel of antitrust experts who have studied all these issues and more. 


Moderating the panel is our dear friend, Professor Richard Epstein. We all know Professor Epstein well. He’s a distinguished scholar at both New York University and the University of Chicago. He is also the Director of the Classical Liberal Institute at New York University and the Peter and Kirstin Bedford Senior Fellow at the Hoover Institution. He is a prolific author and speaker on, among many other topics, antitrust, with some of his most recent work analyzing big tech companies as common carriers. Professor Epstein, thank you for joining us and moderating this esteemed panel.


Prof. Richard Epstein:  Well, thank you so much for having me. Let me first set out the rules of engagement that we’re going to do and give a cautionary note before I introduce the panelists. This is going to be kind of a round-robin operation. We’ve all agreed to have opening statements from the three panelists of about three minutes each, and then we might have some round of replies, and then some discussion, which I will moderate in a fair, impartial, neutral, and sublime manner, I hope. And then we will, at the end, open it up to the audience.


The methodological caution that I wanted to give everybody is a phrase that I’ve come to use a great deal. Whenever you’re dealing with a difficult issue which has multi facets, what you have to do to think à la carte rather than offering all from Column A and Column B. There may be tech companies that you agree with on one point and rabidly disagree with them on another point. And it would be a terrible mistake to say that, well, since I’m pro Amazon with respect to its labor policy, I have to agree with its policy with respect to books, and so forth.


We are going to split these things up into components and then put them back. And once you understand this policy, you can see why what John said is indeed correct. Since there are going to be so many cross currents, it’s very hard to take a position that favors this, that, or the other interest group. 


Now, to address these issues, what we do is we have three panelists. I’m going to talk about them very briefly. Jessica Melugin is the Director for the Center of Technology and Innovation at the Competitive Enterprise Institute. Guess what she specializes in? Asheesh Agarwal, my student. He is the Deputy General Counsel at TechFreedom. Guess what he specializes in? Dr. Hal Singer knows antitrust and regulation law. You don’t even have to guess what he’s in. And I think at this moment, at least, he’s unaffiliated. 


So what I will do is I have the three names in one order on my sheet, so Ms. Melugin, can you start us off with three well-chosen minutes of stuff? Then we’ll go to Mr. Agarwal, and then we’ll go to Dr. Singer. 


Jessica Melugin:  Okay. Well, thank you so much. It’s such a pleasure to be here with you all today. I’m going to very quickly highlight a couple of the cases that I hear most often cited and invoked to recommend further antitrust action today, and I’m going to give you, hopefully, a few things to keep in mind when you hear that done.


So we’re going to start with the granddaddy of them all, Standard Oil. And a couple things I want us to remember about the Standard Oil case is at the time of the trial, Standard Oil was already lowering its prices to consumers and increasing its output in an irrefutably dynamic sector of the economy. So right out of the gate for antitrust, we have a consumer harm question there. It would be difficult to find that consumer harm, not competitor harm, but consumer harm. The case is often referred to as a predatory price case, even though there wasn’t a lot of evidence of that offered at the trial.


But today, you see new offerings to make predatory pricing cases easier to bring. And I think the cautionary tale about that is let’s make sure we don’t create a disincentive for companies to offer the lowest possible price to consumers, especially at a moment where a lot of people’s economic situation is very fragile.


Moving on to AT&T, this is a great one because people like to talk about all the innovation that was released when we got around to breaking up AT&T. But I would like to humbly offer that it’s also important to remember that AT&T was a government created and maintained monopoly. The government protected AT&T from competition for decades, and in doing so, kept consumers away from lots of innovations. I don’t think it’s a fair parallel to say that if you broke up a Google or a Facebook, you would see the same kind of boom.


IBM, thirteen years of litigation, tens of millions of dollars in taxpayer-funded litigation, and all came to naught, not even a settlement, dropped without merit. And in the meantime, it did create an incentive for IMB to raise its short-term prices to consumers because they were worried about the threat of whatever antitrust remedy might have been applied to them. So the lesson there is beware the unintended consequences of antitrust, even with the best of intentions, no doubt.


And then I’ll just finish up with Microsoft because that’s interesting. It came after the revolution in antitrust putting economics and consumer wellbeing at the heart of the law. And I think the biggest takeaway from Microsoft—we can probably have a whole panel discussion on whether they won or lost—is that the market often moves much more quickly and in ways that it’s very difficult for regulators and courts to predict and keep up with. 


And at that, I will hope that I have obeyed the rules so far inside of three minutes, and I’ll stop talking.


Prof. Richard Epstein:  You have not committed a temporal trespass. So we are grateful to you for everything that you’ve done. And being able to knock off four cases in perceptive fashion at 45 seconds apiece, it turns out that you’re going to win some kind of a prize. 


Agarwal, you’re a lawyer, right, like me?


Asheesh Agarwal:  A lawyer, not a PhD economist, actually.


Prof. Richard Epstein:  Whatever it is. You can be whatever you want. But you’re an expert, so you have your three minutes of fame. 


Asheesh Agarwal:  Well, I thank you, Professor, John, and really, the Chicago chapter. It’s a real honor to be here. I served on the board of the Chicago Lawyers Chapter for many years with Laura Kotelman and David Applegate and others, so it’s great to be with you.


What I thought I would do, really building on Jessica’s comments, is provide just a brief overview of what antitrust law is and is not. And as I go through it, I suspect you might end up concluding that a lot of the concerns that you hear about big tech companies these days really aren’t antitrust concerns, at least as that term has been used over the past four decades. 


So start at Antitrust 101. Antitrust law is about the protection of competition and consumers. And the touchstone of antitrust law is what’s called the consumer welfare standard. And the idea is that you’re going to judge business conduct, whether it violates the Sherman Act or any of the antitrust laws, is what the company is doing good for consumers or bad for consumers? 


And that’s typically measured by price and output, which are very objective criteria. But you also have non-price competition, which, of course, look at the things like variety and quality, innovation. Since we’re talking about tech, the tech market, tech companies compete in other ways too, data security, privacy. These are all things that are subject to the consumer welfare standard. There’s been a bipartisan consensus on this for, really, the past 40 years since the revolution introduced by Judge Bork and, no doubt, Richard Epstein, and others in the 1980s. 


So what is antitrust not? Antitrust is not about big is bad. There was a strain of that thinking in the early 20th century, mostly with President Roosevelt when it was enacted. But as time has developed, we of course determined that was not a reasonable standard. And in fact, in the 1960s, LBJ’s antitrust chief said, “Hey, we need to move away from this big is bad mentality.” 


Antitrust law is also not about abuse of dominance, which is very much a European concept, which for this audience should make it suspect by itself. But abuse of dominance is this notion that, hey, big companies, they have so many resources available to them that they’re able to coerce unfair contractual terms. That’s not something that American antitrust law has ever thought of as being a viable theory. 


Finally, antitrust law is not about non-economic social values. And again, until very recently, there was a broad ideological consensus about that, which is now starting to break down. So last year, the House Judiciary Committee issued a lengthy 450 page staff report which called for abandoning the consumer welfare standard as inadequate to deal with many problems. And instead, it wanted to replace the consumer welfare standard, or at least add to it, with criteria that called for the protection of workers, entrepreneurs, fairness, and democratic ideals. I think we can all agree that those are good values in and of themselves, but it’s very hard to operationalize if you’re talking about antitrust law.


So bottom line, what I would say is that antitrust law is flexible enough to deal with the concerns of big tech. And as Jessica said, there are major court cases pending, and we’ll see what happens with those. Thanks.


Prof. Richard Epstein:  All right, great. Thank you so much. And now, Dr. Singer, Hal, you have your three minutes of fame. You have to unmute yourself.


Dr. Hal Singer:  Sorry about that. I want to thank The Federalist Society for having me, and I enjoy being the token liberal on a panel every now and then. I too have a fairly narrow view of what antitrust can achieve in this space. So in that regard, there might actually be some consensus on this panel.


I think the antitrust landscape is fairly hostile to policing anticompetitive acts of the platforms. Antitrust can only address exploitation of power supported by restraint, and not just any restraint. I want to focus on two specific characteristics. One is I think the restraint has to cut across the firm’s boundaries. Conduct that stays within a firm’s boundaries such as self-preferencing is given great deference by the courts, and I would want to personally steer clear from such a case. 


The second characteristic is I think the restraint has to be causally connected to a consumer price effect. Non-price harms such as innovation loss or privacy harms, I think, again, are going to be received with great skepticism by an antitrust court. And I think not only you need to connect it to a price, but it must be aimed at the consumer side of the platform. AmEx shows, or American Express case, shows that it is not sufficient to merely connect the restraint to a price effect on the merchant’s side of the platform. 


Having said all that, there are some good antitrust cases out there against big tech, and by good, I mean satisfying these two conditions that I laid out. There are also some sketchy cases. And in disclosure, I think I should tell everyone that I am working on one or more of the good cases. 


There are some gaps in protection, however, that come about from anticompetitive conduct that isn’t going to make it through this filter that I’ve laid out. And I believe that these gaps—and this is probably where we’re going to dissent or have a little debate on this panel—I believe that these gaps in protection should be filled by regulation. Remember, antitrust isn’t the only tool in the tool kit. And there are two areas that I have in mind for regulation, if I have time. I think I can do this in about 30 seconds.


But one is that I worry about self-preferencing by dominant platforms. And it’s usually a two-part strategy where an idea is appropriated, and then after the idea is taken, the platform uses its platform power to steer users to the clone. And just yesterday, we saw a story in The Wall Street Journal about how Amazon was bullying Echobee and threatening to deny Echobee access unless Echobee turned over its data. I think this would be a very tough antitrust case to bring as it doesn’t fit into any well established rubric. There’s no rubric called bullying. But we can understand. It doesn’t take a PhD.


And I can obviously understand that if enough of these merchants feel like they’re being shaken down and that they’re really in an unfair or unlevel playing field, they’re going to throw in the towel, and future merchants might throw in the towel. And that’s when we can start to see an innovation harm. It’s something very difficult to get at through antitrust.


The second area that I think could be plugged with — a gap in protection that could be plugged with some regulation is when you have a power imbalance between a platform and some input provider where there’s no restraint that’s necessarily supporting the power imbalance. It just comes about because there’s a power imbalance. The platform got there first, and they’ve been able to, either through acumen or through mergers, whatever, to take over or monopolize their market.


And so I’m thinking in particular about the kind of lopsided dealings between individual newspapers, say, and Facebook or Google. Here’s a place where I think that if we get — if the payments to these input providers are too low, we can have a harm. We can have basically an output effect in this input market, resulting, again, in the newspaper example with too little news produced, or too little quality news produced, or even news deserts. And my second disclosure I’m going to give for you guys today is that I am working for the newspapers in that case as well.


So with that, I’ll wrap it up and turn it back to Richard.


Prof. Richard Epstein:  Okay, great. Well, let me just see if I can distill some of this. And I’m going to say essentially if we try to summarize what the Chicago School of Economics said, if I get the orthodoxy correct, you start dealing with monopolization and cartelization. We kind of like some antitrust to be dealing with predation. We’re very suspicious. And when you’re dealing with vertical arrangements, there are obviously efficiencies but occasionally abuses. So we tend to think of something in terms of the rule of reason. 


Now, the way in which the panelists, all of you, have sort of discussed this has been more Christmas past until the last remarks of Dr. Singer. And so what I want to do now is to sort of ask you questions about Christmas future in the following way, which is if you were to take the basic framework—start with you, Jessica—and you talked about things like the Standard Oil case and all the rest of that stuff, and you started looking at some of the major issues, how straightforward do you think is the application of the theory that you have to a platform economy where it is generally understood there are no perfect competitive solutions? And so what modifications, if any, would you want to make from the received wisdom, and how do you think they would fare? 


So we’ll start with you, and then we’ll take it all the way through.


Jessica Melugin:  If Dr. Singer is the token liberal, I’m the token non-lawyer and the token extremist, probably. I place myself farther along the spectrum of skepticism than even the Chicago School, probably. 


Prof. Richard Epstein:  That’s okay. 


Jessica Melugin:  When we talked about there’s nothing illegal about bullying, yeah, I have less of a problem with people kind of duking it out and bumping snouts in the marketplace. Non-perfect results happening every second is less troublesome to me than all the possible implications of growing the regulatory state and all the pitfalls of antitrust litigation. So I am fully prepared to say that the cheese will likely stand alone.


That being said, if there is illegal conduct going on under the laws that are in place with these pending cases, that remains to be seen. Would I change anything fundamentally about antitrust law because big tech companies have come into existence? I have to perhaps not be lawyerly and just say, bluntly, I would not.


Prof. Richard Epstein:  Okay, I’ve got to ask you one follow-up question. I’m going to basically sharpen Dr. Singer’s remark and say that what is happening is it’s not only that Amazon is asking Echo, or whatever its name is, to share data. It’s asking it to breach its contract with other consumers where they’ve pledged to keep it private. Under that circumstance, it also looks like an inducement of breach of contract and so forth. So would you have some sympathy for that kind of a case? And so as to help our worthy quote-unquote “liberal” along with him by bringing it to bear a basically 19th century fluke.


Jessica Melugin:  Yes, I think the contract element of that remains a legitimate concern, certainly. I just can’t help but having to point out that all of these people who sell on the Amazon marketplace are selling on the Amazon marketplace. Whether a contract has been breached, that is obviously a very legitimate concern. 


Prof. Richard Epstein:   And then it’s inducement of breach of contract.


Jessica Melugin:  I think that’s a legitimate concern. I would say too, though, that do I believe that the Amazon marketplace will ever be or will continue to be the only place to sell your wares is something that I don’t want us to lose sight of as we get into the weeds of what the market looks like right at this moment.


Prof. Richard Epstein:  Okay. Mr. Agarwal, I’ve got a question for you, and it sort of follows on all of this. One of the big issues that we had in the late 19th and early 20th century antitrust law had to do with the durability of cartels and monopolies. And so there was an argument that if you didn’t enforce the contracts that they would kind of fade away, and other people saying no, you’ve got to really hit them with a hammer.


And when you start looking at Amazon or some other companies with power, do you think that what Jessica said is correct, that you’re going to get some, shall we say, suspect durability that they’re going to be eroded if they play these things, or do you think, in fact, that they have persistence that will last to the long or at least to the middle run?


Asheesh Agarwal:  Well, I definitely agree with Jessica that markets are not static. Look, just in the past year since the pandemic, you’ve seen the growth of Zoom, of TikTok. Facebook faces all sorts of competitors from new and younger social websites who are growing at a faster rate. And even Amazon, which is the number one online retailer right now, is going to face and is facing more and more competition online from Walmart and Target. Walmart is the biggest retailer in the country.


So markets aren’t static. Some of the things that the big tech companies are doing that we as conservatives and libertarians might not like, and John alluded to some of them in his opening framing comments, I think are things that are going to have market consequences. If people don’t have confidence that they can get the information that they want from these platforms, people will react, and markets will adjust.


I also want to make just two other quick points. One is antitrust law really is flexible enough to deal with these concerns that people have. As you know, Professor Epstein, a decade ago, there was this big, bipartisan, blue ribbon commission called the Antitrust Modernization Commission which looked at digital markets and platforms and concluded that no substantial statutory changes were necessary because you do have the rule of reason out there.


And if I have a point I would make, it is that at one level, there’s nothing new under the sun. Yes, you have digital marketplaces, and they’re new in some respects, but in other respects, they’re not. The touchstones continue to be output and price. And before you think that there is an antitrust violation in any of these markets, I’d ask, well, what’s happening in that marketplace?


So if you’re looking at app stores, for example, Apple apparently gets 100,000 requests from developers every week to sell on the app store, and the prices are falling there. Facebook has invested billions of dollars in WhatsApp and Instagram to make those more consumer friendly. So there’s a lot of evidence of non-price competition, prices remaining zero, and of a lot of innovation happening.


Prof. Richard Epstein:  I agree. Now, Dr. Singer, I’ve got my last set of questions, which is you announced yourself as being a liberal, and I will take that on its face, although there was no discernable evidence of that in the presentation that you made so far today. But there is some legislation, and as we noted that there are two rather strong New Brandeisians in the government. There’s Lina Khan and there’s Tim Wu.


And so the kind of question I would want to ask is that you take some of their positions and you now start to look at merger policy. There’s the Klobuchar regulations coming out on that, the proposal. Do you think that the current standards in which essentially the thing goes through unless it can be stopped is the appropriate one, or do you think you would want to reverse the burden of proof and perhaps lower the level of concentration of your regard as dangerous?


Dr. Hal Singer:  Yeah. I think in the realm of mergers, I feel that there’s — an area that could be tightened a bit is the vertical merger reviews. I feel like it’s very difficult to try to stop any kind of vertical merger. And so there is an idea, I don’t know if it’s yet reflected in Senator Klobuchar’s legislation, but you may have heard of it, called this dominant platform presumption, which would be if a dominant platform were to make an acquisition, that acquisition would be subject to a higher form of scrutiny. I would say, for example, the burden would be on the merging parties to prove that the acquisition was pro-competitive. So that’s the idea I have on point of mergers.


Prof. Richard Epstein:  Okay. Let me just ask a point. There’s a piece that was written by Tim Wu and my colleague Scott Hemphill, basically trying to deal with nascent mergers. And one of the arguments, they say, “See, look how big Instagram is. If it had been a freestanding company, you would have a much better industry.” 


But the question I’m going to ask is essentially playing off of what Dr. Agarwal said, which is quite simply would they have been that big if it turned out that the acquiring companies didn’t put billions of dollars in them, or whether they simply die for insufficient capital and expertise? And so, in other words, if you take that as the test case for this kind of merger presumption and so forth, is it a good rule or a bad rule in light of these mergers? How should we understand to think about that? And then maybe we could go around to Jessica and she could answer it as well.


Dr. Hal Singer:  Yeah. So I think, if the question is to me, it’s kind of counterfactual. What would we have in the absence of that merger? I think we’d have a much more competitive social media market and more competitive digital advertising market. If Facebook and Instagram were competitors and competing for eyeballs, competing for advertisers, I think we’d probably be —


Prof. Richard Epstein:  — But would they have been competitors? If one was ten times the size of the other, and now the smaller one has become larger, would they have been able to sustain that if they hadn’t gotten the capital and the expertise from the acquiring corporation, is the question.


Dr. Hal Singer:  Yeah, I hear what you’re saying. We’ll never know the answer to that with certainty, but it seems like they were well on their path. And in fact, the amount of money that Facebook paid for them seems to suggest that Facebook believed that they were a serious threat. And there’s internal documents that have been uncovered through FTC investigations and the like saying that Facebook acknowledging the threat and what Instagram could evolve to become. So I am sympathetic to these concerns, and I do think that we should seriously reconsider or consider at least a dominant platform presumption against acquisitions by some of these tech titans.


Prof. Richard Epstein:  Jessica, are you going to stick to your position against him, or are you going to waver under the attack?


Jessica Melugin:  Well, I’m trying to earn my honorary legal degree today, so I’m going to stick to it. I’m going to back up a little bit and just talk about what kind of unintended consequences and incentives something like that would set up. And if you look at the venture capital situation for these startups, because IPOs have gotten increasingly expensive and difficult—thank you, Sarbanes-Oxley—being acquired is — I think I read 50 percent of these startups say that’s their goal is to be acquired. That’s how they get cashed out. And in the process, we get a lot of new products.


In Instagram’s case, what we got was an obscure, glitchy, photo sharing app that when Facebook paid all that money for it, even the late night talk show hosts ridiculed them for that. So to be able to look —


Prof. Richard Epstein:  — What, for making a bad deal?


Jessica Melugin:  For overpaying, yeah. They couldn’t believe that — I think it’s Stephen Colbert. I hope it’s Stephen Colbert. That would be more satisfying for me.


Prof. Richard Epstein:  Well, I’ll accuse him of it.


Jessica Melugin:  But let’s just do that, since we’re recording it.


So I think that you have to think about sort of down the line of economic incentive, I want to keep goofy new social media apps churning out from northern California like crazy. And if that means a bunch of college dropouts need to feel like they can get a check from Mark Zuckerberg, I don’t really see the consumer harm in that.


Instagram is now a much better product, much more available. Similar with WhatsApp; it went from a fee to use it to free after Facebook bought it. So again, if you look at it through the dynamism of the market, you have to watch what you’re doing to incentives. And when you say, “oh, well, this dominant firm, and you’re this big now, so you can’t do this, and you’re not quite that big yet, so you get to do this for six more months,” I think that that chills innovation in a way that concerns me. 


Prof. Richard Epstein:  Okay. Asheesh, I’m just going to put it to you the abstract way. If you recall that I mentioned at the beginning that when you started that there were certain kinds of merger situations, you wanted to use a rule of reason. And that would require you, in many cases, to figure out whether the restraints were dominant over the efficiency advantages.


Well, you’ve heard Dr. Singer saying they paid a lot because they knew it was a great product, and you heard Jessica saying they paid too much because it was a lousy product. Now, since you are a guy who works for TechFreedom, which way do you put the scales when you’re dealing with this kind of a merger question?


Asheesh Agarwal:  Well, I would say we should leave it up to the market participants to determine a price rather than trust government regulators to determine what an appropriate price is. With respect to Dr. Singer, what I would say is nascent acquisitions didn’t just come around through the invention of the platforms. They have been around for a long time in a lot of industries. Let me give you a brief historical example because I wrote a paper on this.


A hundred years ago, John Deere was a full service agriculture supplier and sold—this was the 1910s—wagons, buggies, plows, what have you. They didn’t sell tractors because they weren’t able to develop them internally. They tried kerosene, gas, two cylinder, four cylinder. Nothing they tried to develop internally was successful in the marketplace. But they heard from their customer base and they anticipated that that’s where the market was going. So what did they do? They bought out the Waterloo Gasoline Engine Company, which had made the first or the most successful tractor at the time. They bought the company. They invested in it. And within a couple of years, output had quadrupled.


Well, if you look at what Facebook did with Instagram and WhatsApp, it’s kind of a similar story. Facebook saw that the future was in mobile. They tried to develop the technology internally. They didn’t do that great of a job on it, so they purchased companies and invested the heck out of them, marketed the heck out of them, and then output skyrocketed. Isn’t that what we want our companies to do, to anticipate where consumer demand is going to be and then invest in it to make that a reality?


Prof. Richard Epstein:  Isn’t that what we want, Dr. Singer?


Dr. Hal Singer:  May I just respond? Is that okay?


Prof. Richard Epstein:  Yeah, I insist upon it.


Dr. Hal Singer:  I don’t want to be defending any straw man, so let me just make really clear what I was proposing. I was not proposing any price regulation. I wasn’t suggesting that government should be setting the price for the acquisitions, so I don’t know where that came from. And I also am not proposing a ban. I know that some people are. During the onset of COVID, there was talk about a pure ban on mergers, and I’m not proposing that, either.


The dominant platform presumption, if I could say it, would merely change the presumption. It would shift the burden from the government’s obligation to show harm, typically through price effects which are nearly impossible, even in mature industries, to show, to shifting it back over to the merging parties, so making that narrow category of acquisitions presumptively in violation and putting the burden on the platform to prove otherwise.


So I’d like you to respond to that. Why do you think the sky would fall if that were the law?


Prof. Richard Epstein:  Okay. Well, let me ask the first question of you. 


Dr. Hal Singer:  Okay, but I just want to make sure that you — 


Prof. Richard Epstein:  — I want to discuss that one thing first, and then I will put the question that you have about Chicken Little to everybody, the two other panelists.


You say it’s going to be a presumption. As a lawyer, when I think of a presumption, I always ask the question, how rebuttable? Is it easily rebuttable? Strictly rebuttable? Certain kinds of evidence to be required for rebuttable? That is, you could have everything from presumptions that are almost impossible to overcome to those that become trivial. And so essentially, what would be the burden of proof—beyond a reasonable doubt, clear and convincing evidence, preponderance of evidence, substantial possibility—that you would want to use to overcome the presumption?


Dr. Singer? So which of my four standards, which I take from the traditional tool kit, is the one that you like the best?


Dr. Hal Singer:  As an economist, it’s going to be tough for me to tell you the exact standard here.


Prof. Richard Epstein:  By comparative advantage, right?


Dr. Hal Singer:  I am sensitive to that critique, and I think that you just want to make sure that there is a way out. And so I wouldn’t want to make it an impossible burden, but something concrete that the merging parties could demonstrate that there’s a true efficiency that offsets the presumption of harm.


Prof. Richard Epstein:  Okay, so I would treat that as a substantial probability of gain, even less than 50 percent. So I think it’s there. And then the question of how much of a difference that it is, I don’t know. Anyhow, are you biting, Jessica, on this?


Jessica Melugin:  Well, I will not attribute this to Dr. Singer, but I do believe—and Asheesh, you can correct me—I think that Senator Hawley’s latest bill does actually ban mergers for companies above a certain cap. Is that — it’s $100 billion —


Dr. Hal Singer:  — Yeah, I think so.


Asheesh Agarwal:  $100 billion dollars.


Jessica Melugin:  $100 billion dollars. And I think that incorporates like — it’s a 150-some U.S. companies that would be, and not just in the tech sector. Just you can’t buy a company, kids. Sorry. With apologies to Professor Coase, there is no more independent decision about where your firm can do something internally, like the John Deere example. And when you have to bring in an outside — I think that’s a huge impediment to progress.


It’s not like federal regulators are having a difficult time winning merger cases. Again, not a lawyer, so you can correct me, but my impression of watching the cases is that they have a perfectly reasonable success rate there. I’m not sure that’s where I would tweak things.


Prof. Richard Epstein:  Yeah. I have a question. Asheesh, let’s put it this way. Senator Hawley is generally though to be to the right of center. Am I mistaken about that, or no?


Asheesh Agarwal:  He is on most issues, but on these issues, he, by his own admission, he was praising Lina Khan the other day.


Prof. Richard Epstein:  Yeah, that’s what I’m saying. This seems to me like the fact that he’s Tim Wu and Lina Kahn in disguise. That is, what you do is you’re seeing the far left and the far right meeting somewhere in a dark alley and coming forward with a uniform presumption on this. Can you explain why it is — what it is that drives Hawley if he’s supposed to be a small government guy? Is this simply a kind of a Brandeisian excess of one kind or another, or no?


Asheesh Agarwal:  Well, look, I think there’s some frustration with big tech companies on the right, and that relates to some of the speech issues and some of the Section 230 issues that we might talk about. There’s a lot of populist frustration with Twitter and what have you, and I think that’s what’s driving some of this.


But I want to say a couple of other things. First of all, Dr. Singer, kudos to you for coming on this panel, to a FedSoc panel.


Prof. Richard Epstein:  I’m glad you did.


Asheesh Agarwal:  Obviously, your views are outnumbered two to one, and you knew that coming in, so it’s great that you’re —


Dr. Hal Singer:  — I have a taste for pain.


Prof. Richard Epstein: Well, you never know. Josh Hawley could show up.


Asheesh Agarwal:  [Laughter] That’s right, that’s right. But to the way you framed the question, would the sky fall with changed merger presumptions, no, they wouldn’t. But I do agree with Jessica. It would make financing more problematic or uncertain for some of these smaller companies. Is that a good thing? I mean, most innovation, we’re fortunate it happens in the United States, not in Europe. And part of the reason for that, I think, is the availability of financing and the legal regulatory regime that we’ve created that doesn’t punish success. I think that’s a good thing.


And the other thing I’d say is why should we change merger presumptions without a strong showing of harm to consumers? And we have major law suits pending right now that will help us determine when we read the court opinions whether consumers have been harmed and whether antitrust law has a remedy for them. And I think after we see those play out, I think we’ll be in a much better position as a country to determine whether we need statutory changes.


Prof. Richard Epstein:  Okay. Dr. Singer, I have another question to ask you about this. One of the traditional worries that we had with antitrust was how you start to think about products that actually sold for a positive price. Most of the things that are basically an issue today are given away for free at some level. There’s an advertisement tick on that and the funding is completely different from soft law. Does that change your view on how you want to think about the antitrust laws if you don’t have the same kind of problem that you had in 1930 when the A&P came on the market and started to undercut people?


Dr. Hal Singer:  So here’s the problem, if I’m reading your question correctly, is that most of the exercise of market power by the platforms are occurring on the merchant side of this two-sided platform. So for example, Amazon charges an excessive—I can talk about Amazon—Amazon is charging an excessive take rate on its merchants. So apparently, it was in the 20s, moving up into the high 20s, and then on top of that, Amazon is allegedly forcing merchants to take Amazon’s fulfillment services.


If not, the punishment is that you get disappeared in search. And that allows Amazon to exact an even greater tax. It’s now — for one merchant who was profiled in The Wall Street Journal, her take rate was now in excess of 50 percent. That is, every dollar of merchandise she sells on Amazon’s platform is going right back to Amazon through the Amazon tax.


And now the question is if you were to bring a case against Amazon, would it be sufficient to be able to connect a restraint that Amazon is, say, putting in the merchant contract to an excessive take rate? I would submit that under AmEx, unfortunately, that that wouldn’t be sufficient, that the plaintiff would have to go one step further and demonstrate that the excessive take rates find their way into the — through pass through by the merchant into higher end user prices.


Prof. Richard Epstein:  Okay. Let me ask you one thing. You said AmEx. I know what you mean, I know our fellow panelists know, but I suspect there’s some people in the audience who might not. So can you give us a kind of very short survey of why it is that you think AmEx basically blocks this particular development?


Dr. Hal Singer:  Yeah. So what AmEx did — AmEx said it wasn’t sufficient for the plaintiff to demonstrate a causal connection between the restraint—in that case, it was a no steering rule—which AmEx said that you can’t—you, merchant—cannot steer your customer to a lower cost card and do so by, say, offering a lower price. You basically have to give the same price to everyone, regardless of how much we want to take from you.


And so what the Court was basically saying was that that isn’t sufficient. You have to trace the effect through to the other side of the market. Then the Court got a little confused. They saw that transactions were increasing over time, and so they thought there couldn’t be output effects on the consumer side. Of course, they were wrong to the extent any of those excessive taxes on the merchant side were passed through to end users in the form of higher goods prices. And there was an output effect, but the Court just couldn’t see it.


It’s a long way of saying that now when we apply that standard into a hypothetical case against tech, I don’t think the plaintiffs are going to be able to stop at the harm to the merchant side. That is, even if they could show a causal connection between the restraint and an excessive take rate, that would be sufficient. I think they’d have to go one step further and show that, say, the merchants on Amazon’s platform are actually passing through those inflated take rates in the form of higher prices to their end users. 


Prof. Richard Epstein:  And they haven’t been able to show that yet.


Dr. Hal Singer:  We don’t have a case yet against Amazon. I’m just telling you hypothetically.


Prof. Richard Epstein:  Do you think he’s going to be able to make out his case, Hal’s going to be able to make it out?


Jessica Melugin:  I agree that that would go — to bring it back to the larger question here, that would go to a more direct relationship to consumer harm. But I have no idea if that’s what’s happening there. I think that we’ll get a chance to find out with the introduction of Lina Khan into our lives. We’ll probably get some more insight into that through the courts, if I had to guess. Whether or not that’s happening, I don’t know. But I’m not happy to agree with — go ahead. Sorry.


Prof. Richard Epstein:  I want to ask this of you, Ms. Melugin. What you’re seeing here, is there a tension between your claim that markets always tend to introduce new competitors in the dynamic fashion that undercut these kinds of monopoly powers and the recent development in which Amazon seems to be raising fees? It seems to me that there’s at least some tension there. Or is the explanation that Amazon has gotten so much better at what it does that it could claim a larger share of the pie and still leave the merchant better off than he or she was before?


Jessica Melugin:  Yeah, I think you have to ask those larger questions. And then the other part of that is if they are, in fact, raising these fees to a point that the market decides is unreasonable, doesn’t that create, without a barrier to entry that I’m aware of, doesn’t that create an incentive for another platform to come about and offer the same thing? In fact, I would say they already exist, and there’s more competition coming that way. I would prefer to let the market work that out over a little longer period of time than to come in with a big regulatory intervention.


Prof. Richard Epstein:  Okay, Asheesh, let’s put it to you. How long are we prepared to wait for markets to work? I think this is the fundamental question that you ask back when they put the Sherman Act to law, and the basic attitude that they had then was that our enforcement of horizontal arrangements through the courts did not result in a breakdown because these guys found ways to have self-enforcing contracts that seemed to last much longer.


And so the question I’m going to ask, the same question as before that I put to Jessica, is that they’re charging a larger number with respect to these companies. Is that because they’re supplying better services than they’ve ever supplied before so that the company is no worse off in terms of its rate of return, or is it, in fact, because it kind of sees the time horizon for its not so durable monopoly as being longer than you had presupposed? That, to me, it seems to be a real difficult empirical question. And can we solve it by a presumption, or do we have to get some kind of direct evidence in order to figure out which way it’s going to go?


Asheesh Agarwal:  Well, again, ultimately, I think you need evidence of consumer harm. Look, I will agree with the view that Dr. Singer probably has, which is it is certainly possible, both as a matter of case law and as a matter of economics for a company that has market power or even, you might say, monopoly power in one market to extend that power into another market in a way that’s anticompetitive and ultimately would and should violate the antitrust law. So that certainly is possible. And we’ll see what happens when some of these cases play out. And certainly, it sounds like from public reports that Amazon is under investigation, and some of those suits might be brought at any time. So we’ll have to see what happens.


But what I would say is that Dr. Singer, to come back to his phrase, oh, they’re charging an excessive markup. Well, who’s to say what the appropriate markup is? Walmart takes a cut out of every product that’s sold at Walmart. And a couple years ago, I took a cruise. You can book these little excursions from your cruise ship. And talking to some of the guys on the islands running the excursions, they were complaining that the cruise ship takes too big of a cut there. 


Going back to a point that Jessica made at the very top, it just seems to me this is just bargaining between parties, all of whom are trying to capture as much revenue as possible. There’s nothing wrong with that. You better be able to show there’s harm to consumers before you’re finding there’s damages there.


Prof. Richard Epstein:  Dr. Singer, let me put the question this way. These are very complicated markets. And I’m just thinking of what happened with Parler when it was kind of forced off the market because it couldn’t get anything through the app store. Do you regard Apple’s decision to keep them out of the app store as being essentially a restraint in trade, or do you regard that as legitimate conduct?


Dr. Hal Singer:  Well, I tried to —


Prof. Richard Epstein:  — I’m asking questions to which I don’t know the answer.


Dr. Hal Singer:  I wasn’t very sympathetic to the Parler case, but you kind of threw me with the case because they filed a case against Amazon with respect to the AWS, the hosting service. And I have formed semi-intelligent opinions on that case. I thought that case was fairly weak. 


I don’t think they filed a case against Apple, but a hypothetical case against Apply may have been stronger to the extent that Apple could allegedly be characterized as being dominant in a certain space for Apple-based phones. I don’t think that Amazon, at least with respect to AWS, fit the bill there. 


Prof. Richard Epstein:  Could you explain AWS?


Dr. Hal Singer:  Yeah. AWS is Amazon’s web hosting subsidiary. And I think—I’m doing this by memory—I think their market share, and again, market share isn’t the end all, be all measure, but it’s on the order of around 30 percent of hosting services in the U.S. So the notion that Amazon AWS had some kind of obligation to provide web hosting to Parler I thought was fairly weak, a weak claim. When do we impose duties to deal on firms? It’s generally under very extreme circumstances. And dominance, you would think, would be an element. And I didn’t think the element was present in that case.


Prof. Richard Epstein:  Yeah. And Jessica, I see you nodding in complete agreement on that. 


Jessica Melugin:  Yeah. I was just thinking that Dr. Singer is my kind of liberal, if that’s what liberal is.


Prof. Richard Epstein:  Yeah, I think there’s a lot of role reversals going on here, and that’s okay.


Jessica Melugin:  Yeah, it keeps it fun. Can I just say one thing about what I feel like is —


Prof. Richard Epstein:  — Say two things.


Jessica Melugin:  Okay, thank you. I call it the crisis of faith in creative destruction from some on the right. And that goes to this AWS kicking Parler off. That move, I think, was something that tipped a lot of concerned people on the right over from, “Well, you can always go get a different social media.” It went up the stack to the cloud, and a lot of very smart, thoughtful people on the right said, “Okay, this is crazy now. Now this has gone too far. Now Parler really can’t exist.”


And I would just point out that the next generation of social media applications is very likely to be decentralized. So this will be too old for most of the people listening to this, but it’ll be Napster-like. It won’t be sitting on someone’s cloud. It won’t be controlled by a corporation. There won’t be content moderation from the top down. It’ll be more community oriented and controlled. And I think that it will solve a lot of these kinds of questions. But again, I hear myself repeating myself, and I understand that I’ve boring everyone by making the same argument.


Prof. Richard Epstein:  I take it when Parler is now considering law suits and other things, am I correct in assuming that it’s also made the independent decision to build its own base for its own distribution services?


Jessica Melugin:  My understanding is that there’s a lot of companies that, based on what happened, are thinking of building out their own infrastructure in a way to stay more in control of that. And to me, that suggests not that we need to regulate all of that, but that suggests that maybe that that’s a really smart market solution, depending on where you need to be up and down the stack. 


Prof. Richard Epstein:  So essentially, what I would say is if you could find free entry into that market, you’d be less worried about the short-term situation. Asheesh, is there going to be any kind of hidden barrier to entry that you and I are overlooking?


Asheesh Agarwal:  Not that I’m aware of. According to public reports, former President Trump is going to be — planning to be back on social media within the next two to three months. When he does that, I’m going to go out on a limb and say he’s going to attract tens of millions of users. And a suspect whatever platform he joins is going to be very open and receptive to conservatives and Republicans in a way that people perceive that Twitter has not been. And so again, I think the market is going to adjust. It’s certainly not static.


Prof. Richard Epstein:  All right. Would you agree, Hal? I think in this, everybody starts to agree. 


Now, I’m going to ask John Adams a question. We have now gone about 50 minutes, which is what I think is the appointed time for repartee. Are there any questions in the chatroom or anything else that I ought to be addressing, because if anybody has them, please send them my way, and then we will take our wizard panelists to do it. Well, John, what is it?


John Adams:  Professor, you do have two questions in the chat box.


Prof. Richard Epstein:  Oh, I do?


John Adams:  Open the Q&A. You can see those questions.


Prof. Richard Epstein:  Where do I go? I looked at —


John Adams:  It’s right next to participants, and there’s a red dot that says 2.


Prof. Richard Epstein:  Oh, that one.


John Adams:  Yes, and I’ll let you take them.


Prof. Richard Epstein:  All right. Okay, this is from John Swee (sp). And what he says is he’s — I’m going to shorten it a bit. We worry about consumer prices. Should we be speaking to that or to consumer welfare? The two are welfare — the closer we are to — welfare is equal to benefit minus cost. But if a business increases cost to consumers, and it currently increases benefit to them by an even grade, should that be of concern? In other words, if consumer surplus increases, is that — if one only looked at price, one might be misled into identifying the firm as a monopoly, when, in fact, both producer and consumer surplus may rise.


So what you say is, in fact, a classic situation. It’s kind of what I hinted at when I asked my question about Amazon taking a larger cut. Is he right about the standard, do you think, Hal, that when you’re looking at these things, it should be consumer welfare rather than consumer prices? Are you maximizing surplus rather than worrying about revenue as such?


Dr. Hal Singer:  Well, I think that as a practical matter, what courts have been focused on are price effects. So as I hear the question, it’s could welfare capture something that’s non-priced? Is that — Richard, is that —


Prof. Richard Epstein:  — Yeah, that’s a good way to think it. Yeah.


Dr. Hal Singer:  Yeah. Look, I’m not going to go into a court and try to convince a judge of some non-price consumer harm. There are cases out there that are privacy harm cases right now, for example.


But if I could just kind of pivot one bit, I do worry—is that okay, Richard?—I do worry about the notion that we’re asking courts to engage in these tradeoffs between harms on one side of the market, say, to merchants, say, in the AmEx case, against purported benefits to consumers or cardholders. I am very worried about that. In merger law, we explicitly tell courts not to do that. Under Philadelphia National Bank, we do not want them engaging in multi-market balancing. And I feel like AmEx has set us up on this court where the consumer is supreme and we would even tolerate a known harm to someone on the other side of the market, so long as consumers are better off.


And where you see this really kind of leading to a horrific potential outcome is in this NCAA case that was just argued in front of the Court where the NCAA is saying we should tolerate a worker harm through a price fixing conspiracy on the input side because certain consumers have a taste for amateurism, which is kind of code for a taste for exploitation, or even worse case, a taste for white supremacy.


Prof. Richard Epstein:  Okay, yeah. Let me just make one comment.


Dr. Hal Singer:  This could lead us to a very, very bad place if we—just in conclusion—if we make every other provider in the stack to be subservient to the consumer.


Prof. Richard Epstein:  Yeah. I think the AmEx case, the argument that was made was slightly different. It was that if you look at these as two-sided markets, it turns out you want to put the cost on the — basically, on the side that’s inelastic, and then have it pay subsidies to the other side. And that would mean that it would be on the merchant side that you would have these done, and then they give lots of goodies to bring more people on the other side in order to increase the size of the market. So it’s not as though they’re independent markets. It’s an argument that’s made only, I think, with respect to platforms. I don’t know whether it’s right or wrong.


I should tell you I have divided loyalties in that case. My friend Evan Chesler argued there on one side, and my student Eric Murphy, now on the Sixth Circuit, argued when he was solicitor general for Ohio. I regard it as quite a close case on these situations. The NCAA case is a kind of a different problem because it’s not at all clear exactly how universities profit or whether that’s the coin of the realm. We could think about that.


But let me just say here is another question for you, Dr. Singer. What kind of UMC—I don’t even know what that means—rulemaking would you like to see the FTC promulgate under the Biden administration? What does UMC stand for, first of all? Somebody know? Tell me. Even with three experts, we can’t figure out what’s going on.


Dr. Hal Singer:  Why don’t you google it?


Prof. Richard Epstein:  Yeah, somebody should google it. But anyway, what kind of rulemaking would you want done, and then the two of you can follow up on him. So Hal, which way would you want to do on this thing? Do you want to see Singh make Lina Khan run the place?


Dr. Hal Singer:  Unfair methods of competition (UMC) are Section 5. Thanks.


Yeah, there is a constituency here. There are some proponents that the FTC should just kind of go out on its own and start issuing rules. And given how dysfunctional Congress is, that might be the only practical way to stop some of the abuses that we’re seeing.


What I would much prefer, but I realize I’m being completely naïve here, is that the direction instead would come from Congress. So for example, if Congress were to instruct the FTC to treat self-preferencing as a form of unfair practice and to subject self-preferencing cases to some, say, tribunal where a case could be heard, a merchant, say, brings a case against Amazon in front of a tribunal pursuant to a nondiscrimination standard, that’s how I would write it up if I could write it up on a chalkboard.


But I know that a lot of liberals and people on my side of the aisle are losing patience because nothing is happening in Congress, despite all these horror stories. And so they’re saying, well, if the FTC has the authority itself to go out and make these rules, say, a nondiscrimination standard on its own, why not just strike out and do it under its own rulemaking authority?


Prof. Richard Epstein:  By the way, do you, Jessica, believe that self-preferencing is a problem, or do you only see problems if, in fact, the internal vertical arrangements are more inefficient than entering into spot market contracts with other parties?


Jessica Melugin:  You’ll be not surprised to hear that self-preferencing does not keep me up at night.


Prof. Richard Epstein:  Basically consistent to the end. Asheesh?


Jessica Melugin:  Property rights, all the way.


Prof. Richard Epstein:  I’m not saying you’re wrong. I’m just asking. I’m amazingly diffident, right?


Asheesh Agarwal:  Just two comments. In terms of rulemakings, we do have in antitrust law per se rules for things that we know are impact competitive, like naked price fixing, of course, and that’s appropriate. But for everything else, largely judged by the rule of reason, and in some cases, self-preferencing. Probably most cases, self-preferencing is not problematic. If a grocery store wants to put its store brand at eye level and more expensive brands higher or lower, is that really problematic from an antitrust perspective or a consumer perspective? Maybe, and if a case can be made, all right, let’s lay it out there. But I would question the need for rules.


Prof. Richard Epstein:  Yeah. I have the following question. If it’s dubious that a court would do it, why does it become clear when it turns out that the FTC does it?


Here’s another question, which is directed in part to me, so I’m going to direct it to everybody else. What is the future of Richard Epstein and Clarence Thomas’ common carrier approach to content restrictions on major sites? Now, this is a reference to something that Justice Thomas said recently, which had its origin in something I wrote with — actually, not wrote, but was written by Tunku Varadarajan in The Wall Street Journal and suggested that common carriers have a general duty to take all takers on reasonable nondiscriminatory terms.


And the question is can you transfer that from dealing with rate regulation as it existed in, say, the earlier part of the 20th century to dealing with these more obscure situations? Or in effect, is it a situation where there isn’t any real common carrier issue because new entry will obviate the problem? So I’ll start with you on this one, okay? Asheesh, which way do you think about it?


Asheesh Agarwal:  Look, obviously, Professor, I bow to your greater wisdom. But my understanding of common carrier regulation is that this arose where the product or service had to be available to everybody. So whether you’re a Communist or a white nationalist, you can get DirecTV or Comcast or what have you.


That’s never been the case with the social media companies, as I understand it. They’ve always had their terms of services and reserve the right to deny service to people who violate those terms. So whatever sort of regulatory regime is being contemplated now, one is it would have to be consistent with the First Amendment query, whether any of these proposals would do that. And secondly, I don’t think it would be common carrier regulation as that term has been understood.


Prof. Richard Epstein:  Well, it is a little bit more complicated than that. But certainly, you can’t escape your common carrier obligations if you have some by simply announcing that you do not wish to be bound by it. These are public obligations that are put against you with your will on the ground that they have no other place to go.


And so it started off when there was only a single coach that went from Oxford to London, and it was the only single one along the way. And you could always charge a reasonable rate to get a competitive rate of return, and you could always excuse people for cause, i.e., disruption and abuse, but otherwise, you had to sort of more or less take everybody.


And so the question, Hal, is do you think that these common carrier conceptions could be used to deal with content, or is the Jessica position that new entries are going to solve everything going to be correct here? I’ve been on both sides of this question, so I ask it, but there’s a degree of diffidence that is uncommon for me, usually.


Dr. Hal Singer:  I was surprised, pleasantly surprised, by Justice Thomas’s comments about treating these dominant platforms as common carriers because I’m pedaling two forms of common carrier regulation right now for the platforms. And I look back, and it’s not just Justice Thomas, by the way. There’s other things going on. Ken Buck, I would commend you to go look at what Ken Buck is saying with respect to nondiscrimination regimes and structural separation. There has been — there seems to have been a shift, at least among some elements of the right taking a more favorable attitude towards this.


I want to just remind everyone that before cable was regulated under common carriage rules, they weren’t. And at some point, someone decided, hey, we’ve got to knock this off. And in the 1992 Cable Act, we imposed nondiscrimination regime on cable. People saw that cable was picking off the best content out there, appropriating the idea, making it their own network, and then removing the competitor, the independent competitor, from the basic tier. That was the strategy.


And so enough independents started complaining and saying, “Look, this is an unfair playing field. Our best ideas are being appropriated, and we can’t compete when we’re on the sports tier, or even worse, we’re taken off.” And so Congress gave them a venue. It’s at the FCC, whereby a disfavored or affected independent network can bring a discrimination case against, say, Comcast alleging that they’ve been treated unfairly by virtue of their lack of affiliation. 


Just one more, too, Richard. We also have a form of a duty to deal that’s imposed on cable through the must-carry rules. So broadcasters were deemed to be an important aspect from a societal perspective. They were threatened because of the power imbalance with cable, and so the idea was that cable would have to deal with them if a broadcaster so chose. So these ideas have been imposed in the past. It did not cause the world to end or the sky to fall, and it solved a real social problem. And I think that we’re seeing similar issues evolve in the new economy, and it seems to be calling out for these sorts of common carrier regulations.


Prof. Richard Epstein:  Jessica, still skeptical?


Jessica Melugin:  Yes, but I’m trying to earn my honorary degree, so I hate to disagree with the moderator of the panel. 


Prof. Richard Epstein:  Look, I’m the sole — on this issue, I have basically taken both sides of the question with equal fervor. 


Jessica Melugin:  I think that there’s a lot of specifics to the cable example that don’t overlap the social media. I think that there’s a lot of a more curated approach in branding with social media that should be considered when you’re contemplating common carrier. I think that it really removes those companies’ ability to differentiate themselves at all. If you all have to carry everything, then where’s the innovation coming from? Where’s the specialization? Where’s the differentiation?


I think that’s a pretty heavy hit to take to a very dynamic industry when the best example people can — the best recommendation is, “Look at all this great stuff we did with telecom.” I’m not convinced on that. I would like to let it play out a little bit and see if we can’t get some innovations from the market that might take care of a lot of people’s concern, at least from the right.


Prof. Richard Epstein:  One of the things, of course, that was difficult is that the broadcast industry itself is not the model of competition, and new entry there was extremely difficult to acquire. And the ability to fragment frequencies to create additional statements channels was explicitly barred by the terms of service that were given through the FCC. So there were market imperfections, and these may or may not have been done.


But anyhow, we have a couple more questions here. This is from Nathan Lazarus. Nice question. Should there be more merger retrospectives? Ms. Melugin started off the panel by doing basically that, discussing historical antitrust action. Are there some mergers that are allowed that just lead to higher prices and no efficiency gains in retrospect? Asheesh, do you think that looking back is a good idea or a bad idea, and what do you hope to find if you do it?


Asheesh Agarwal:  I do think it’s a good idea. But just briefly on the prior discussion, Professor, I think you put your finger on it, which is that there are a multiplicity of options now online. There’s more than one horse and wagon that go from Oxford to London. There’s just — it’s not just Facebook. There’s LinkedIn. There’s Snapchat and probably a hundred other things that I’ve never heard about where people can go to. So the idea that you have to regulate the biggest ones because those are the only speech outlets that people have simply is just not borne out by the facts. I think that’s another reason why I’m very skeptical of treating even our biggest websites as common carriers. 


Prof. Richard Epstein:  Okay. Can I ask you again just a simple question, Asheesh? Has there been any decline in loyalty to a company like Facebook that actually lost customers to anybody else, or not?


Asheesh Agarwal:  I don’t know the answer to that. What I can tell you is that other smaller companies are growing at faster rates that appeal more to younger social media users. 


Prof. Richard Epstein:  So let me ask you, and I’ll ask this to Hal in the same way, we remember Life magazine. This was the all-purpose place that everybody went to. And then all of a sudden, it started getting cannibalized even by Time companies like Sports Illustrated and so forth. And then every specialized niche seemed to get its own magazine. And so the only thing we see Life magazine for are commemorative issues of things that happened 15 years ago. Is that going to happen to Facebook, that they’re going to become the Life magazine of the 21st century?


Dr. Hal Singer:  Are you asking me?


Prof. Richard Epstein:  Yeah, why not.


Dr. Hal Singer:  I don’t think so. Their position seems to be pretty durable, and they have taken out, I think, the most potent threats to their platform power. So no fear in my — if I was a Facebook investor, I wouldn’t be worried about that at all.


Prof. Richard Epstein:  I can still — let me just give an anecdote. About 25 years ago, I was invited to talk to people at Microsoft, and it was a very interesting conversation. If you actually talk to them privately, every one of them had said, “We think that our control position of something like Microsoft Explorer can disappear in a twinkling on some other day. We don’t lose sleep over slow deterioration of position. We lose sleep over the fact that there’s going to be a major technical innovation.”


And that was 25 years ago. I take it Microsoft Explorer is still viable, right? That is, it’s kind of a paradox that the guys who are inside of the company feel that they have this sort of Damocles hanging over their head, and then they respond in ways which make them more innovative than they would otherwise be. So a company like Microsoft kind of reinvents itself from the inside to do something different from what did. And so there’s more dynamism in the market than you might expect by simply looking at the name of the company rather than by what the thing it’s done. So anyhow —


Asheesh Agarwal:  That’s a great example. Look, Explorer has been overtaken by Google Chrome. There’s all sorts of public reporting that Apple is developing its own search browser. Apple gets in the market, look out for Google’s dominance. These products are dynamic.


Prof. Richard Epstein:  Yes. Is Chrome used more than Explorer now?


Asheesh Agarwal:  Yes.


Prof. Richard Epstein:  Oh, so they were wrong. Okay. See how much I learned. 


Well, in effect, as we kind of wind down to the end, I’m just going — I’ll ask my next question in a second, but I just really wanted to say as best I can tell, the grounds that seem to separate people on critical judgements, very hard to quantify as to the rate of decline of dominant positions through new entry. And the slower you think that is, the more you’re willing to take direct regulation. The more rapid you think it is, then the more skeptical you are. That seems to be the equilibrium. So there’s an empirical disagreement in the theoretical unity for that stuff.


Now, here’s my next question from a man named Ed Sienda (sp). What about the tying issue? Conditioning the use of a product is to give up your personal transaction data for free to them to monetize. It’s similar to what happened with this Echobee transaction. So Jessica, what do you think about that? Are you perfectly happy with this, or are you kind of upset?


Jessica Melugin:  I’m perfectly happy, perfectly happy with tying. Perfectly happy. 


Prof. Richard Epstein:  Perfectly happy. Now, I’m going to ask you the following question. Suppose what it said is there are two ways to use this information. And the traditional method has always been to take it and then to make it anonymous with respect to people whom you do further business with, in fact, for your own self-protection because if you give your consumer list out to somebody, they’ll use it. If you simply give them a promise that they’re going to have X number of consumers meeting Y parameters and don’t give them the names, and then sold the list, you could sell it over and over again. That, I think, is perfectly stable.


But when you think, Jessica, if they decided that they wanted to go all in, you have to sacrifice it, do you think A) there would be consumer resistance, or B) if there weren’t, do you think there would be some reason to say now that you’ve deviated from the previous model that’s worked in the last 30 years, you should really think this over again?


Jessica Melugin:  I think consumers can think it over again. I’m not sold on the idea that I am being forced to give — no one is forcing me to hand over my data to Instagram. Instagram is a fun, goofy thing that I enjoy doing. I do it for free. I’m willing to put up with a certain amount of data being extracted from me and ads being shown to me that I probably want to see or have something to do with me.


I think that there’s different kinds of data. There’s different levels of concern about what kind of data we’re talking about. But if you’re talking about the transactional, like I go online and I see a popup ad and it follows me to the next ad, I don’t think that those kinds of models last forever, first of all, and I don’t see some reason why that necessitates a revolution in the way data is regulated.


Prof. Richard Epstein:  Do you agree, Hal?


Dr. Hal Singer:  Can I just weigh in right here? So what’s happening is that because Congress is so broken and because we haven’t managed to write a new privacy law to take on the digital platforms, we’re using the only tool that’s really left at our disposal, which is antitrust. And so yes, you an make a case if you squint your eyes that a privacy harm could be construed or cognizable under antitrust law, but that’s not a first best solution. And I certainly don’t want to be they guy explaining that to a judge because I like to leave the courtroom with every piece intact.


Prof. Richard Epstein:  Essentially, Asheesh, is the real issue that we’re worried about with privacy misappropriation, or is voluntary transfer of equal danger?  


Asheesh Agarwal:  Oh, I think it’s probably misappropriation. It’s interesting, to Jessica’s point, that everybody values privacy in the abstract, but when they’ve done studies about, well, how much would you as a consumer be willing to pay to keep all of your information private, it’s almost nothing, quite frankly.


And there are websites that are much more protective of people’s privacy. DuckDuckGo is a perfectly good search engine that doesn’t track your data across websites in the way that Google has for its ads. It’s still a much smaller player than Google, for example. Look, I agree that some sort of privacy legislation makes sense, but good luck.


Prof. Richard Epstein:  You don’t know what. My observation about it is if you don’t have the data collection for the ads you don’t want to see in addition to the ones that you might want to see, and to the extent that ads are targeted to you and they’re more valuable to you, it seems to me it’s a consumer win on that particular point. And why do I say that? Because I don’t think there’s anybody who wants to have an ad free universe.


Really, this business has been around a long time, and there’s a debate which goes back to the ’70s as to whether ads essentially are designed to give people information that they value or whether it’s designed to give them kind of a seduction in siren form. My view is in consumer markets, if you try it once and it doesn’t taste good, you don’t buy it again. And companies know that, so the improvement is there.


Look, we have a grand total of two minutes, and I don’t want to end this conversation with myself. So we’re going to even do it more compressed and in reverse order. We now have 30 seconds each, Hal, Asheesh, and Jessica, and then I’ll have the last word, which will be thank you. Hal, do you have parting thought?


Dr. Hal Singer:  Well, I think there are some good antitrust cases out there. I think it’ll be fun to watch them unfold. But just remember that’s not the only tool. If we think that there’s a market failure or abuse of dominance that’s not supported by a restraint and crosses a firm’s boundary and generates a price effect, by all means, stop it through regulation.


Prof. Richard Epstein:  All right, so here’s to the man of mixed market responses. Yes, Asheesh?


Asheesh Agarwal:  Well, thanks again to you and to the Chicago FedSoc chapter. I would close by saying that we have multiple major lawsuits pending right now against Apple, Google, and Facebook. The antitrust laws are flexible. Let’s see what happens in the courts over the next one to three years. And I think at that point, we’ll have — if there is a basis for changing the law statutorily or through rulemaking, we’ll have a much better understanding of that.


Prof. Richard Epstein:  Now, Jessica, are you willing to wait that long, or do you know the answer now?


Jessica Melugin:  I’m willing to wait. I’m willing to wait. We’ll also see — along the parallel lines of what happens with that litigation, we’ll see what happens in the marketplace, and we’ll have a better idea of what issues we’re worried about today that we’re still worried about by the time that the Google case in 2025 gets probably settled.


But I want to say thank you so much for having me, and I have so much respect for all three of these gentlemen. So it’s really been a pleasure to talk with all of you today. 


Prof. Richard Epstein:  Okay. And I want to have brief retrospective. Everybody remembers when whatever it was, AOL managed to acquire Time Warner. And we knew who the dominant player was. And ten years follow, and no more AOL, and Time Warner’s a powerhouse. So that’s the moral for this particular presentation. We exceed in content even if we are slight in transmission.


I want to thank everybody on the panel for being here. I want to thank John Adams and Kate Fugate for organizing this, and I want to tell everybody I’m getting off now because I have to teach a class in 20 minutes. So thank you all. Take care and goodbye. All right, John, you can shut us down. And we had a great panel, and I want to thank all three of you.


John Adams:  Thank you, everybody.

Asheesh Agarwal


American Edge Project and U.S. Chamber of Commerce

Jessica Melugin

Director, Center for Technology and Innovation

Competitive Enterprise Institute

Hal Singer

Managing Director

Econ One Research

Richard Epstein

Laurence A. Tisch Professor of Law and Director, Classical Liberal Institute

New York University School of Law

John Adams


Eimer Stahl LLP

Antitrust & Consumer Protection

Federalist Society’s Chicago Lawyers Chapter

The Federalist Society and Regulatory Transparency Project take no position on particular legal or public policy matters. All expressions of opinion are those of the speaker(s). To join the debate, please email us at [email protected].

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