(Drivebycuriosity) - The US is on the brink of a new recession. To make things worse there is a crusade against Big Tech. Leading Politicians and powerful agencies like the Federal Trade Commission (FTC) are throwing sand into the engines of Amazon, Alphabet (Google), Apple & Meta (Facebook). They are attacking companies which have been working well. Thanks to their sheer size & efficiency & dynamic Big Tech supported the growth of the whole US economy and constrained inflation.
Senator Amy Klobuchar is pushing a bill which intends to restrain technology companies just because they are huge & successful. Klobuchar´s bill - the American Innovation and Choice Online Act (AICOA S.2992) - , one of five antitrust bills, targets only technology companies with a market capitalization or annual revenue of $600 billion or more. Big companies like Walmart & Target are excluded, which allows them to go scot-free.
Klobuchar`s bill would bar major online platforms such Google parent Alphabet, Apple, Amazon, Meta (Facebook & Instagram) & Microsoft to favor their own products over those of rivals who use their platforms (twitter ). The Klobuchar bill excludes competitors like Walmart & Target - and many other retailers - which have
been doing the same business for years but are not included in the bill ( reason). Klobuchar wants to reduce services by Apple, Google, Facebook &
Amazon and might even break these companies up (klobuchar medium aier thehill springboardccia).
Klobuchar`s Bill also intends to give the already almighty antitrust authority Federal Trade Commission (FTC), which is enforcing antitrust laws, much more power and money (springboard ). In June 2021 President Biden called the progressive Lina Khan, who had worked for left-wing organizations, chair of the FTC. Khan, co-author of the Klobuchar Bill ( politico), bases her career (and her power) on the ridiculous claim that Amazon´s prices are Too Low (!) turning the company into a monopoly, even though the evidence of the recent 25 years show that the number of competitors has been rising all the time ( explained here and here).
Klobuchar also wants to give Jonathan Kanter, head of the Antitrust Division of the Department of Justice (Justice ATR), much more power. Kanter presents himself as a fierce enforcer of antitrust and tries to criminalize business leaders just for doing their jobs ( truthonthemarket Kanter).
Klobuchar`s bill would empower Khan & Kantner "to regulate Internet platforms and condemn business practices as they see fit" ( Laffer). The bill also gives enormous power to the Khan-controlled FTC and Kanter-controlled DOJ to pick and choose which businesses will and will not be covered by the bill.
Crippling The Tech Sector
The unholy trinity Klobuchar, Khan & Kantner intends to cripple the tech sector which is the bread and butter of the US economy. Professor Erik Hovenkamp explains that "no matter what an integrated platform does, there will almost always be some rival who can claim to be a victim of unequal treatment. For example, even if Amazon lists its own batteries 4th in the search results, it will still have to worry about potential complaints by rivals listed 5th or below. It might decide that remaining in the battery market would be more trouble than it’s worth" (papers.ssrn ). Hovenkamp adds: "Antitrust cases take years and cost many millions of dollars to litigate. The high costs of antitrust litigation—and the uncertain scope of antitrust liability under the proposed reforms—would threaten incentives for competition and innovation. They may discourage platforms from introducing desirable new products based on the fear that competing sellers could then sue for any perceived slight".
To make things worse, Big Tech can be fined with 15% of the global revenues (not profits) for alleged wrong doing (!) which would strangulate their business ( medium.) It would be far to risky for Amazon to continue Prime (washingtontimes).
The crusade is against the interest of the American consumers. Many Americans are happy with Big Tech´s services & products, otherwise they would prefer other companies. Google, Amazon, Apple & Co. could only become so huge because their services & goods are popular, cheap and often for free. And contrary to the claims of Klobuchar, Khan & Co. there is an intense competition (I explained it here and here).
The Internet makes it very easy to compare prices & services and to switch to other shops, news providers & entertainers, sharpening the competition. Customers can choose the company which has the best quality, the best service and/or the lowest prices which gives the consumers a lot power. As a result, customers have more power than the corporations.
But the crusaders don´t care about consumers and their real target is not competition. They want to punish growth and they ignore efficiency, productivity & consumer welfare. Klobuchar, Khan & Co want to reshape the economy and they are trying "to massively expand the size and scope of government" ( townhall ).
FTC Chair Khan and her fellow crusaders, called Neo-Brandesians (after Supreme Court Justice Louis Brandeis, 1916-1939), represent a Marxist ideology. They try to expand significantly the government’s role in the U.S. economy ( dailyjournal promarket) and they aim for a socialist society, where the means of production is controlled by the state, and planning will substitute for competition as the economy’s steering mechanism ( ftc.gov).
Khan & Co. loathe consumer welfare, meaning protecting the consumer (which is still the logo of the FTC). Sandeep Vaheesan, a Kahn Co-author, declared consumer welfare as "nonsense" ( law.columbia). Instead they want to fix issues like underemployment, income disparity, political power, and wealth accumulation (thehill ). FTC commissioner Rebecca Slaughter demands that “antitrust should be used to accomplish political and social goals” ( thecentersquare).
Klobuchar, Khan & Co view large companies as evil and they prefer that the government, rather than the private sector, orchestrates the
functioning of the economy" writes ( .ftc.gov). Biden adviser Tim Wu claims that, "efficiencies (caused by size),
productivity, declining costs, and cheapening of commodities" are bad. Some Brandeisans regard consume as vulgar and bad for the planet ( vox.com). Khan & Kantner want to
replace Big Tech by Big Brother Government. Giving them the control leads to stealth nationalization of leading companies ( washingtontimes).
Biden protege Lina Khan has an explicit beef with Amazon and stated publicly, absent any formal hearing, that the company is guilty of antitrust violations and should be broken up." (yalejreg.com wsj.com). Instead of fighting against price hikes Lina Khan and other Brandeisian Big Tech crusaders fight against low prices (yalelawjournal reason). They claim that low prices destroy competition, hurt workers and ruin the environment (vox ).
Throwing Sand In The Gears
The crusade could harm the whole economy because it wants to reduce services which are used by the majority of the Americans and make their
live easier. The
proposed reforms would especially hurt families who rely on digital
shopping and online communication every day. Many small retailers would
go out of business because they would loose Amazon´s efficient online
platform & logistic services to sell nationwide. America´s inflation could accelerate because the downwards price pressure by Amazon - and some of Google`s search functions - would
disappear. Higher prices would reduce the purchasing power of lower income families which would force them to spend less on goods & services. As result many companies - not only Amazon - will experience weaker revenues.
The crusade throws sand into the gears of companies which are the engines of the US economy by creating enormous additional costs & frictions. Big Tech has to restructure to apply to new laws, they have to hire armies of lawyers and to pay $ billions for courts & fines which have to be paid ultimately by the consumers. A study by National Economic Research Associates (NERA) came the result that enforcing the ongoing bills and rearming the FTC would cost US economy $319 Billion ( ccianet). The sum includes effects of higher retail prices and the loss of services like Amazon Prime. As a result Big Tech will be forced to hike prices (laffer ).
New regulations and inquiries are occupying management capacities and are slowing decision processes - making business more complicated and costly. The regulatory overkill already creates more bureaucracy which " is the death of any achievement” according to Einstein. New regulations and restrictions reduce the productivity & efficiency of Big Tech companies; they shrink their abilities to further innovate, making business more complicated and costly.
These costs and frictions will slow down the business of huge corporations which are the growth drivers of the economy. Slowing America´s growth engines will slow the whole already sluggish US economy.
If the Klobuchar & Co. win they will give advantages to less efficient corporations and they will encourage, laziness and ineffectivity will lead to "increased costs, reduced output, and harm to consumers and suppliers" (competitionpolicy ). More regulation also encourages corruption because powerful politicians & bureaucrats can blackmail corporations by threatening them to regulate them more.The crusade leads to a dictatorship by bureaucrats, punishment of merits, diligence, risk taking etc. Klobuchar/Khan`s antitrust leads to disorganization (by central planning) & waste of resources.
