Digital Concentration Isn’t Antitrust Problem, Official Says

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By Victoria Graham

The increasing concentration of the digital platform marketplace doesn’t automatically mean there is an antitrust problem, the head of the Justice Department’s antitrust division said April 19.

“The concentration of an industry is not the same thing as the concentration of an antitrust market,” DOJ Assistant Attorney General Makan Delrahim said in comments prepared for delivery at the University of Chicago’s Booth School of Business.

Consumer preferences, not antitrust enforcement, should be the primary tool that dictates how technologies adapt and emerge to address ongoing concerns in the digital world, Delrahim said.

His comments come in the wake of a range of criticism from advocates and lawmakers about big tech companies such as Alphabet Inc.'s Google, Amazon.com Inc., and Facebook Inc., which appear to have elbowed out any competitors, leaving consumers with fewer choices.

Delrahim’s comments on digital platforms reflect his general viewpoints on DOJ enforcement overall: Free markets should dictate competition, not antitrust. They build on his overall mission to reinforce the DOJ’s role as an enforcer and not a regulatory body.

To that end, Delrahim also announced the creation of the Office of Decree Enforcement within the antitrust division, which will aim to ensure compliance and enforcement on consent decrees that companies enter into with the agency. Details concerning how the office will function are expected in the coming weeks. The division began reviewing some 1,300 old consent decrees last year to determine which ones had outlived their usefulness and need to be terminated.

Let the Consumer Decide

Data privacy concerns are top of mind for many consumers, as recently illustrated in Cambridge Analytica’s breach of Facebook user data. Advocates say Facebook’s dominance in the marketplace gives it too much control over massive amounts of user data.

Delrahim said an antitrust crackdown on digital platforms isn’t the right way to remedy data privacy concerns. Instead, consumer choice will ultimately dictate where the marketplace will shift. “From an economic standpoint, the key takeaway is that revealed preference for data privacy could signal the emergence of a new market asset,” he said.

The DOJ’s role in the digital marketplace space is to ensure that new platforms can emerge. “A more effective approach grounded in evidence would be to ensure that there are sufficient incentives for new competitive entry in markets for platforms with network effects,” he said.

Evidence-Based

Some consumer advocates are calling for a broader approach in antitrust reviews that take into account societal concerns beyond prices and consumer choice, such as stagnant wages and unemployment, when enforcers are reviewing mergers.

Such a broad viewpoint would be dangerous, Delrahim said. Taking broader societal issues into an agency’s analysis would make “antitrust a political tool that changes significantly depending on the party in power,” he said.

An evidence-based approach, which requires credible confirmation that a proposed merger would harm consumers, is the prime way for the DOJ to approach antitrust concerns within the digital technology space. Antitrust analysis is structured to be flexible to respond to emerging technologies, he said.

To contact the reporter on this story: Victoria Graham in Washington at vgraham@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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