The GOP Should Not be Helping Democrats Break up Big Tech

Washington, D.C. – Thanks to Joe Biden's mishandling of the economy – and just about everything else – the Democrats seem to be falling apart. Less than 40 percent of all Americans believe he is doing a good job as president.

That seemingly should create an opening into which the GOP can slide easily, leaving them in a good position to stop Biden from raising taxes, pursuing the Green New Deal, and putting Build Back Better into place piece by piece.

The GOP unfortunately, never seems to let an opportunity to ruin a good thing go to waste. Divisions within the party over policy, especially between the Trump and anti-Trump wings, threaten to derail a unified effort to win back control of Congress.

The biggest difference comes, surprisingly, from an issue that not many in the GOP typically give much thought to. The rise of social media, and the perception that the most important platforms discriminate against expressions of conservative opinion, have led large numbers of those on the right to believe its time to give the federal government unprecedented power to break up the companies that together are known as “Big Tech.”

Unbelievably, at least to those who still believe in limited government, several prominent, usually reliable conservatives have jumped on board a crusade launched by Minnesota Democratic Sen. Amy Klobuchar to bring the companies that own search engines and social media platforms to heel. As written, say those who have looked at her bill, it would make it more difficult for consumers to use some of the most popular services provided by the nation's five biggest technology companies.

Under the terms of the Klobuchar bill, for example, it would be much more difficult for Amazon to offer free two-day shipping to its Prime members or to offer its house label version of products as alternatives to better-known household brands. How that furthers the cause of protecting consumer welfare, which is the current standard for evaluating whether corporate behavior violates existing antitrust regulations, is not clear at all.

“In plain English,” wrote Tom Hebert, the executive director of the Open Competition Center in a recent op-ed, “the bill bans companies over a government-determined size from promoting their own private-label products next to name-brand products. This is not an insidious practice — Costco does this when they sell Kirkland paper towels next to Bounty.”

Some have made the argument Klobuchar's bill is an attempt to undo the consumer welfare standard in place for nearly half a century in favor of a “let the federal bureaucrats at the FTC decide if big and bad are the same thing” approach to antitrust that would be bad for business but great for the politicians who oversee their regulators.

The arguments some conservatives use to justify their support for the Klobuchar approach don't make sense. Writing in a letter to the Wall Street Journal recently, Iowa GOP Sen. Chuck Grassley and Colorado Republican U.S. Rep. Ken Buck suggest “Ample evidence illustrates how Big Tech has engaged in anticompetitive behavior that has hurt businesses and consumers” without offering any.

“Our legislation states unambiguously that dominant platforms may not preference or discriminate in a manner that would materially harm competition,” they continue but, by blocking a site from promoting inhouse brands alongside what others offer for sale or use, they're advocating for exactly what they say they are against.

At least they have it right when they say “When companies must compete for customers, and consumers have the freedom to choose among a variety of products or services, everyone has a chance for success. This classically free-market and traditionally American economic setup also pushes companies to innovate to get a leg up.”

The Klobuchar approach they've endorsed doesn't do that. It chokes off competition rather than promoting or safeguarding it. A study recently released by the Committee to Unleash Prosperity written by Dr. Arthur Laffer and John Barrington Burke on the economic impact of the proposed bill, unlike the Grassley-Buck letter, provides persuasive evidence that the companies that constitute Big Tech “provide services at steadily lower prices to consumers.”

That is exactly the opposite of what monopolies do, meaning there's little justification for going after them on existing antitrust grounds. New ones are needed, and what's being proposed by Klobuchar et all is not in the consumer's best interests. Laffer warns their new strategy for dealing with antitrust would “add dramatically to the prices that consumers pay for routine tech services from package deliveries to cell phones, to search engine services, to social media communications.”

Hebert's analysis is just as frightening to those who support free markets. Klobuchar's bill, he wrote, “prohibits platform companies with a market capitalization of over $550 billion and 50 million monthly users from promoting their own ‘products, services, or lines of business' next to those of a competing business in a way that would ‘materially harm competition.'”

“If a bureaucrat determines that a company has violated” the terms laid down by Klobuchar in her legislation Hebert continues, “the government can levy a civil penalty of up to 10 percent of revenue” which, he concludes, “could easily be twice the size of the profits in a low-margin industry like retail.”

That's a high price for all of us to pay just because someone got sent to Facebook “jail” or Twitter “prison” for expressing an idea someone, somewhere, didn't like. The companies need to be more transparent about how those things happen and who is responsible for it as well as institute an appeal process that works. They are private companies who are not legally bound to uphold the absolute protections provided us in the U.S. Constitution regarding free speech but, as we live in a free speech culture, they would be smart from a market perspective to make better accommodations for the expression of views their platform overseers view as discordant.

The Laffer study also points out how the high-tech sector has been instrumental in protecting price stability and keeping down inflation over the last decade. Overall prices over the last ten years have risen by 22 percent. The cost of tech products and services has fallen by at least 16 percent over the same period. That's not monopolistic, which is how most of us who are not attorneys tend to think when the phrase “antirust” is invoked.

If enacted, the Klobuchar bill would give the U.S. Federal Trade Commission massive new powers to go after companies without any guarantee free speech and censorship on social media would be protected, let alone addressed. It would establish a framework for federal regulators to go after companies based on size alone and not because they have misbehaved in the marketplace. That's a dangerous place to be because it doesn't offer consumers any more protection than they have now and is certainly not something conservatives who say they support limited government should endorse, let alone co-sponsor.