When it comes to antitrust policy, Americans are from Mars and Europeans from Venus. That was my takeaway from a competition policy conference last week in Brussels, where all the top US and European regulators, as well as those from many other countries, tried – and failed – to develop a shared approach to the massive concentration of power that has built up in several sectors, most particularly platform technology.
Bringing the US and Europe together is key to successfully curbing both the power of Silicon Valley’s largest companies and the Chinese surveillance state, especially given how artificial intelligence is further entrenching the dominance of both. However, there are two fundamental differences in how Americans and Europeans see the issue of corporate concentration that will make it difficult to achieve this goal.
A fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties
— US president Joe Biden
First, consumer welfare still underpins the European approach to competition policy. But Americans are undertaking a much broader examination of how corporate power is amassed and wielded and what the consequences of undue power might be – not just for consumers but also industry competitors, workers and society at large.
“A fair, open, and competitive marketplace has long been a cornerstone of the American economy, while excessive market concentration threatens basic economic liberties, democratic accountability and the welfare of workers, farmers, small businesses, start-ups and consumers,” said US president Joe Biden in a July 2021 executive order. This unleashed a torrent of investigations of corporate power by the Federal Trade Commission (FTC), Department of Justice (DoJ) and the Consumer Financial Protection Bureau (CFPB).
These included not just traditional antitrust cases, but attempts to ban non-compete clauses that limit workers from moving jobs, and pre-emptive investigations into nascent industries such as artificial intelligence, which are already dominated by the usual firms. Lina Khan, chair of the FTC, defended this approach in Brussels, saying that “we are still reeling from the concentration that resulted from Web 2.0, and we don’t want to repeat the missteps of the past with AI”.
The director general of competition at the European Commission called anti-trust ‘a side dish’ to other state policies that encourage competitiveness
While FTC, DoJ, CFPB and White House officials in attendance all seemed to be talking about power rather than pricing, Europeans were subdued and divided. Some, including members of the European Parliament Andreas Schwab and René Repasi, seemed to want to adopt a more aggressive US-style approach. But it was most telling that Olivier Guersent, the director general of competition at the European Commission, called antitrust “a side dish” to other state policies that encourage competitiveness. The message was clear: incremental change is still the order of the day.
‘It’s a fool who turns down money’
This is perhaps to be expected. As Imperial College professor of economics and antitrust advocate Tommaso Valletti put it, “Europe imported a more economic approach to antitrust from the US 30 years ago.” By this, he means the consumer welfare approach and its technocratic focus on price. “Since then, professional economists [working in the field] have become very successful – they get about €1 billion in annual consulting fees … to support a business model that protects corporate rents.”
Europeans, who of course have no national champions in the tech space … still seem stuck in the narrow, technocratic world of pricing models
But price is usually irrelevant in a digital economy. As US trade representative Katherine Tai put it: “We have a massive problem with concentration in the technology field around those people who are collecting the data.” Tai has taken a tremendous amount of flak for withdrawing US support for a laissez-faire approach to cross-border data flows, because it would endanger privacy and also support the monopoly power of Big Tech and big states like China. “[Tech concentration] has become an enormous issue that we have to grapple with in trade and an area where the trade disciplines, the trade representative and the antitrust enforcers have been thrown into each other’s roles.”
Europeans, who of course have no national champions in the tech space, should welcome this approach. And yet they still seem stuck in the narrow, technocratic world of pricing models. Here’s hoping the next EU competition commissioner makes antitrust a main dish.
– Copyright The Financial Times Limited 2024
