Antitrust Law And Dominant-firm Behavior In The Digital Technology Sector: Toward An Actionable Agenda For Policymakers

The second of the two reports in a series, Antitrust Law And Dominant-firm Behavior In The Digital Technology Sector: Toward An Actionable Agenda For Policymakers applies the framework of the first report to eight well-articulated and widely studied public-policy problems involving the major dominant firms in the digital technology sector. The report examines how each of the eight problems is perceived to cause, often in differing proportions, a combination of social, economic, and political ills linked to the large digital technology firms. It then applies the framework, making recommendations to policymakers as to how they should evaluate and consider supplementing an antitrust approach.

The eight problems, and AAI’s findings in applying the five uncertainty variables to each, are summarized below.

1. MISINFORMATION AND DISINFORMATION. On both the producer and consumer sides of news markets, there may be a risk that increased competition would be ineffectual in slowing the spread of false and misleading information online. In addition, conduct that facilitates the spread of false and misleading information online may lead to divergent, incommensurable effects. That is, it may lead to increased output at the same time it leads to decreased quality.

2. SELF-PREFERENCING. If a vertically-integrated platform favors its own or its advertising partners’ products in the marketplace, an antitrust plaintiff’s ability to make evidentiary allegations of a discernable wealth transfer from either a producer or consumer to the platform will likely vary depending on the facts. Such plaintiffs sometimes may have to rely solely on qualitative evidence, sometimes may be able to rely on both qualitative and quantitative evidence, and sometimes may have to grapple with evidence suggesting that qualitative non-price effects and quantitative price effects diverge, and are incommensurable.

3. PREFERENCE-SHAPING AND BEHAVIOR MODIFICATION. If a dominant platform employs insights from human behavioral psychology to target the sale of commercial products and services in a socially harmful way, an antitrust plaintiff seeking to deter a harmful competitive effect may struggle to allege causation. Moreover, evidentiary challenges in establishing causation may lead to challenges in creating a viable remedy, particularly if it is unclear whether any non-price effects and price-effects may diverge.

4. THE USE OF ADDICTION SCIENCE IN SOFTWARE DESIGN. When a dominant platform employs principles of addiction science in software design as a means of attracting user attention, an antitrust plaintiff may similarly struggle to allege causation, again creating challenges in crafting  a viable remedy.

5. FREE SPEECH AND VIEWPOINT DISCRIMINATION. When a dominant platform’s algorithm for displaying content cultivates polarized, feedback-driven information flows that fail to expose users to diverse viewpoints, there is a risk that inter-platform competition will fail to solve the problem, particularly if platforms become siloed and users do not multi-home. An antitrust plaintiff seeking to challenge conduct on grounds that it generates harmful viewpoint suppression would be relying solely on qualitative evidence of a non-price effect, and the qualitative and quantitative effects likely are incommensurable and may diverge, creating challenges in crafting a viable remedy if a case could be won.

6. PRIVACY INTRUSIONS AND DATA BREACHES. When a dominant platform’s business model is predicated on making uniquely accurate predictions about human behavior through intrusive collection of user data and sophisticated data analysis, it is unclear whether the introduction of competing, privacy-protective choices in the marketplace will prompt users to switch away from the dominant platform. In addition, an antitrust challenge predicated on privacy harms necessarily would rely on qualitative evidence of a harmful non-price effect, and it may be unclear whether price- and non-price effects from intrusive privacy practices would align or diverge, and whether they would be commensurable, raising questions about the viability of an antitrust remedy.

7. “UNDEMOCRATIC” MARKET STRUCTURES AND THE POLITICAL POWER OF LARGE FIRMS. When a platform’s dominance in a market breeds antidemocratic political pressures, an antitrust plaintiff’s ability to alleviate such pressures through de-concentration measures likely will vary depending on the facts. Consummated merger challenges may offer the potential for de-concentration, but the spin-off of firms that offer complementary products may or may not lead to horizontal competition in a platform’s core market. Monopolization challenges may allow for comparatively more flexible de-concentration remedies, but whether they are likely to succeed in any given case depends on how the break-up remedy would be tailored to the challenged conduct.

8. WORKPLACE FISSURING AND LABOR EXPLOITATION. When a dominant platform’s behavior serves to depress the wages of employees or other workers or diminish the non-wage terms of employment or other work, whether increased competition will reverse the trend, and whether the platform will be found to have the necessary power to force such a wealth transfer, likely will vary from case to case. The viability of a competition-restoring remedy in the labor market likely also will vary depending on the facts.

The report was authored by Randy Stutz, AAI’s Vice President of Legal Advocacy, and made possible by grant funding from the John S. and James L. Knight Foundation. See