Antitrust hawks offer states a toolbox for regulating Big Tech

‘If we’re going to wait for Washington to solve this problem, we could be waiting a very long time,’ New York state senator says

The so-called techlash that has gripped Washington in recent years has yet to result in Congress sending new antitrust legislation to the president’s desk. (Lionel Bonaventure/AFP via Getty Images file photo)
The so-called techlash that has gripped Washington in recent years has yet to result in Congress sending new antitrust legislation to the president’s desk. (Lionel Bonaventure/AFP via Getty Images file photo)
Posted November 16, 2021 at 6:30am

Antitrust hawks who favor tougher regulations on big technology companies are looking beyond the Beltway to aid state lawmakers who have similar aims — but fewer resources.

The D.C.-based American Economic Liberties Project — a nonpartisan organization that advocates for new antitrust laws to take on the power of companies like Apple, Amazon, Facebook and Google — last week released a toolkit that state officials could use to push policies similar to those that have been proposed, but not yet passed, at the federal level.

"There's something really important about state lawmakers setting the terms for their constituents and their local economies and not waiting for Washington to deliver something that may never actually come along," Pat Garofalo, the organization's director of state and local policy, told CQ Roll Call.

The so-called techlash that has gripped Washington in recent years and resulted in increased scrutiny of major firms like Google and Facebook, which are both facing federal antitrust suits aided by bipartisan groups of state attorneys general, has yet to result in Congress sending new antitrust legislation to President Joe Biden's desk.

The bill that has come the closest, an uncontroversial measure that would update Federal Trade Commission fees charged to merging companies and direct the proceeds to antitrust enforcement, passed the Senate last summer as part of a larger legislative package but is now in danger of floundering because of the packed end-of-year legislative calendar.

For state officials who feel Big Tech's dominance is negatively affecting small businesses that rely on their platforms to do business, depending on Washington has grown tiresome.

"The question has been asked, why states need to step up,'" New York state Sen. Michael Gianaris, a Democrat, said at a discussion hosted by AELP last week. "If we're going to wait for Washington to solve this problem, we could be waiting a very long time."

Gianaris is backing state legislation that would change New York's definition of what constitutes unlawful monopoly power by a single company. Much of antitrust law depends on the consumer welfare standard, which ties monopoly power to the price of goods and services. Because technology companies offer "free" access to their platforms, antitrust hawks say they have become dominant without running afoul of the consumer welfare standard.

'Abuse of dominance'

The New York bill, which passed the state Senate in June, would establish an "abuse of dominance" standard to replace the existing consumer welfare standard.

"These big corporations have monopolized access to the consumer through their various platforms: Google search, Amazon's selling platform, Google and Apple's app stores," Garofalo said. "There are all sorts of ways they can game these platforms to harm the folks that have become reliant on them because there's nowhere else to go."

While the New York bill is the first of its kind, Gianaris is hopeful that it will spark action in statehouses across the country.

"There's a great history in this country of states serving as laboratories and providing solutions that can be exported to other [states] and then adopted throughout the country," he said last week. "I think it's time we step in and take a stand for small and medium-sized companies, for workers and for the general public."

Establishing an "abuse of dominance" standard is one of the nine suggestions outlined in AELP's toolkit for taking on Big Tech. 

"These big corporations have monopolized access to the consumer through their various platforms: Google search, Amazon's selling platform, Google and Apple's app stores," said Garofalo. "There are all sorts of ways they can game these platforms to harm the folks that have become reliant on them because there's nowhere else to go."

The toolkit lays out other legislative priorities, including proposals to more strictly regulate the app stores run by Apple and Google, that mirror ongoing efforts at the federal level. It also contains more localized proposals to protect small businesses, especially restaurants that have little choice but to partner with dominant food delivery companies to survive.

The report also urges state legislatures to provide more resources for their antitrust enforcers. While large technology companies can bankroll legions of attorneys and lobbyists, most states employ fewer than three antitrust investigators, the report said. Nearly half of all state-level antitrust enforcers are employed by six states, the report found.

But increased funding is not enough on its own, the report said, and should be paired with other legislative proposals.

"Increased antitrust funding will run up against states' traditional budget priorities," the report said. "And critics will point to the length and difficulty of antitrust cases as a reason not to pursue more of them, which is why increased funding should be paired with other reforms to antitrust law to reflect the realities of today's dominant corporations, particularly in tech."