While the House Majority Report on digital platforms, published earlier this month, differs from other analyses both in terms of its structure of analysis and the range of its recommendations, it aligns with previous inquiries’ conclusion that governments need to do more to promote competition in the digital world. 

In August, Patricia Sakowski and I published a Stigler Center Working Paper titled Competition in Digital Markets: A Review of Expert Reports that analyzed 21 reports issued by 17 antitrust authorities and expert panels on competition in digital markets. All in all, we found that “the reports largely agree that governments need to do more to promote competition in the digital world, though they disagree on how to do so.”

Today, we are releasing an updated version of our working paper, incorporating both the analysis by the House Majority and the House Minority. Our previous summary still holds true, though with a small change: The reports we analyzed overwhelmingly agree that governments need to do more to promote competition in the digital world, though they disagree even more on how to do so.

In order to understand why this is the case, one has to understand how the House Majority Report (or simply House Report) differs from other analyses that have been carried out around the world, both in terms of its structure of analysis and the range of its recommendations.

In terms of structure, the House Report starts with a summary of the general competitive dynamics of digital markets, one in which it relies on testimonies and past studies such as the Stigler Center Report, the Furman Report, and the British Competition and Markets Authority’s Digital Advertising Market Study. Indeed, “Section III. Background”  uses around 40 pages to both present the House Majority’s view on the role that data, network externalities, and economies of scale and scope play in raising barriers to the entry in digital markets; and to generally affirm that the rise of some dominant digital platforms has negatively impacted innovation and entrepreneurship, privacy and data protection, the free and diverse press and political and economic liberty. 

In this general characterization, the House Report is not very different from past analyses: it took the Stigler, the Furman, and the Special Advisers’ studies 45, 40, and 75 pages, respectively, to similarly indicate the unique general characteristics of digital markets and the types of harms that may arise from lack of competition in the digital world. 

From there, the House Report moves to outline what drives competition in ten specific digital markets. This analysis is quite succinct when compared to its peers. For some markets, the House Report relies on a combination of past studies, testimonies/submissions to the subcommittee and some internal company data/exchanges. For example, the House describes the competitive dynamics in the markets for online search, social networks and social media, and digital advertising in roughly twenty pages. In doing so, it relies on and attempts brings to a US context many of the same conclusions reached by the British CMA in 2000+ pages. Other analyses of the same markets by the Australian Competition and Consumer Commission and by the French Autorité de la Concurrence required around 620 and 110 pages, respectively. 

The same goes for findings on the competitive dynamics of mobile app stores, where the seven pages of the House Report rely on and attempts to bring to a US context some of the conclusions reached by the Dutch Authority for Consumers and Markets in 108 pages. On the other hand, the House Report is the first to separately analyze  the markets for online commerce, mobile operating systems, digital mapping, cloud computing, voice assistants, and web browsers, something that it does so somewhat succinctly, in 40 pages.

The House Report appears to do so because, at least in comparison, it reads as if it is trying to achieve a different goal from the other studies reviewed in our working paper. More specifically, those past studies were either focused on understanding the broader competitive dynamics of digital markets (Stigler, Furman, Special Advisers, etc.) or the competitive dynamics of specific markets that compose the digital world (CMA, Australian Competition and Consumer Commission, Autorité da la Concurrence, Dutch Authority for Consumers and Markets). 

The House Report, however, does not seem to be really focused on understanding markets, but rather on probing specific companies. Indeed, the 250 pages that compose the report’s core “Section V. Dominant Online Platforms” read less like an independent fact-finding mission and more like an indictment of the economic power of Facebook, Google, Amazon, and Apple, combined with a calling out of what the House Majority sees as the absolute failure of the American antitrust establishment to acknowledge and prevent the rise of these behemoths. 

This analysis cuts across many different markets and includes many valuable (and quite damning) internal documents, data, and testimonies. Reading them does make you wonder what US antitrust authorities were thinking over the past years when they failed to challenge even a single merger or conduct in the digital world, especially in the markets they had expressively promised to keep on a tight leash. However, in choosing to focus on companies rather than markets, the House Report reads very differently from the other documents that reflect more traditional antitrust reviews. 

All of this, it is worth stressing, is a bipartisan analysis that is also supported by the House Minority. 

“Many of the House’s conclusions are perfectly aligned with the analyses made in other countries—there is all but a consensus that Google, Facebook, and Apple are dominant in their core markets.”

This apparent goal of denouncing both the power of digital platforms and the general failure of antitrust enforcers in preventing their rise is also reflected in the House Report’s recommendations section. Indeed, as our paper summarizes in more detail, many of the changes to antitrust laws defended by the House Report go significantly beyond what has been defended in other analyses. To mention two important distinctions, while most reports defend the notion that antitrust should continue to be generally guided by the consumer welfare standard (not the extremely narrow view that equals antitrust injury to output effects, but one that incorporates quality, innovation, etc.), the House Majority advocates for Congress to restore “the original intent and broad goals of the antitrust laws, by clarifying that they are designed to protect not just consumers, but also workers, entrepreneurs, independent businesses, open markets, a fair economy and democratic ideals.” 

Similarly, while other studies generally focus on changing burdens of proof as a way to rebalance error-costs in antitrust enforcement and some (including the Stigler and the Furman reports) defend the creation of a new regulator to handle concerns like self-preferencing by dominant digital platforms, the House Majority defends the creation of broad structural separations and line of business restrictions as the best way to prevent dominant intermediaries from abusing their dominant positions.

In addition, many of the proposals in the House Report would impact antitrust enforcement in ways that would go beyond digital markets. For example, it proposes the creation of rebuttable structural presumptions against transactions that would lead to a concentration of 30 percent or more of a given market, or that Congress explores a presumption against all vertical mergers when either of the parties is a dominant firm in a concentrated market. It also proposes that Congress extends the Sherman Act to prohibit abuses of dominance, something that could be potentially paired by a presumption that a seller with 30 percent or a buyer with 25 percent of a given market are considered dominant; that Congress removes the need to prove recoupment to qualify conduct as predatory, facilitates tying claims and revives the essential facilities doctrine, among others. These would be paired by the legislative reversal of many judicial decisions that restrict enforcement, such as the much-discussed Ohio v. American Express Supreme Court case (that indeed requires important adjustments/clarifications). 

There are also proposals to facilitate Congressional oversight of antitrust enforcers, increase their funding and facilitate private antitrust litigation. Many of these bolder reforms have been challenged by the House Minority Report, some outright (e.g., structural separations, increase of private antitrust enforcement) and some because the minority defends further studies are needed before it can reach a conclusion (e.g., revitalizing the essential facilities doctrine, creating rebuttable structural presumptions for dominance).

All in all, many of the House’s conclusions are perfectly aligned with the analyses made in other countries—there is all but a consensus that Google, Facebook, and Apple are dominant in their core markets. The focus on Amazon is somewhat new, as other reports discussed e-commerce more broadly. In addition, the analysis of some markets such as cloud services and voice assistants is equally new and likely merits more in-depth scrutiny than the House afforded. 

Some of the proposals also find counterparts around the world (e.g. presumptions on start-up acquisitions, some changes in burdens of proof), while others go significantly beyond what has been discussed elsewhere. Above all, as David Dayen writes in his apt summary in the American Prospect, the combination of the report’s unique structure and proposed solutions reflect a “Big Tech report that’s not about Big Tech”, but rather about reimagining US antitrust enforcement altogether. In doing so, it places the US back at the center of the discussions on how to govern digital markets—a discussion it had unfortunately relegated to other jurisdictions for many years.

Finally, as a side note, we were quite happy to see the prominence of the Stigler Center Report (one of the most if not the most quoted document in the House Report) and even a quote from ProMarket as part of the materials that helped support the investigation. When we decided to put together the Stigler Committee on Digital Platforms, we did so exactly because of the almost absolute lack of engagement from US authorities on this crucial discussion on the governance of digital markets. As the conclusion to the Policy Brief stated:

“Some will regard our proposals as too timid, while others as too radical: We regard them as the minimum response to address the new challenges raised by Digital Platforms. As the Digital Revolution is advancing, the political system is called to manage the effects of this revolution on society. Without a public debate, the policy response risks being dominated by the interests of the Digital Platforms themselves. The independent nature of this report makes it the ideal starting point for such debate, which we hope will be intense and fruitful.”

The Stigler Report has been out now for roughly 12-months—we are very thankful to the 30 scholars from around the world who dedicated part of their limited time to help us put this project together. Since its release, the Stigler Report has been challenged by the Council of Economic Advisors of the Trump Administration and by the Charles Koch Institute, among others who disagree with our views. On the other hand, it has been generally well-received by many other antitrust authorities and scholars around the world and now by the House Majority. 

As an independent research institute, we are delighted to be achieving our goal of participating in this crucial debate about the governance of the digital world. We are also happy that the US government has officially decided to join this conversation, not only with this report but with the many ongoing investigations that are carefully scrutinizing these digital markets that are crucial not only to our economic well-being but also to our democracy.