This week’s news can be divided into PM and AM editions – pre-Manchin and after-Manchin. Anything that seemed possible in Congress before Senators Manchin (D-WV) and Schumer (D-NY) announced their agreement on a reconciliation bill that addresses climate, energy, and tax issues now seems far less likely. Congress hath no fury like a McConnell scorned.
Yet for every Manchin in the news there is an equal and opposite Khan. This week’s headline is the FTC’s suit to block Meta from acquiring Within, a virtual-reality (ahem, metaverse) fitness startup – a suit that pushes the bounds of antitrust law so far that even the New York Times sounds skeptical. The FTC is making two core allegations. They are difficult to summarize in a few words, but that’s what I have: First, that by buying an existing company instead of developing its own competing product, Meta is lessening competition. In other words, by not affirmatively increasing competition Meta is lessening competition. And, second, that Meta’s stated intent to enter this market would have already discouraged new entry, so allowing this acquisition would further lessen competition. In other words, potential entry lessens competition.
It is hard to overstate how incoherent these theories are. At most pithy, they fail to recognize that barriers to exit are barriers to entry. If the FTC is successful in this case, it would kneecap American innovation and reduce choice online in a single act. And winning this case would require breaking basic, longstanding, antitrust doctrines. Just imagine the market definition exercise! As Mark Meador notes, it’s a strange strategy to bring an antitrust case when you “describe the industry as “characterized by a high degree of growth and innovation” in your press release.”
[Updated Friday morning to add:] Leah Nylen reports that FTC staff recommended against challenging this acquisition but were overruled by Khan. This unfortunately offers further support for Khan’s assertion that M&A “can really degrade working conditions.“
Chair Khan’s FTC has been a cypher when it comes to Big Tech. Since being appointed, she has consistently talked a big game. But as Commissioner Wilson notes, the FTC has let four similar deals go through with Meta alone. And now Chair Khan is going all-in with the first hand she plays, bringing a case that will drain the Commission’s resources and distract it from other matters for a significant portion of what remains of President Biden’s first term.
Looking back to the pre-Manchin news, Senator Schumer spent the early part of the week being harassed by protesters and colleagues from the left and the right, all demanding that he bring the American Innovation and Choice Online Act (AICOA) to the floor for a vote. But Senator Schumer seems to have said the quiet part out loud: he doesn’t believe that the bill has the votes to pass. And with the August recess looming and the midterms not waiting far behind, he doesn’t have the floor time to waste on bills that won’t pass.
Well, that and he might understand something that Senator Klobuchar (D-MN), AICOA’s champion, doesn’t seem to have figured out: As Neil Chilson notes, Americans aren’t all that worried about big tech and, especially in an period of high inflation, actually like the business practices AICOA would make illegal. (One wonders if that’s how he persuaded Manchin to support the reconciliation bill, showing him the polls showing support for climate legislation – that and offering cookies.) He’s not alone in understanding that the bill faces faltering support.
Finding stories about AICOA this week – none of them positive – is like shooting fish in a barrel. See here, here, here, here, here, and everything cited above. We’ve been calling AICOA dead bill walking for weeks. But that now seems to be the safe take.
None of this seems likely to stop Senator Klobuchar from trying to make fetch happen. Politico reported this morning that she plans to hold an antitrust hearing next week but yet doesn’t have any witnesses lined up to provide a backdrop for opening statements.
What else is in the news? The previously-reported MOU between the FTC and NLRB apparently has a third counterparty: the Department of Justice is also in on the action. Steve Salop and Jennifer Sturiale have an interesting piece arguing, in light of West Virginia v. EPA and the stalled state of AICOA, that the FTC should adopt new … wait for it … UMC enforcement guidelines. The piece is thoughtful and worth reading. It is curious to note, however, that while they aspire to put forth a viable “middle-of-the-road” approach, they recognize that this is not that. Not too long ago there actually was a bipartisan UMC policy statement. If Salop and Sturiale want to propose “middle of the road” UMC guidelines that might have bipartisan support they should probably start with the 2015 UMC guidelines that actually were adopted with bipartisan support.
Looking for something to read? I turn to some self-preferencing for this week’s recommended lunchtime or community reading. Truth on the Market, the very same blog that hosts the FTC UMC Roundup, is currently running a symposium on Antitrust’s Uncertain Future: Visions of Competition in the New Regulatory Landscape. While some of the pieces are traditional, scholarly blog posts, others have chosen different literary genres to explore this imagined future, such as short stories, parables, sci-fi inspired pieces – even poems or song lyrics. Not only is it entertaining and insightful: it’s the week’s must-read.
The FTC UMC Roundup, part of the Truth on the Market FTC UMC Symposium, is a weekly roundup of news relating to the Federal Trade Commission’s antitrust and Unfair Methods of Competition authority. If you would like to receive this and other posts relating to these topics, subscribe to the RSS feed here. If you have news items you would like to suggest for inclusion, please mail them to us at firstname.lastname@example.org and/or email@example.com.