Changing of the guards: U.S. elections likely to drive further international cooperation on competition in tech markets
The recent 2020 U.S. federal elections were a cliff-hanger for many across the globe. Antitrust has not been a core platform of any of the candidates, but many have been watching for clues as to the potential impact on competition enforcement and regulation in tech markets.
The expected change in the executive branch with presumptive President-elect Joseph Biden is likely to expand on existing federal enforcement priorities. The impact on current and future enforcement will depend heavily on leadership appointments at the Federal Trade Commission (FTC) and Department of Justice (DOJ), currently being developed by a transition team. More fundamental changes to U.S. competition enforcement and regulation in the tech sector are also possible, depending on the outcome of the January 2021 run-off elections for control of the Senate.
These developments will support greater coordination with other enforcers around the world on the issues facing the tech sector. The U.S. has been increasingly looking overseas on competition polices in these markets, and the transition team has signalled a broader commitment to multilateralism. Companies in the tech industry must consider the potential for increased collaboration and convergence of enforcement policies across jurisdictions.
Continued enforcement in the tech sector under the new leadership
Change in leadership at FTC and DOJ
Neither Biden nor Vice President-elect Kamala Harris have made antitrust enforcement or regulation a key issue in the campaign platform but have supported stronger antitrust oversight of the tech giants. What will have the greatest impact on open and future investigations in the sector is the appointment of leadership positions at the antitrust authorities. There is no set timeframe in which these leadership positions will be filled, and the appointments may be delayed pending Senate confirmation proceedings.
- FTC: New appointments for FTC Commissioners will have a significant impact on its enforcement stance. The Commissioners include representatives of both parties, with the majority expected to shift so that the Democrats will ultimately hold three of five seats as a result of the election. The President-elect will fill vacancies from any resignations (subject to Senate confirmation) and designate the Chairman. The Chairman—who in turn appoints the Director of the Bureau of Competition—will play a key role in setting enforcement priorities going forward.
- DOJ: Leadership appointments at the DOJ at the level of the Attorney General and the leadership of the DOJ’s Antitrust Division (both again subject to Senate confirmation) will also have broad authority to set the authorities’ new enforcement agenda going forward.
Since the transition team largely draw from former enforcers during the administration of former President Barak Obama, we expect the approach of the agencies to harken back to policies of the last administration. With the change in leadership, we also expect greater cooperation between the enforcers. The two have been sharply divided in recent years over cases such as the FTC’s enforcement action again Qualcomm, where the DOJ sought to intervene against the FTC in support of the company.
Impact on tech investigations
A change in the heads of the two key antitrust regulators may particularly influence the direction of the pending investigations and lawsuits. Both authorities are reported to have ongoing investigations into major U.S. technology companies. The DOJ filed an enforcement action against Google in October, and a potential FTC action against Facebook is reported to be imminent.
Investigations into other large tech platforms are ongoing. Since the Democratic state attorneys general have been active in these investigations and declined to join the Google enforcement on the basis that the enforcement was too narrow, they may seek to push the new administration to expand coordination and join them in supporting broader claims going forward.
We also expect further scrutiny of acquisitions of nascent competitors and enforcement targeting exclusionary conduct in line with global trends, as we previously anticipated.
Renewed international coordination
Moreover, renewed international enforcement efforts are expected during the new administration. President-elect Biden has previously committed to rebuilding transatlantic cooperation with allies in Europe.
In the past year, the European Commission has given statements in investigative hearings by the House antitrust subcommittee highlighting the importance of aligned enforcement approaches across jurisdictions. Since the election, Competition Commissioner and Executive Vice-President Margrethe Vestager — responsible for both competition and digital policy — has built on proposals for transatlantic collaboration on tech markets. To promote greater predictability for multinational platforms, she has called for developing a common rulebook for the digital economy across jurisdictions.
With Europe seen as taking the lead on enforcement in the sector, increased engagement (if not necessarily convergence) on ongoing investigations and regulatory initiatives is inevitable.
Potential for more fundamental legislation depends on runoff Senate elections
The most significant impact of the elections would be expected in the event of a change in control of the Senate together with its existing control of the House—which would occur if the runoff Congressional elections result in the Democratic Party taking the majority in the Senate. These elections are scheduled for January 2021 for two seats in Georgia which are currently held by Republicans.
While still the minority in the Senate, Democratic leadership in both the House and the Senate have already proposed measures that would promote convergence with other jurisdictions. A change in the control of the Senate could find some of these initiatives gaining support.
- House of Representatives: The democratic majority of the House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law recently released an extensive and widely publicized report on its investigations into Big Tech. Their report had recommended vastly expanding the scope of the U.S. antitrust laws, including incorporating the abuse of dominance analysis used in other jurisdictions. The House report also contemplated ex ante regulation on access to data and alleged discriminatory conduct by platform gatekeepers, which is similar to initiatives under discussion by the EC and German antitrust regulators.
- Senate: Similar initiatives have also been percolating in the Senate and are poised for more traction if there is a change of control. Senator Amy Klobuchar, the ranking minority Democratic member of the Senate Subcommittee on Antitrust, Competition Policy, and Consumer Rights, has been active in proposing significant legislation.
While Congress would still not be likely to muster broad-based support for the most significant changes that have been proposed in regulating or breaking up large tech firms, a change in control in the Senate could support more targeted legislation to enhance the competition toolkit for tech markets in line with other jurisdictions. Measures proposed include:
- Bolstering the competition toolkit for enforcers: legislation intended to support enforcement by introducing fines and creating presumptions of competitive harm for exclusionary conduct by companies with significant market position or acquisitions significantly increasing market shares or above certain thresholds; and
- Targeted measures to support enforcement: targeted legislation intended to improve competition enforcement in tech markets (e.g. legislation on conflicts of interest and self-preferencing) could also come out of a series of hearings the subcommittee has held on key issues in the sector, including online advertising.
If ultimately successful, these measures would help to bring the U.S. closer in line with the enforcement environment in other jurisdictions.