Republican Sen. Josh Hawley of Missouri has put what he called “woke mega-corporations” on notice, particularly tech platform giants including Facebook and Google.
However, new antitrust legislation he proposed could place drastic new restrictions on all sorts of big businesses.
You have read the maximum number of free articles.
This content is available exclusively to Digiday+ members.
Despite some similarities to a recent antitrust reform bill from Sen. Amy Klobuchar of Minnesota, bipartisan momentum behind Hawley’s bill is likely to be tepid at best considering his polarizing push to contest the Electoral College vote on Jan. 6 certifying Joseph Biden as president. Still, the legislation could step up congressional dialogue around updating the government’s approach to defining what anti-competitive behavior looks like in a tech-ruled era.
Hawley’s bill is bold and could start a more vibrant discussion around antitrust reform in the Senate, suggested Barry Pupkin, a senior partner focused on antitrust at law firm Squire Patton Boggs. “It seems sort of, I guess, radical,” he said. “I think you straitjacket a lot of possibly decent transactions,” Pupkin continued, adding, “I think though, it starts a dialogue.”
So, what’s so radical about it? Here’s what Hawley’s Trust-Busting for the Twenty-First Century Act, introduced on April 12, proposes:
- It would prohibit “dominant digital firms” such as Amazon, Apple, Facebook and Google from making any acquisition worth over $1 million — effectively squashing any tech-related acquisitions.
- It defines a “dominant digital firm” broadly as one that possesses dominant market power related to a website or internet service.
- It would touch companies way beyond big tech. It would preclude any company with a market cap over $100 billion from making acquisitions that lessen competition, meaning corporations including Johnson & Johnson, Procter & Gamble, Walmart, Disney and Netflix would think twice before attempting to buy or merge with other companies.
- It would update the Federal Trade Commission’s authority over antitrust regulation by giving the FTC the authority to investigate a dominant digital firm.
- In addition to potentially preventing a variety of acquisitions, the legislation would require companies found in violation of updated antitrust rules to forfeit profits derived from business or acquisitions related to activity found to be anti-competitive.
The Democratic bill
On the other side of the aisle, an antitrust reform bill introduced in February by Democratic Sen. Amy Klobuchar, gives both the FTC and the Justice Department, the federal government’s other trust-busting agency, more penalty power against companies, more resources and more money for hiring additional personnel. Here’s what’s important:
- Klobuchar’s Competition and Antitrust Law Enforcement Reform Act would nearly double the FTC’s annual budget and boost the DOJ’s antitrust division’s budget, funding that will help attract more knowledgeable tech experts.
- It would establish a new Division of Market Analysis inside the FTC to conduct investigations, publish reports evaluating the competitive conditions and dynamics affecting markets, assess the competitive effects of acquisitions after they are completed and recommend enforcement actions to remedy anti-competitive impact.
- Klobuchar has made antitrust a primary mission as powerful chair of the Senate Judiciary’s antitrust subcommittee, on which Hawley sits as a minority member.
What the bills have in common
There is a key similarity between the two bills. Notably, said Pupkin, both Klobuchar’s and Hawley’s proposals seek to shift the burden of proof away from the federal government to the defendant. Hawley’s bill requires the party making the acquisition, rather than government regulators, to establish evidence that an acquisition’s pro-competitive effects outweigh any anti-competitive impact. Klobuchar’s bill also would require corporations making acquisitions that are extremely large or could significantly increase market concentration to prove that snapping up other companies wouldn’t harm competition.
“You’re changing the burden of proof,” said Pupkin. Right now, he said, “The government has the burden of proving illegality.”
Other big tech antitrust lawsuits are underway
Efforts related to anti-competitive practices among the big digital platforms are already underway at both the FTC and the DOJ. The FTC in December launched its investigation into Facebook, alleging the company has maintained its monopoly on the social media industry by acquiring emerging rival Instagram in 2012 and mobile messaging app WhatsApp in 2014. The DOJ, several states and even a publisher group have filed antitrust lawsuits against Google, arguing that aspects of its search, digital ad business and decisions about third-party cookies are anti-competitive.
Hawley’s history of fighting big tech
While Hawley’s bill would affect all sorts of large companies beyond the tech industry, he has taken special interest in fighting tech platforms, arguing they have too much power and make biased decisions that stifle conservative voices.
“A small group of woke mega-corporations control the products Americans can buy, the information Americans can receive and the speech Americans can engage in,” said Hawley in a press statement introducing his bill.
Hawley has been a vocal critic of Facebook and Twitter for their decisions to ban prominent conservatives from their platforms for posting false or misleading information. “These monopoly powers control our speech, our economy, our country and their control has only grown because Washington has aided and abetted their quest for endless power,” he continued in the statement.
In addition to filing antitrust suits against Google and Facebook while attorney general of Missouri, in the last Congress he introduced reforms to Section 230, which protects websites from liabilities associated with information posted by others on their sites. His proposal would stop large tech firms from discrimination when enforcing terms of service and allow users to sue them for breaching their “contractual duty of good faith.” And he sent a letter last year to Twitter CEO Jack Dorsey arguing the company did not deserve immunity under the Section 230 law after Twitter labeled as incorrect or misleading former President Donald Trump’s tweets making false claims about the legitimacy of President Joseph Biden’s presidential win.
Hawley’s bill is unlikely to garner support from the left, but…
Some elements of Hawley’s bill that would drastically limit business growth and advantage through acquisition might appeal to Democrats or progressives, suggested Pupkin. However, considering the senator’s reputation as a staunch Trump backer who led the push to block acceptance of the 2020 Electoral College results, Pupkin said the political optics would likely deter any bipartisan support or even real momentum behind the legislation.
“Given Hawley’s history in the last three months, particularly around Jan. 6, I think he’s going to have tough time getting much of anything through,” said Pupkin. A lot of Democrats “might be willing to go along with” legislation that prevents giant companies from growing, he suggested, “but they wouldn’t be able to go along with Hawley.”
Sign up to get the day’s top stories at 6am eastern.