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Biden cites two Roosevelts in threat to break up big tech companies

Joe Biden.jpg

President Joe Biden is threatening to copy action by previous administrations to break up monopolies – and to undo approvals given for past mergers.

But he also cited work by two previous presidents, the two Roosevelts, who served in the first half of the last century, in their efforts to break up monopolies. Where the Roosevelts tackled oil and railroads, Biden (pictured) wants to tackle big tech.

In an executive order signed on Friday he said that he will ban excessive early termination fees by internet service providers (ISPs) and ban deals with landlords that give tenants only one internet option.

He told the the Department of Justice (DOJ) and Federal Trade Commission (FTC) to enforce antitrust laws “vigorously” and said they should be “to challenge prior bad mergers that past administrations did not previously challenge”.

It wasn’t immediately clear whether that would allow the Biden administration to unravel old mergers that it decides were “bad mergers”.

However, it looks as if the FTC will look at Amazon’s proposed takeover of MGM for US$8.45 billion, announced in May.

The executive order follows Biden’s appointment last month of a young lawyer, Lina Khan, to the FTC. She is famous for a paper she wrote as a graduate student only four and a half years ago, in which she noted a fundamental problem of identifying and taking measures against consumer harm: when the services are free, it’s hard under current law to prove an unfair wielding of monopoly power.

The White House said that the executive order on Friday “tackles four issues that limit competition, raise prices, and reduce choices for internet service”, though it does not immediately address issues that Khan is expected to tackle.

It laments that “more than 200 million US residents live in an area with only one or two reliable high-speed internet providers, leading to prices as much as five times higher in these markets than in markets with more options”.

The order prevents “ISPs from making deals with landlords that limit tenants’ choices”, demands price transparency “so people can compare options”, and wants to end high termination fees.

Biden said in the order that he encourages the Federal Communications Commission (FCC) to “restore Net Neutrality rules undone by the prior administration”.

But just as seriously for the hyperscale technology platforms, the Biden order notes that “over the past 10 years, the largest tech platforms have acquired hundreds of companies – including alleged ‘killer acquisitions’ meant to shut down a potential competitive threat”.

He says that “too often, federal agencies have not blocked, conditioned, or, in some cases, meaningfully examined these acquisitions”.

Now, mergers will get greater scrutiny, especially when they are by “dominant internet platforms, with particular attention to the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by ‘free’ products, and the effect on user privacy”.

He notes that “many of the large platforms’ business models have depended on the accumulation of extraordinarily amounts of sensitive personal information and related data”.

He says that “companies that run dominant online retail marketplaces can see how small businesses’ products sell and then use the data to launch their own competing products. Because they run the platform, they can also display their own copycat products more prominently than the small businesses’ products.”

Biden hints – or, rather, says explicitly – that his administration might force a break-up of some big tech companies.

The White House’s notes to Friday’s executive order quotes approvingly measures taken by two past presidents who “faced similar threats from growing corporate power”.

These are President Theodore Roosevelt (1901-09) and his nephew, Franklin Delano Roosevelt (1933-45).

The older Roosevelt “broke up the trusts controlling the economy—Standard Oil, JP Morgan’s railroads, and others”, says the Biden White House.

The younger Roosevelt’s “administration supercharged antitrust enforcement, increasing more than eightfold the number of cases brought in just two years”, says the White House.