Getty Images/iStockphoto

Litigants face tough road with antitrust lawsuits

As big tech companies like Google and Facebook fight antitrust lawsuits in court, experts are divided on whether core antitrust laws need updating for the modern economy.

Federal agencies, states and private companies keep lobbing antitrust lawsuits at big tech companies, but they have yet to win in court. Congress is facing mounting pressure to rein in powerful tech giants like Google, Facebook, Apple and Amazon.

It's been difficult for the Department of Justice and the Federal Trade Commission to quickly prove their antitrust cases. The DOJ claims Google maintains monopoly power over search and advertising markets. The FTC alleges the company's dominance of the social networking market is harming consumers. But beyond lawsuits, some in Congress believe legislation is also needed.

One of the Senate's leading antitrust crusaders, Sen. Amy Klobuchar, D-Minn., encouraged the FTC to take on Facebook. She also introduced legislation to update antitrust laws to the realities of the digital economy. Klobuchar's push for updated antitrust laws is controversial.

Some experts say that antitrust claims won't stick until the antitrust laws, namely the Clayton Act and the Sherman Act, are updated to fit the modern economy. Other experts argue that while rapidly changing digital markets may make antitrust cases more challenging to prove, there's nothing wrong with the foundational antitrust laws. The issue is divisive, and William Kovacic, professor of law at the George Washington University Law School, said, "there is no absolutely confident basis for knowing what the right solution is."

"I think the path to more effective control is probably going to lead to some combination of new legislation and of highly creative approaches that the [enforcement] agencies are willing to test on an experimental basis," he said. "That means either adopting rules on their own or going to Congress and getting new powers. But if the only instrument at their disposal is the traditional case-by-case litigation, that's going to fail."

Why antitrust claims are tough to stick

The problem the courts are having was illustrated in a recent decision by U.S. District Judge Yvonne Gonzalez Rogers in the Epic Games vs. Apple lawsuit. Gonzalez Rogers, in the Northern District of California, said the court could not conclude that "Apple is a monopolist under either federal or state antitrust laws." 

Antitrust laws

Epic filed its lawsuit against Apple last year after Apple pulled its popular Fortnite game from the Apple App Store. Epic accused Apple of antitrust behavior regarding its App Store practices, such as not allowing app developers to market other payment options outside of the Apple in-app payment mechanism, for which Apple charged a 30% commission fee.

According to the court's decision, Epic couldn't prove that Apple dominates the digital mobile gaming transactions market. But Epic won a small victory in its case. The court ruling requires Apple to now allow developers to tell their customers about alternate payment options.

Epic isn't the only company that failed to prove a tech giant exercises monopoly power.

In June, a federal court dismissed antitrust lawsuits filed by the FTC and DOJ against Facebook, noting that the FTC failed to provide evidence of Facebook's dominant market power over the social networking market. The FTC re-filed its antitrust lawsuit against Facebook in August, but Facebook quickly filed a second motion to dismiss the new effort, stating that the lawsuit still fails to prove its claims.

The reason antitrust cases can be difficult to prove is the result of legal precedents over the last few decades that support less intervention in the market, Kovacic said. 

"The range of possible findings of illegal behavior under the antitrust laws has been shrinking over a period of 40 years," Kovacic said. "It hasn't been an absolutely steady progression; there have been moments where plaintiffs succeeded. But the overall trend has been one of extreme caution."

Kovacic said the cautionary trend was evidenced in Gonzalez Rogers' Facebook decision -- a hurdle the FTC will also face in its litigation with Facebook.

The courts have become fearful of intervening too much, he said. "And the default is, in cases of ambiguity and uncertainty, stand back and let it go."

The case for updating antitrust laws

Although there are proposed changes to the antitrust laws at the federal level, the FTC is also currently trying to tackle a similar "non-intervention minded" method the commission uses to assess mergers and acquisitions made by powerful companies.

FTC Chair Lina Khan, a critic of big tech, has amended and rescinded old policies and statements related to merger review, including rescinding vertical merger guidelines adopted in 2020 under the Trump administration. The FTC and DOJ plan to assess vertical and horizontal merger guidelines and create new ones for businesses, taking into account the modern business economy.

However, if the FTC sees a problematic merger or acquisition, any antitrust lawsuit it files will be judged based on the current antitrust laws, which Kovacic said still ultimately support less intervention.

I suspect the only thing that ultimately is going to restore the larger possibilities for enforcement will be Congressional intervention.
William KovacicLaw professor, George Washington University

"The effect of this has been that the target that plaintiffs have to shoot at, whether they're private plaintiffs or government plaintiffs, has gotten smaller and smaller," Kovacic said. "And I suspect the only thing that ultimately is going to restore the larger possibilities for enforcement will be Congressional intervention. They're going to have to change the law."

Additionally, antitrust lawsuits can take years to play out in court, Kovacic said. Tech, in particular, is an industry sector that's constantly changing and evolving, meaning an antitrust case might not have the same merit it once did when originally filed if the case doesn't go to court for years.

For example, Kovacic said the DOJ's case against Google -- filed in 2020 -- is set to go to trial in September 2023. By the time appeals are completed and depending on whether the case reaches the Supreme Court, a final decision might not be issued until 2026. 

Relying on traditional litigation means plaintiffs are more likely to fail, Kovacic said.

"Antitrust law tends to look backward, not forward, and by the time these cases come to a close, you're talking about an industry that doesn't exist anymore," he said.

Although regulators are starting to recognize that traditional tools aren't going to work as far as reining in large, powerful companies, Kovacic said it's unlikely Congress will act soon to update antitrust laws. 

"When is Congress going to come to the rescue? Not this year," he said. "The [enforcement] agencies will get more money, they will. But more money to do what? Operate in the same framework? The question is, are you going to change merger law? Are you going to change law involving dominant firms?"

Staying the course

While large, powerful tech companies and the antitrust cases against them are in the limelight, Harold Furchtgott-Roth, director of the center for the economics of the internet at conservative think tank Hudson Institute, based in Washington, D.C., argued it doesn't mean current antitrust laws need to change.

Antitrust laws focus on market definition, Furchtgott-Roth said. Litigants involved in antitrust cases present the court with their definitions of the market and, while sometimes litigants agree on market definition, often they disagree. Defining the market is an empirical matter largely based on whether a hypothetical monopolist could raise prices for goods, Furchtgott-Roth said.

It's easier to define a market for steel or coal than rapidly changing digital technologies, he said.

Furchtgott-Roth pointed to Microsoft as an example, which faced a U.S. antitrust lawsuit in 1998. There were disputes about whether the market for internet browsers constituted a separate market, and arguments were made that Microsoft's Internet Explorer monopolized the market. That has turned out not to be the case, as other internet browsers arrived to compete with Microsoft's Internet Explorer, he said.

"What might be an antitrust problem at one point in time, a few years later may not be," he said.

The slow progression of the FTC Facebook litigation and the decision in the Epic case don't mean there's anything wrong with antitrust law, Furchtgott-Roth said.

 Additionally, Furchtgott-Roth echoed George Washington University's Kovacic in that courts have taken a more hands-off approach to antitrust cases, which won't change quickly.

"Over the past 40 years, the courts have taken a much more economic approach to antitrust, and I think that pendulum is going to be slow to change," he said. 

Furchtgott-Roth said, while there is appetite in Congress to change the laws, he doesn't see it happening anytime soon either.

"Past efforts to change antitrust law have not necessarily succeeded," he said. "I'm a little skeptical it's going to happen in this Congress."

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

Dig Deeper on Risk management and governance

Cloud Computing
Mobile Computing
Data Center
and ESG