Warren Plan To Break Up Big Tech Market Dominance

Bloomberg Intelligence Senior litigation analyst. So Jan Warren said that when someone gets excessive market dominance, they start to destroy the market competition. Does she have a point because I mean Google is a verb already and who could compete

with Google or Facebook? Well, I'll say it's a matter of antitrust law, and no, she doesn't really have a point, because you know, after many, many, many years of lawsuits and suddy and application of the law to to business, you know what the Supreme Court has said more than once is that market dominance alone is not anti competitive and doesn't kill competition. But market dominance coupled with bad conduct and conduct that would foreclose other competitors that can

violate the antitrust laws. And I think in terms of just a blank blanket statement that a dominance in in one um area, in one sector destroys other competition is just not really you know, most economists would tell you that you just you just can't say that that It's going to going to be a case by case basis, and it's going to depend on the companies and how that marketplace operates. How difficult would it be to do?

Because she points to President Teddy Roosevelt trust busting, There's the breakup of a T and T in the late eighties. There's Glass Stiegel, which dealt with banks. It's been done before, it has been done before. But when you think about taking a company and breaking it up, you have to look at the structure of that company and how well

integrated that company is to begin with. In this case, you have these internet platforms that are considered multi sided platforms, and it means both sides of the businesses to some extent depend on the other and the success of the other. And and one of the things that provides a good consumer benefit and free services free to search on Google and lower prices on Amazon, and free to participate in Facebook is the fact that they leverage some of these

other sides of the business and the advertising side. So you know, when you think about A T and T, it is widely thought of as a fairly successful breakup, but one of the one of the very few um and in that case it may have been that it was just an easier to separate out the businesses that

were at issue. In fact, A T and T is the one when it thought that it would be losing in court that suggested that option, separating those the local telephone service from the long distance rather than what what was actually being sought by the plaintiffs in that case. So so they thought it feasible. But it isn't always feasible for a very well integrated day company to be able to just break apart and then continue to offer the consumer benefits that it offers, and and it'll ruin

many of the efficiencies that are built in. I want to get your reaction to something, she said. What she proposes is to prohibit platforms from both offering a marketplace for commerce and participating in the marketplace. So she said, you can be an umpire a platform, or you can own teams, but you can't be an umpire and own one of the teams that's in the game. So in other words, with the Facebook's tie up with WhatsApp, you would you would just separate them, Or Amazon's purchase of

Whole Foods, no go right. You know. I thought about that analogy for quite a long time because I just don't actually see it as particularly applicable because sports and sports teams are very different than business. And if you think about business, for in many many different industries, many types of different plator industries and platforms and sectors, for many years, companies have competed as well as business with

their rivals. You know, this is the way business generally works, and it would be very odd to me to to separate out internet platforms uh um from everything else. I mean, think about it. When you go to the grocery store. The grocery store is selling a product, but it also has its own private label products on the shelves, competing with the branded products offered by the grocery store. Costco,

for example, has its own brand. I can think of so many other examples in agriculture and beef processing and chicken in many different industries, you know, this is how business thrives, and it would be too arbitrary to me to have a different kind of a rule for tech and internet platforms. Well, we'll see where it goes. It's become very popular. It's it's become popular to break to the idea of breaking them up. But let's turn to

a current merger. Last Thursday, the Federal Communications Commission paused in its review of T mobiles purchase of Sprint, which has been on a review for eight months. What's happening. Well, you know, I think this is probably not a good

sign for the deal. Now. Now, the fact that they paused is really large procedural because they've got a whole tranche of new documents and analyzes by T Mobile and Sprint that they really needed time to look at, and they needed to get out to the marketplace and get comments from from third parties. So they needed the time and they stopped the clock, and that's generally what they do.

But the fact is, after eight months, as you just mentioned to now, supply new analysis and new information suggests to me that the old arguments aren't really working very well and that T Mobile is having a struggle convincing the regulators that this deal is not anti competitive, so that is probably a bad sign for the deal. Well, we've talked about this before about whether it's anti competitive.

It would combine the third and fourth largest US wireless provider is in itself, that seems to be a really tough argument to make. And in fact, twice before that kind of deal it wasn't always three and four, but that kind of deal has been attempted um and and failed in front of these regulators, the FCC in the Department of Justice. I think this deal is a really close called June because from just to pure straightforward textbook

antitrust perspective, it looks like an anti competitive deal. Now, where a deal might have the tendency to cause harm in a marketplace, which I think this deal superficially suggests, the companies have the option of showing the pro competitive efficient side of that deal and the benefits that will come out of that deal, and if the regulators think those benefits will outweigh the potential for harm, that deal

can still get cleared. But you know, I know, I don't know a deal that has one out on that, and I think they have a tough argument here, and I think the odds aren't great. Now, that's the f

c C that's put it on hold. Do we know what's happening at the Department of Justice with its review, So they're still in the middle of their review, and they must have some sort of a timing agreement with the companies because at this point, I would think that they have finished the in depth request for information called a second request, and usually what happens is once the companies finish it, it gives the d o J only thirty days, and I think we've probably passed that point,

so the company is likely entered into a timing agreement. We don't know the term of that agreement, so we don't know where they are in their time clock. But the head of the d j's Anti Ross division has said that they are working closely with the f CC and somewhat aligning with the f c C. So I think we'll probably see decisions around the same time. All right, Well, and they're going to testify this week on Capitol Hill, So more about that. That's Jennifer Reid Bloomberg Intelligence senior

litigation analysts. For more of Jen's analysis going to be I go on the Bloomberg terminal. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple podcast, SoundCloud, and on bloomberg dot com slash podcast. I'm June Brosso. This is Bloomberg