Issue of the week: Getting tough on antitrust

Attention, big technology companies: When it comes to antitrust enforcement, “there’s a new sheriff in town,” said Grant Gross in Computerworld. In two recent speeches, Assistant Attorney General Christine Varney has repudiated the Bush administration’s hands-off antitrust policy, warning large high-tech companies to expect “a more aggressive approach to antitrust enforcement under President Obama.” Why the focus on high tech? “Because technology is always evolving, with companies looking to enter new consumer markets with new products,” said David Goldman in CNNmoney.com. That creates plenty of opportunities for regulators to catch big companies abusing their market dominance to squash upstarts. Analysts are already handicapping which tech Goliaths will be the first to tangle with the antitrust cops.

Google and Intel top most lists, said Steve Lohr and Miguel Helft in The New York Times. The new antitrust team at the Justice Department is looking closely at networks—“technology platforms that become so dominant that everyone feels the need to plug into them.” Google certainly fits that description, and recent attempts to increase its dominance have already drawn scrutiny from antitrust enforcers. Last year, for example, regulators nixed Google’s proposed search-advertising partnership with Yahoo, which would have effectively given Google 85 percent of the search-advertising market. Now the Justice Department is examining the antitrust implications of Google’s deal with publishers to put millions of books online. Antitrust regulators are also “examining whether Google’s sharing two board members with Apple reduces competition,” because both companies offer browsers and phone operating systems.

Intel has antitrust worries on two continents, said Aaron Ricadela in BusinessWeek. The European Union last week socked the chipmaker with a record $1.36 billion fine for “offering computer makers financial incentives to favor its chips over those made by smaller rival Advanced Micro Devices.” Those incentives, in the form of volume discounts, were nothing more than kickbacks, the EU said. “The European decision may form a template” for U.S. regulators to follow in their own scrutiny of the chipmaker.

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The last thing the U.S. needs is to mimic Europe, said Keith Hylton and Geoffrey Manne in Forbes. The EU hasn’t alleged that Intel’s behavior harmed consumers. How could it? “Innovation is up, and prices are down”—precisely what you’d expect in a competitive market. Instead, the EU is speculating that consumers could potentially be harmed in the future. And now the Obama administration apparently wants to copy that approach. You would think that U.S. regulators “would know better than to attack the most successful firms in our economy.”

What’s wrong with attacking big companies that stifle innovation? said Steve Pearlstein in The Washington Post. The Bush administration’s antitrust policy assumed that “markets could generally be relied on to correct their own excesses.” The financial crisis exploded that “fantasy” and proved the assumption wrong. Even if Google or Intel don’t provide the test cases, the new administration has “a golden opportunity” to root out the “predatory practices” that harm competition and erode public faith that our markets are both free and fair.