For Wall Street, the 2024 Presidential election turns the spotlight on a critical issue for big tech companies: the debate over antitrust issues.
The Biden administration has taken some big swings versus tech companies, highlighted by lawsuits against Apple, Amazon.com and Alphabet's Google. Its next target could be Nvidia in artificial intelligence.
But former President Donald Trump has also been known to take aim at Big Tech, despite his Republican-grounded, pro-business posture. While campaigning, Democratic Presidential nominee Kamala Harris hasn't said much about Big Tech. But Vice President Harris has criticized high grocery prices, signaling she would oppose the proposed Kroger – Albertsons merger.
The antitrust crackdown on big tech was not a topic in the first Presidential debate. A second debate between Harris and Trump has not been agreed upon.
"The general impression is that both Harris and Trump would continue the major monopolization cases now underway versus big tech," William Kovacic, former Federal Trade Commission chairman in the George W. Bush administration and a professor at George Washington University Law School, told Investor's Business Daily.
Harris And Big Tech
"I can't imagine that Harris would be anything other than fully supportive of the big monopolization cases," Kovacic added. "The interesting question is how much her roots in California politics would influence her views on antitrust policy. The tech industry would like to see a loosening of controls on mergers."
Under the Biden administration, the Justice Department has filed antitrust cases against tech giants Google and Apple. The Google antitrust case involves the tech company's digital advertising business. The DOJ also argues that Apple's tight control of the iPhone ecosystem harms consumers and developers while producing giant profits.
Additionally, the FTC under Biden filed antitrust lawsuits against Facebook-parent Meta Platforms and Amazon. The commission claims Amazon stifles competition on price and production selection, thereby harming consumers.
Perhaps the Biden administration's biggest move came in late 2023 when it issued new merger guidelines published by both the DOJ and the FTC. Big Tech companies as well as much of corporate America view the Biden merger rules as unfairly inhibiting mergers and acquisitions.
Big Tech: Trump Antitrust Record
Trump's antitrust track record includes attempting to block AT&T's acquisition of Time Warner, whose assets included cable network CNN. While Trump's DOJ filed suit against the deal in 2017, a federal judge let it proceed.
The Trump administration also filed an antitrust case against Google focused on its dominance in internet search. Another antitrust case was filed against Facebook in December 2020 by the FTC accusing the company of creating a monopoly in social media by buying Instagram and WhatsApp. In 2021, a federal judge dismissed the complaint.
But the FTC refiled the lawsuit and it's moving forward. The revised case was allowed to proceed because it included more market-share statistics and evidence supporting the allegations that Meta controls prices and blocks competition in social networking.
Trump has a long history of accusing big tech, including companies like Google, Facebook and Amazon, of being politically biased against him.
"If we assume Trump has not lost his antipathy for big tech, especially the information service companies he believes help cost him the 2020 election, one expects he would come to office telling the antitrust people to 'keep up the good work' in those big cases," Kovacic said.
Some observers point to the U.S. government's antitrust case versus Microsoft as a precedent. While the Clinton administration seemed to be pushing for a Microsoft breakup, the George W. Bush administration accepted a settlement offer in 2001.
Will Google Lose Both Antitrust Cases?
A federal judge on Aug. 5 ruled that Google has violated antitrust laws by engaging in unfair business tactics to dominate the internet search advertising market. Further, a second phase of the trial must now take place to determine what remedies the federal court will order.
Meanwhile, the ad technology case began on Sept. 9. Some analysts call it the "DoubleClick trial." In 2008, Google acquired leading digital advertising firm DoubleClick for $3.1 billion.
The federal judge in the internet search case may not decide on a remedy until March. A decision in the ad tech trial is also likely in early 2025. If needed, a remedy phase in the ad tech case would likely drag on through the summer of 2025.
Meanwhile, if Google loses both antitrust cases, that could give other antitrust lawsuits versus Facebook, Apple and Amazon some momentum from a political and media viewpoint, though not from a fact-finding, legal perspective.
"If Harris wins, a lot will depend on her selection of an assistant attorney general for the antitrust division," said Herbert Hovenkamp, a professor at the University of Pennsylvania's Carey Law School. "There would be a lot of pressure on her to stay the course on Google."
He added: "I wouldn't expect a President Harris to drop the big antitrust cases. They could narrow them or they may keep right on going with them. Looking forward, I don't think she is going to be as aggressive about going after big tech as the Biden administration. I think she'll moderate antitrust and bring it more towards the center."
Big Tech: Lina Khan's Future
Trump or Harris would pick a new attorney general as well as an assistant attorney general that handles antitrust matters.
If Trump wins, control over the FTC would shift to a 3-to-2 Republican majority as Congress re-approves nominations. That means Biden appointee Lina Khan would be out as FTC chair.
If Harris wins, she would likely keep Khan on as head of the FTC, though Khan has faced criticism within the tech industry from LinkedIn co-founder Reid Hoffman and others.
Notably, Khan unsuccessfully sued Microsoft to stop it from buying video game publisher Activision Blizzard.
One challenge for Harris would be finding a middle ground without picking a fight with Democratic Party leaders who have strong positions on antitrust issues, including Senators Bernie Sanders and Elizabeth Warren.
Kovacic speculated that both Trump and Harris would take a strong posture on antitrust.
"If Trump's desire for retribution is strong, I can't see him telling the Justice Department to go easy on Google," said Kovacic. "Nor could I see Harris telling them to back off either. These cases are such visible matters. If you seem to be selling out in any way in the eyes of the Warren coalition, you're picking a fight you probably want to avoid."
Biden Overhauls Merger Rules
A key antitrust focus will likely be the Biden Administration's merger guidelines published in 2023, which sparked controversy. The U.S. government uses the rules to determine whether merger deals violate competition law.
The guidelines lowered the bar for deciding when a merger is presumptively illegal based on whether it would result in a high degree of industry concentration or high market share for the combined companies. The new rules also introduced labor market and wages impact as part of the merger analysis.
"I think the most vulnerable Biden accomplishment is the 2023 merger guidelines," said Hovenkamp. "It's certainly possible that a Trump administration would rescind those rules and develop a new set of guidelines."
"There's a great deal of (legal) expansion in the 2023 guidelines and a lot of businesses from a lot of different parts of the economy don't like them," he added.
Big Tech: Need For Clarity
Clarity remains Big Tech's biggest antitrust demand.
Paul Swanson, antitrust partner at the law firm Holland & Hart, said the 2023 guidelines are too vague.
"I think what companies want is clarity," Swanson told IBD. "There's concern businesses don't really know what the rules of the road are now. That's upsetting because the penalties for getting on the wrong side of antitrust law are so severe."
John Newman, a law professor at the University of Miami and a former FTC antitrust official, said the Biden administration has been less willing to accept settlements as a partial solution to antitrust cases.
"The biggest change hasn't been in what mergers are problematical but whether they're actually blocked," he told IBD.
"I would bet dollars to doughnuts that Harris leaves the current FTC structure in place," he said. "So Khan and the other two Democrats and two Republicans would stay on. As long as that's the makeup, I don't see the 2023 merger guidelines being rescinded. Maybe they'd want to supplement them. But dollars to doughnuts I'd bet they stay in place for five years."
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
