The Top Antitrust Cop Says Big Tech Looks a Lot Like Standard Oil

Photo:  Anna Moneymaker (Getty Images)
Photo: Anna Moneymaker (Getty Images)

Jonathan Kanter, the Department of Justice’s top antitrust enforcer, says Big Tech’s cornucopia of questionable business practices looks an awful lot like the oil industry during Standard Oil’s reign. Once a symbol of unstoppable corporate power, the John Rockefeller-owned mega-monopoly was ultimately broken up into 34 separate companies in one of the strongest antitrust enforcement efforts in American history. Like oil before it, Kanter said technology in 2023 represents the “lifeblood” of modern society.

Kanter, who’s currently leading several antitrust lawsuits and investigations into Google, made the comparison during an interview at the State Of the Net conference on Monday. His analogy to one of the nation’s most dramatic regulatory enforcement periods offers a slight glimpse into the mindset of one of the nation’s most powerful legal bulldogs who, until now, has preferred to stay tight-lipped around his plans. One of the Justice Department’s suits seeks to divest Google’s search business from its digital ad business in what may be the closest analogue to Standard Oil’s story.

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What happened to Standard Oil and why does it matter for Google?

The United States Supreme Court in 1911 called for Standard Oil’s breakup in 1911 for violating the Sherman Antitrust Act. Prior to that, Standard amassed an unmatched oil empire. Rockefeller, its founder, became the country’s first billionaire and earned the moniker, “most hated man in America.” A series of bombshell investigations from investigative journalist Ida Tarbell revealed the extent of the firm’s anticompetitive dealings, ruthless tactics, and secret backroom alliances with railroads.

Notably, Kanter also mentioned Standard Oil during an antitrust conference in Brussels days earlier when speaking about “​​dominant firms in platform industries.” Kanter said these powerful platforms have a “wide array of levers and dials at their disposal” to alter markets and harm competition. Kanter doesn’t even fault these companies for using those tools to act like bloodthirsty monopolies, it’s what they do. That said, when the DOJ does find evidence of anticompetitive practices it’s up to enforcers to consider “structural remedies,” as was done against Standard Oil. In other words, breakups are totally on the table.

“The logic behind that stance applies to platform markets just as much, if not more so, than other industries,” Kanter said. “Structural relief can break the incentive structures that otherwise might encourage platforms to shift towards closed systems that exclude competition; relief can reinvigorate incentives to interoperate and facilitate multi-homing by users across platforms.”

Google’s worst nightmares are coming true

The 50-year-old antitrust attorney joined the DOJ in the first months of the Biden administration as part of a three-headed legal chimera ostensibly aimed at hitting Big Tech where it hurts. That so-called Antitrust All-Star Team’s lineup consisted of tech critics Lina Khan helming the Federal Trade Commission, professor Tim Wu in the White House, and Kanter at the DOJ. Wu has since called it quits, and Khan is recovering from a series of stinging defeats at the hand of Meta as well as a volley of political sideswipes. Kanter, on the other hand, has actually made some inroads.

In January, he announced an explosive DOJ lawsuit against Google accusing it of maintaining an illegal monopoly in the digital ad market. The solution? Break off parts of Google’s ad-tech business from the rest of the company. Another developing antitrust investigation into Google Maps suggest the agency may be interested in shaking up the tech giant’s dominance over maps as well.

More enforcement actions could be coming for AI, the metaverse, and dark patterns

Kanter’s brief remarks at the State of the Net Conference touched on a number of potential areas of concern in the modern digital economy, ranging from artificial and the so-called “metaverse” to the potential manipulation of consumers through “dark patterns” practices. On AI, Kanter acknowledged the importance of giving the industry room to breathe in order to preserve the types of “inflection points,” witnessed during the internet’s ascent. Still, he said enforcers need to simultaneously ensure disruptions caused by the tech lead to “healthy markets.”

When it comes to more hypothetical arenas like the metaverse, Kanter stressed the importance of keeping the agency ahead of the technological curve. To do that, Kanter said the DOJ is hiring even more data scientists and analysts to ensure the agency develops a depth of expertise in understanding how data works in the modern era. Under that model, the agency could end up looking a lot like a university business school’s faculty.

“The importance of data is so significant, so substantial that we need to understand at an expert level how that data is used, how it affects the economics, how it affects the potential for tipping, moat-building and other competitive dynamics,” Kanter said during the event.

On the questions of so-called dark patterns—which the FTC has already ramped up enforcement against—Kanter said it’s important to consider how the “accumulation of data,” by companies can manipulate users away from certain markets. That’s a form of tech-based anti-competitive practices not well understood in the context of late 20th century, old-school antitrust enforcement.

What does all this mean for Big Tech?

Kanter’s remarks in recent weeks suggest the DOJ isn’t planning on stepping off the enforcement gas anytime soon and that full-throated measures like company breakups are on the table. The clearest target here is Google. Though many similar anti-competitive accusations could be lodged against Mark Zuckerberg’s Meta, enforcement against company is generally left to the FTC, even though the agency hasn’t been winning its battles lately.

That leaves Kanter and the DOJ, at least when it comes to Big Tech, particularly focused on Google. With multiple investigations and suits underway, Kanter’s statements suggest the agency may be willing to take breakups much further than some had previously predicted. That could all happen sooner rather than later too. With a presidential election one year away, the clock’s ticking for federal agencies aligned with the Biden administration’s antitrust vision to make inroads.

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