Attorney General Bill Barr announced last month that his department would take a hard look at the Big Tech companies for antitrust violations. Both Republicans and Democrats applauded this move and hope the Department of Justice’s investigations will stifle Silicon Valley’s many monopolies.
Barr’s announcement signals that he and his department are serious about this matter. The DOJ is expected to file an antitrust lawsuit against Google this year. It could be the first of many actions it takes against these corporate behemoths. Action from the DOJ against Google would provide greater legal standing for the investigation that Texas Attorney General Ken Paxton is leading on behalf of 48 states into the tech giant.
Yet as Makan Delrahim, the assistant attorney general and head of the DOJ’s Antitrust Division, continues to consider weakening or repealing anti-monopoly protections in other industries, there are questions about whether he will undercut the efforts of the department and of state attorneys general altogether.
Granted, Delrahim’s ties to Google made him recuse himself from investigations into Big Tech. His previous role as a prominent lobbyist for Google, where he helped the company acquire DoubleClick, a key component to its monopolistic ad business, represented too significant a conflict of interest for him to investigate Silicon Valley impartially. That said, Delrahim’s focus on relaxing anti-competitive restraints on monopolists within the music industry could provide more fodder for Big Tech’s legal defense.
The Antitrust Division is currently reviewing long-held consent decrees against the music industry duopoly operated by the American Society of Composers, Authors, and Publishers and Broadcast Music Inc. Combined, ASCAP and BMI control 90% of the music industry’s public performance rights. All businesses that play recorded music, including bars, restaurants, radio stations, and concert halls, must deal with this duopoly to obtain the music licensing they need.
Independent music publishers ostensibly formed the ASCAP and BMI music giants to combine their market power so they could increase prices on businesses. Absent checks on their power, these two conglomerates could easily price gouge and abuse the market with impunity. That’s why, back in the 1940s, the DOJ had ASCAP and BMI agree to sign antitrust consent decrees to protect the public.
Under these antitrust settlements, the two music giants agreed to license all of their music under one affordable license to every business that asks for the playing rights. The decrees allow ASCAP and BMI to maintain their market dominance while imposing reasonable safeguards to prevent price gouging.
Many political and legal analysts have considered DOJ’s handling of the music monopolies a blueprint for how the Trump administration should handle Big Tech’s consumer abuses. The music agreements have received the respect of experts for their light-touch approach that respects the free market while setting clear, transparent rules for the monopolies to follow. ASCAP and BMI are left alone by the federal government so long as they respect the terms they signed onto with the DOJ — but when they don’t, they incur heavy monetary fines that severely discourage them from doing so again in the future.
The music decrees have allowed the music industry not only to function but to flourish for the past 70 years. Nevertheless, ASCAP and BMI predictably want to scrap the longstanding agreements, and Delrahim has been all ears.
This month, his Antitrust Division hosted panels that discussed the issue at length. The division invited famous artists like Jon Bon Jovi, who in a virtual keynote address advocated making no changes to the decrees. Directly comparing ASCAP and BMI to Big Tech, the rock star said that these DOJ agreements serve the public’s interest and that the DOJ should ignore the special interests who demand weakening or eliminating them. And yet, the investigation continues.
Delrahim doesn’t appear to be just checking a box by opening the investigation either. In a speech delivered to the National Music Publishers Association, he signaled being open to revising the consent decrees or eliminating them altogether. He made a point to say that the division hasn’t decided whether the ASCAP and BMI consent decrees are the best for current business, going so far as to positively cite court decisions challenging the consent decrees in his speech.
ASCAP and BMI are not worthy of any form of regulatory relaxation whatsoever. They wield as much power over the market as they did back in the 1940s. One of them even paid a $1.75 million fine to the department less than five years ago for seemingly violating the term.
While likely not intentional, Delrahim’s relaxing of antitrust rules that govern the music industry would blow up the very antitrust model that many believe the DOJ should follow to tackle Big Tech. This is extremely troubling. Monopolies, whether in music or Big Tech, hurt consumers and businesses and make a mockery of the free market principles that have made this nation great.
The Antitrust Division must keep these principles in mind before it sets precedents that can impact the market across all industries for the decades to come.
Matt Mackowiak is president of Potomac Strategy Group, LLC. He’s a Republican consultant, a Bush administration and Bush-Cheney re-election campaign veteran and former press secretary to two U.S. senators.
