Deciding whether digital platform companies such as Facebook, PayPal and eBay are anti-competitive monopolies that would be subject to antitrust law is difficult, a top economic adviser to President Obama said Friday.
Jason Furman, head of the White House Council of Economic Advisers, said in a speech at an antitrust conference in Chicago that “quasi-monopolies” like those enjoyed by Internet behemoths may not pose the same threat to consumers that traditional monopolies do.
Because the Internet companies become more valuable to their users the bigger they are and the more people they reach, “determining the optimal level of competition in these new markets is a dramatically different and harder task,” Furman said, according to expanded text of his remarks.
The White House this year announced an effort to boost competitiveness across a range of industries. Obama issued an executive order requiring agencies to find ways to increase competition in the markets they oversee, and specifically called on the Federal Communications Commission to open up the market for set-top cable boxes to more competition. The administration is reviewing the first set of recommendations from agencies, Furman said.
But with digital companies that do not charge their customers, it may be difficult to measure competition, Furman said. Facebook and other companies do not charge users, but instead charge for advertising.
Nevertheless, those businesses could behave anti-competitively in ways other than raising prices: they could control people’s access to news or reduce innovation in their space, for example.
Furman also noted that it would be harder to detect price-fixing at major digital companies that rely on complicated algorithms to set prices. “Traditionally, price fixing and collusion could be detected in the communications between businesses,” he said. “The task of detecting undesirable price behavior becomes more difficult with the use of increasingly complex algorithms for setting prices.”
