Makan Delrahim's speech lays the groundwork for antitrust versus major technologies

The Deputy Attorney General of the Ministry of Justice has focused on the case against the major technologies in a new speech Tuesday at the antitrust conference on the new borders in Tel Aviv.

Makan Delrahim has exposed some possible arguments against the tech giants, his office apparently taking the initiative to investigate the parent company of Google, Alphabet, and a possible investigation on Apple. In the meantime, the Federal Trade Commission would have taken jurisdiction over Facebook and Amazon.

Shares of these companies dropped last week reports that US antitrust officials were beginning to take action in long-awaited investigations. However, lawsuits against companies have remained unclear, with some technology advocates arguing that antitrust laws at school have no place in the digital economy.

Delrahim's speech, as transcribed on the Department of Justice website, states that existing antitrust laws are strong enough to regulate technology.

"We already have the tools to enforce antitrust laws in cases involving digital technologies," said Delrahim. "US antitrust legislation is flexible enough to be applicable to old and new markets."

Google declined to comment on the speech. Apple, Facebook and Amazon did not immediately respond to requests for comment.

Here are some of the possible arguments that antitrust regulators could use against Big Tech based on Delrahim's speech:

One method of assessing whether a company has breached antitrust law is what Delrahim called the "economic nonsense test". According to Delrahim's definition, a monopoly that makes a decision that makes no economic sense, with the exception of "its tendency to eliminate or reduce competition", would miss the test.

"But even if a company manages to obtain a monopoly position by legitimate means, it can not take measures that do not pursue plausible business objectives, but that are intended to prevent competitors to catch up, "he said.

This test suggests that antitrust regulators could look at technology companies' acquisitions and technology development decisions to determine whether they had a business sense or whether they hindered or restricted competition.

For those who believe that current antitrust laws can not withstand advanced technologies, a key argument is that antitrust laws are based on the concept of harm to consumers. Many modern technology companies offer consumers significantly lower prices than they would otherwise find (in the case of Amazon) or do not charge consumers for their services (as in the case of Google and from Facebook). If price inflation is one of the main concerns of antitrust law, it is hard to say that low technology prices are hurting consumers.

But Delrahim takes a different perspective.

"The Antitrust Division does not have a shortsighted view of competition," he said. "Many recent calls for antitrust reform, or more radical change, are based on the misconception that antitrust policy is aimed only at keeping prices low. it is well established that competition has price dimensions and not prices. "

In addition to price inflation, "the drop in quality is also a type of harm to competition," said Delrahim. "For example, confidentiality can be an important dimension of quality, and by protecting the competition we can have an impact on privacy and data protection."

Similar to how competing firms can lower each other's prices, competition can also encourage them to include quality elements such as confidentiality features. This concept could become particularly important for companies such as Facebook and Google, which do not charge consumers for their services but collect a considerable amount of data about them. Apple, on the other hand, has tried to anticipate this approach by focusing on the confidentiality of products in its products.

Delrahim said the concept of regulating companies outside of price competition would not be a new approach. At the height of Standard Oil's dominance, he said, consumer prices have gone down.

"This was probably due, among other things, to a combination of economies of scale, greater bargaining power, and an overall decline in input prices," he said. he declares. "This shows, however, that price effects are not the only measure of injury to competition under US antitrust law."

Delrhaim said that exclusivity is another important way to evaluate anticompetitive behavior.

"Generally, an exclusivity agreement is an agreement in which a company asks its customers to buy exclusively from it, or from its suppliers to sell it exclusively." there are variations of this restriction, such as requirements contracts or volume discounts, "he said. .

Although exclusivity is not inherently anti-competitive, according to Delrahim, there are cases where a company can use exclusivity "to prevent entry into the market or reduce the ability of its rivals to reach the necessary dimensions, which substantially excludes competition ".

He referred to the antitrust case against Microsoft, which was aimed in part at including the company's web browser in its Windows operating system, which discouraged users from uninstalling it and looking for alternatives .

"This theory is broadly applicable to other technological markets," said Delrahim.

Apple has been criticized and litigated for its App Store rules, preinstalled on iPhones, and providing specific rules for developers to distribute their applications through the system. The Supreme Court recently ruled that consumers had the right to sue the company in a case claiming that its sales commission had inflated software prices.

Anti-competitive behavior may also hinder innovation, according to Delrahim. He explained how the acquisitions of young competitors could be considered anti-competitive.

"They can be beneficial to the extent that they combine complementary technologies or bring products and services to the market that would not have been made available to consumers otherwise," Delrahim said.

"It is not possible to describe here every way that a transaction can harm the competition in a digital market, but I will note the risk of harm if the purpose and effect of the transaction is to increase. an acquisition is to block potential competitors, protect a monopoly or otherwise harm competition by reducing consumer choice, raising prices, curbing or slowing down innovation or reducing Such circumstances may raise the suspicions of the antitrust division. "

Facebook has particularly raised antitrust concerns when it announced its intention to buy another social network platform, Instagram, and later, WhatsApp. By the time Facebook announced the Instagram contract in 2012, Social Internet Fund founder Lou Kerner told The Associated Press that the $ 1 billion young company price was "astronomical". But even then, he admitted that this transaction kept Instagram "out of reach of competitors".

Today, a billion dollars seems to be a theft for Facebook, which analysts say amounts to about $ 100 billion, according to Bloomberg. According to a Piper Jaffray survey, Instagram is the most popular social network among teens. According to a recent survey by DuckDuckGo, Facebook probably also draws on the fact that most Americans do not know he has an Instagram account.

The rise of a handful of technology giants is also preventing small businesses, like a young Instagram, from having enough weight in acquisitions, Delrahim noted.

"It is interesting to note that independent companies complained that the commitment prevented them from selling on favorable terms with AT & T," said Delrahim, citing the historical antitrust case. "Indeed, this complaint refers to young companies for which a popular exit strategy is to acquire a large company in the same market or an adjacent market."

Delrahim said the Antitrust Division could look at "coordinated behavior that creates or strengthens market power". He referred to the 2008 advertising agreement between Yahoo and Google, which would have allowed Yahoo to "replace a significant portion of its own Internet search advertising with ads sold by Google."

The division felt that the deal "would have hurt the Internet search engine advertising and search syndication markets on the Internet, with the companies accounting for more than 90 percent of the markets, respectively." The companies abandoned the plan when the division announced its intention to file a complaint.

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