Amid growing concern over the power of such behemoths as Amazon, Google, Facebook, and other tech giants, in recent months there’s been a bipartisan push for better enforcement of antitrust rules–with even President Trump saying in August that their size and influence could constitute a “very antitrust situation.” The Federal Trade Commission (FTC) has launched its most wide-ranging study of corporate concentration in America in more than 20 years with a series of hearings being held around the country. Chairman Joseph Simons, a practical enforcement-minded leader, launched the hearings by expressing concern over the growing problem of monopoly, which is now found in nearly every sector of the economy. “I approach all of these issues with a very open mind,” said Simons, “very much willing to be influenced by what I see and hear.”
But there’s a problem. The FTC organized these hearings so that Simons and the public would be hearing from many economists who have taken money, directly or indirectly, from giant corporations.
For example, on Monday, the FTC convened a panel titled “The Current Economic Understanding of Multi-Sided Platforms” to look specifically at the most dynamic and dangerous set of concentrated economic actors, the big tech platforms. Every single one of the economists who testified had financial ties to giant corporations.
One example is David Evans, the chairman of the Global Economics Group. Evans scoffed at the danger of platform monopolies. He indicated that the question of “whether Facebook and Google and Amazon are monopolies, it’s all interesting, it’s great to read in the New York Times,” but it’s “not all that relevant” to the practice of antitrust. (FF to 45:30 in the below video) His firm has taken money directly from Microsoft, Visa, the large investment bank SIFMA, and the Chinese giant tech giant Tencent.
Another example is Howard Shelanski, a partner at Davis Polk. Shelanski is more enforcement-minded, but he expressed caution, testifying that we don’t know enough for antitrust enforcers to understand whether powerful technology companies hold unassailable market positions. Shelanski pointed to his own children, saying that they’ve stopped using Facebook because it’s uncool. (FF to 35:00). As it turns out, his law firm’s clients include Facebook, as well as Comcast, and Chinese search giant Baidu.
Evans and Shelanski are straightforward about their role; both are principals with clients. To bring in more neutral parties, the FTC also had economics professors from prestigious universities. But these professors, while they do academic research, also have lucrative consulting arrangements with firms representing large corporations.
For instance, one panelist was MIT professor of management Catherine Tucker. She isn’t just a professor, though; she also moonlights at the economic consulting firm Analysis Group, has consulted for Microsoft and Facebook, and has received a $155,000 research grant from Google.
Wharton Professor Katja Seim testified as well. She has a second job working for Vega Economics, which sells analysis to many of the major law firms in D.C., who in turn sell services to Fortune 500 companies. She stressed that one normal red flag for monopoly–“supra-normal” profit margins–should not necessarily concern regulators when it comes to tech platforms. (FF to 7:15-7:45).
Also testifying was Boston University economist Michael Salinger, who also works at Charles River Associates. Salinger markets his services on the website of the group as leading the economics team that helped Google shut down the FTC antitrust investigation. He told the FTC that American enforcers, as opposed to European enforcers, thought about Google’s “innovation and product design” rather than its monopoly power. (FF to 27:00) His colleague at Boston University, economist Marc Rysman, has a side job at Cornerstone Research, a firm that worked on Google’s acquisition of Admob and ITA. (FF to 4:45)
For instance, the FTC invited University of California, Berkeley economist Joseph Farrell, who offered little, putting forward a classic “on the one hand,on the other hand” set of observations. Economists, he concluded, should “look hard at these issues” and talk to people who are excited about them. Farrell has a side job at the economic consulting firm Bates White Consulting, a firm that has done work for, among others, Comcast and AT&T.
In other words, every single economist testifying on the issue of corporate concentration derived income, directly or indirectly, from large corporations. Beyond that, the hearing itself was held at the Antonin Scalia Law School, which is financed by Google and Amazon.
This is a problem more broadly for the entire set of hearings, which included roughly 40 economists on the payroll of such consulting firms. For example, on a different panel on the state of antitrust law was Dennis Carlton. A professor at the University of Chicago, Carlton has made over $100 million during his career moonlighting as an expert witness for giant corporations through his work with economic consulting firm Compass Lexecon. Carlton told the FTC that we ought to praise large firms like Facebook, Google, and Amazon for technological innovation, and warned, “don’t confuse success with an antitrust violation.” (hour 1:25:40)
Why is a college professor able to make a $100 million testifying on behalf of large corporations? As Jesse Eisinger and Justin Elliott at ProPublica noted in their investigation of the industry, “Companies & lawyers that rely on economists as witnesses aren’t looking for neutrality…. [Instead] to be able to be an advocate without seeming to be an advocate.”
This is not to say that taking money from corporations is always wrong. It isn’t. It’s just that a diversity of perspectives matters. If we want to know why corporate monopolies are dominant, just look at who the FTC is listening to. It isn’t you and me.