Why Trustbusting Big Tech is a Bad Idea
2020-11-04 · Guest: Ryan Young (Competitive Enterprise Institute) · 52:21
DOJ antitrust lawsuit against Google and Big Tech
Bob Zadek and Ryan Young of the Competitive Enterprise Institute discuss why the Department of Justice’s antitrust lawsuit against Google is legally weak and politically motivated. They argue that true monopolies are almost always government-created and that current tech giants actually benefit consumers through lower prices and ease of switching services.
Topics: Antitrust, Big Tech, Google, Monopoly, Section 230, Free Speech, Department of Justice, Cronyism, Consumer Welfare Standard
Speakers: Bob Zadek, Ryan Young
Introduction to Big Tech Antitrust [00:18]
Bob Zadek: Good morning, everyone. Welcome to the Bob Zadek Show, the longest-running live libertarian talk radio show on all of radio. The show of ideas, never once the show of attitude.
Well, I’ve kind of had enough of partisan stuff. The elections are kind of over, more or less. They’ll be totally over maybe in January after the Georgia runoffs are finished. Maybe then we’ll know who’s going to rule over us for the next two years at least, perhaps four years, we’ll see. So I needed a little break from partisanship. So I thought I’d select a topic this morning that affects every American, that’s in the news every day. It’s multifaceted. Every single person is affected by this issue all of the time. And nobody, and I mean nobody—I include myself profoundly—nobody knows who to root for.
That is to say, we have the Department of Justice in Washington, D.C. has just filed an antitrust lawsuit against Google. Ever use Google? Well, you’re going to be affected by that litigation, perhaps, unless it just goes away somehow. And here’s the challenge for you informed voters out there. In the lawsuit, Department of Justice v. Google, seeking to whatever, break up Google into “Goog” and “le,” who knows what they’re going to do, but it’s a lawsuit nevertheless. It affects free speech rights, perhaps. It affects antitrust and anti-competitive business practices, perhaps. Who you rooting for? DOJ or Google?
How about this one? Remember the flap a couple of weeks ago between Jack Dorsey and Ted Cruz and the Republican administration and Twitter involving Twitter’s banning and censoring the New York Post attempt to post on their Twitter feed information about—allegedly information about Biden and Biden’s son, Hunter, and they got blocked by Twitter? And the word “censorship” was bandied about. And Ted Cruz dragged Jack Dorsey before Congress and gave him a tongue-lashing and a scolding that got a lot of publicity. So we have, let’s say, Ted Cruz or the federal government on the one hand and Twitter on the other.
Who you rooting for? And these questions—who you rooting for, Google or DOJ? Who you rooting for, Twitter or United States government?—these questions of who you rooting for are nonpartisan. The answer of who you rooting for doesn’t depend upon what party you’re on. This is bipartisan and or nonpartisan, as you will.
So I thought this morning it would be so interesting and helpful to my friends out there to do a deep dive into all of the antitrust news in the media every day, to understand really what’s going on so at least you know who to root for as you follow this, if you do, in the papers. And with that introduction, I am delighted to welcome back to the show Ryan Young. Ryan is a senior fellow at the Competitive Enterprise Institute. He spends lots of his time worrying about regulatory reform, trade regulation, antitrust regulation, and other issues that affect all of us. And these issues do affect all of us. Ryan has recently written an article, “Google Antitrust Lawsuit: Heavy on Politics, Weak on Legal Merits.” Ryan will explain to us all that’s going on in the somewhat arcane but profoundly important area of antitrust legislation and regulation. Ryan, welcome back to the show again. Good morning.
Ryan Young: Good morning, Bob. Thanks so much for having me back. I always love doing your show.
Defining Antitrust and Monopoly [02:30]
Bob Zadek: Oh, thank you so much. Now, let’s sort of tee up the issues. We have parallel issues which, other than antitrust concerns, don’t have much in common on the legal merits, but they have a lot in common politically. And they both of these battlegrounds have a lot to teach us about how we feel about censorship, antitrust regulation, what’s good for the consumers, what’s good for America.
So Ryan, in a few words, before as we get into the topic of antitrust, first of all, what’s wrong with a trust? Because we’re if we are antitrust, trust must be bad. How absurd is that? A trust is just a type of legal entity. So tell us in the broadest sense, just to introduce us to the topic, the subject of antitrust legislation—it goes back more than 100 years. What is the goal of federal—and there are state laws, but let’s focus on federal—what is the goal of antitrust regulation? What’s wrong with trusts and what’s the real target?
Ryan Young: Well, here’s where it gets complicated right at the beginning. Antitrust law doesn’t actually have a single goal. Some people want to use antitrust law to fight concentrated power. If a company’s too big, maybe it can subvert democracy, promote inequality, and make America a less pleasant place to live. Other people view antitrust law as a way to protect the consumer. To them, and this is how antitrust law works today, it doesn’t matter if a company gets big or powerful or dominates its market, as long as it doesn’t hurt consumers. Big isn’t necessarily bad as long as it does what it does well and helps consumers.
And other people view antitrust law as something else entirely. Republicans, for example, have changed their stance on antitrust to where they want to use it to regulate political speech. That’s what the Twitter flap is about, which is, as I see it, not an antitrust issue at all, something separate.
The Relevant Market Fallacy [04:00]
Bob Zadek: So historically, people associate antitrust law, antitrust regulation—they sort of link it into a concept of monopoly. That historically, as I recall back to what I was taught, whether it was true or not is another story, but what I was taught in the smattering of economics education I had in high school and college, I was taught that Standard Oil and the banks and the railroads all had monopolies. I was taught that a monopoly was per se bad, and government would exist to attack and tear apart monopolies because monopolies were bad because monopolies gave private businesses power over marketplaces. They therefore could take advantage of consumers by using improper practices to keep out competition and charge consumers high prices for junky goods, and consumers had no choice because there was no competition. So does antitrust—is it focused directly on monopoly or just bigness per se?
Ryan Young: The law is incoherent on that. We’re going to be saying that a lot, unfortunately. The lawyers do have, for the most part, what I think is a pretty good test of what a monopoly is. It’s if a company can raise prices and squeeze supply at the same time because they can get away with it, if they have the market power to do that. Usually, if you raise prices, a competitor’s going to sneak in. So if you can do that and squeeze the supply—make less of it but make a super high profit margin—and no one else can come in because you have that market power all to yourself, that is what is considered a monopoly for most antitrust case purposes.
Those are very, very rare in economic history. In fact, the about the only examples we have are ones that have been supported by government, whether it’s the East India Trading Company or AT&T more recently. Those are about the only examples. You can’t have a monopoly as most people define it without government help. Markets just do not sustain monopolies for long term.
Bob Zadek: And one of the challenges even in attacking an alleged monopoly is, before you attack a company for monopolizing per se, you have to identify the market. If you define the market broadly enough, then no company has a monopoly. If you define it narrowly enough, then many companies have monopoly. Whether they abuse their monopoly position is a different conversation, but even the concept of monopoly is almost incapable of being defined, or it can be applied in so many different ways. The law becomes kind of useless. So isn’t the definition of the market—think Amazon—a key component of trying to appreciate whether a company does enjoy monopoly power?
Ryan Young: That’s exactly right. That is what I call the “relevant market fallacy.” In a case, usually the first thing that the government and the company squabble about is what’s the size of the relevant market. Not too long ago, Sirius and XM, the two satellite radio companies, merged. And the government was looking to block it because they said, “You guys are going to monopolize the satellite radio market,” which is true. However, that’s not the relevant market. The relevant market is actually much, much bigger. They compete with terrestrial radio. They compete with streaming music services like Spotify. They compete with audiobooks. They compete with CDs people have in their car, for those of us with older cars. The relevant market is huge, and they do not dominate it. And we’ve seen that in the decade since that merger has happened. Yes, they have monopoly over satellite radio, but the media marketplace is still diverse and it’s healthy and it’s had no deleterious effects on competition. So the government was right to leave that case alone in the end, despite their initial squabbling over the relevant market fallacy.
The Case for Repealing Antitrust Laws [05:30]
Bob Zadek: Now, you have spoken and written often about antitrust legislation, anti-legislation that attacks companies often merely because of their size. So in your perfect world—would we have had one?—in your perfect world, would there be no antitrust regulation? Would that word simply leave the vocabulary? And if so, does that pose a risk to consumers?
Ryan Young: I would repeal the whole kit and caboodle because a lot of objections to concentrated power, which I share, are best dealt with through other means. A lot of times what people are upset about isn’t an issue of competition, or it’s not an antitrust issue. The AT&T monopoly was propped up by the government. If you, for a long time until the late ’60s, attached a separate non-AT&T or non-Western Electric-made answering machine to your phone line, AT&T could go after you with lawyers and win. There was no good reason for that. No monopoly, no market monopoly could ever get away with that. It was only because they had government backing. Markets don’t put up with that sort of thing, but government can enforce them.
And usually antitrust is in fact itself cronyism. Where you have those kinds of rules, companies can game them. And that is—antitrust you can actually make a good case was cronyism from all the way down.
The History of the Sherman Act [06:40]
Ryan Young: The Sherman Act was passed in 1890, but in the decade before that, there were actually 19 states that passed their own state-level antitrust laws. And those happened because right around that time there were two brand new technologies that came out. You had a national railroad network that was maturing, and you had refrigeration. And what that caused was for the very first time you had very large farm producers emerging because they could stick meat and grains and things in railroad cars, keep them refrigerated and fresh, haul them long distances very quickly. That kind of arrangement is good for large producers—they can make more goods, ship them farther, faster, more cheaply. It’s good for consumers. And because consumers started choosing those over smaller producers that didn’t have those cost advantages, the smaller farmers who were being hurt got together and lobbied legislatures to pass laws not to build up their own businesses, but to tear down the new businesses. They captured legislators, they used regulations to their own advantage to benefit their businesses. And the Sherman Act from the start was essentially a national version of that. It’s cronyism all the way down, and that’s how antitrust works in practice. And that’s why I favor getting rid of it altogether. Whatever its intentions, its results are cronyism.
Protecting Consumers vs. Competitors [07:45]
Bob Zadek: I’m so glad you mentioned that, Ryan, because that points out another area of examination, area of inquiry, and an area of confusion. That is, should antitrust attacking bigness per se—is that policy designed to protect other businesses, the would-be competitors who can’t compete against, let’s say, Walmart because of size, things like that? Or should it only protect consumers? I believe historically antitrust legislation was based upon protecting consumers. Therefore, if a company monopolized—a word that, as I said, doesn’t really have a meaning, but the radio audience will understand what I’m talking about—if a company is just so big it can afford through economies of scale to sell its goods or services at a really low price so that nobody can compete, and as a result of which consumers are getting really good stuff at a really cheap price, but competitors cannot get into the marketplace, should that and does that per se protect competitors? Should that draw the attention of regulators, or does antitrust regulation not care about other businesses who can’t compete and only care about protecting consumers?
Ryan Young: Antitrust law should care about the competitive process, not about individual competitors. If Walmart comes into town and small businesses go out of business, Walmart didn’t put them out of business. Consumers did. They made a choice. And that’s not an antitrust issue. If Walmart jacks up its prices, they don’t have monopoly. They don’t have that ability we talked about where they can jack up the prices, restrict supply because they have the market power to get away with it. If they raise their prices, someone else will come in and benefit consumers. Consumers ultimately are the ones who are in charge here, not a big company. So while I oppose concentrated power, that’s not an example of it.
Bob Zadek: So therefore, if you’re going to have for sure antitrust regulation, it should never be used to protect other businesses who are competed out of the marketplace. And I couldn’t agree more.
The DOJ Lawsuit Against Google [09:10]
Bob Zadek: Now, take what we have just developed in the few short seconds we have spent examining antitrust regulation per se, and let’s go down to one of the topics du jour, which is the federal government, Department of Justice, filing a lawsuit somewhat in a hurry with a lot of politics involved that Ryan will explain to us, filed an antitrust lawsuit against Google. Now, let’s give DOJ the benefits of the doubt only for a few seconds, Ryan, and make the best case. I’m asking you to sell out your own beliefs—I understand that, and apologies in advance. But what’s the problem that DOJ found enough to bring a lawsuit against Google? And I’ll remind our listeners that if the goal is to protect consumers, Google does not charge for their product. So Google is not exploiting consumers because it’s giving the product away. So with that brief context, what’s the lawsuit all about, Ryan?
Ryan Young: It’s about two things. The first is Google’s very large market share with its search engine. You have Bing, you have DuckDuckGo. It’s rumored that Apple is in the early stages of building its own search engine. None of those are very popular, and Apple’s doesn’t even exist yet. Google’s market share for its narrowly defined search category is 85%, 90%, depending on whose numbers you use. That is overwhelming, and they can use that any way they please, the Justice Department argues. In fact, one of the complaints a lot of conservatives have is that Google is using it to bias its search results against conservatives and to censor conservative ideas.
The other area is advertising. Google has enormous power over the digital advertising market. They have, between them and Facebook, I believe those two companies alone have more than a two-thirds share of all online advertising. And the Justice Department argues that is too much power for one company to have. That is too lucrative a revenue source, and Google can use that power in unsavory ways. Those are the two facets of the complaint: the search engine and the advertising dominance.
The “Keystroke” Argument Against Tech Power [10:40]
Bob Zadek: You said—I’ve been counting them—six times in this show so far, because I was keeping track of it for a reason, you used the word “power.” Where, where in any founding document, where anywhere is the mission to have the government attack power simply because it exists? I can understand attacking power where one entity is harming another. I understand that, of course they should attack that to protect us from others who wish to harm us. But power per se—merely having a lot of power—wealthy people have more power than less wealthy people. NFL team owners have lots of power that I will never dream to have. So you can’t regulate—you can’t allocate power evenly among all players in the marketplace. So of course some companies will have lots and lots of power. Some companies have power simply because they’re credible. The Wall Street Journal, which enjoys a fine reputation for quality journalism, by dint of it having a good product, it has lots of power. People trust it. Amazon perhaps has lots of power—Amazon is perhaps another show. So power per se is fine, I think, it’s benign unless it’s misused. But what you seem to be saying, Ryan, is the mere fact that Google has power—we’ll get to the censorship in a moment, because as you and I know, it’s not about censorship, it’s the wrong use of the word. But go back to DOJ attacking Google merely because its product gives them power, whatever that even means. How can power per se be bad?
Ryan Young: Well, I would argue instead that Google doesn’t have very much power at all. One part of the case is that Google pays lots of money to Apple and to smartphone companies to make its browser the default, which means people will never use anything else. In fact, it pays Apple—we don’t know quite how much, but it’s believed to be $8 to $12 billion every year just to make its Google search engine the default in iPhones. And that’s part of the complaint because that gives Google power, power they should not have, they should not be allowed to do that, according to the complaint.
But I would argue that Google doesn’t have very much power at all. You and I are much more powerful than Google. And here’s why. The example comes from the last big tech antitrust case, the Microsoft case. That was over Microsoft’s Internet Explorer browser. Microsoft tied it into its Windows operating system and made it the default and even made it so people could not get rid of it or uninstall it if they preferred to use something else. What happened was that even though Microsoft at that time had a dominating market share of the internet browser market, within a couple of years of that lawsuit, which ended essentially in a draw with very few actions taken, you had Mozilla Firefox taking over, Google Chrome, Apple Safari. Microsoft Internet Explorer and its successor, which is called Microsoft Edge, still exist, they’re still the default option for Windows computers, but very few people use them. They have a combined market share of maybe 15%, and the rest is split mostly between Apple, Google, Firefox, and other third-party browsers. It’s a very diverse marketplace. The reason that default status that Microsoft had and was the subject of a years-long, multi-billion dollar antitrust suit is because Microsoft never actually had power. Consumers did. As soon as something else came along that they liked better, consumers had the power to change, and they did. The reason Google’s on top right now is because people prefer to use it. If you want to use something else, if you prefer Bing or DuckDuckGo, and in a few years’ time people may well prefer Apple’s forthcoming option, all you have to do is what I call the “dozen keystrokes” argument. It’s not difficult to type bing.com into your browser, even if it’s Google’s Chrome browser. It’ll still take you there, you can still use that search engine. Google doesn’t have the power here, consumers do. And that’s why I don’t think the antitrust case is well-founded.
Private Moderation vs. Government Censorship [12:30]
Bob Zadek: Now, you mentioned, as if I prompted you in advance, you mentioned censorship as one of the issues that caused DOJ to start to file this lawsuit against Google. Tell me more about censorship. I always understood that only a government could censor, as that word is generally understood. Google has no obligation to publish anything. Its obligation is only to its users. If Google doesn’t give good enough information, it will be vulnerable to competition. So how can—just like Netflix decides what movies to carry, and its decision not to carry a movie could be called censorship by the producers of the movie that’s not carried—of course it’s not censorship. Netflix is making a decision that its business goals are best accomplished by not carrying a movie in its catalog. So tell me about what the DOJ is complaining when they use the concept of censorship in their antitrust attack against Google.
Ryan Young: So far, that’s not part of the complaint, and that’s because that is a very, very thin argument because, as you said, only governments can censor. If Google or Facebook or Twitter says, “We’re not going to spread a story,” they can’t take down the website that took down that story. And again, the dozen keystrokes argument. It’s not very difficult to type in nypost.com or whatever source of controversy it is, or breitbart.com or whatever, to find the content that you want. You might have to be a little more savvy, but it’s not like you have a government with the force of law clamping down on news sources. That’s not happening. People are not being silenced. Private platforms are saying, “We don’t want that content here.” Maybe they’re making a mistake, and in many cases I think they are making mistakes, but that’s not a legal issue because we have the First Amendment. Facebook or Twitter or Google cannot clamp down on content; all they can do is refuse to distribute it on their private platform. And that’s a distinction that a lot of people don’t make anymore, and that makes me a little sad about the state of free speech in this country. Usually you have at least one party who favors it, and in the last four years we’ve found that neither party is willing to defend free speech. You’re supposed to defend speech that is unpopular, that you disagree with, and we’re not seeing that these days. I find that disheartening. That’s not an antitrust issue, but it’s still a very important issue.
Bob Zadek: We’re going to discuss in a moment free speech when we discuss the parallel antitrust conversation happening around Twitter’s behavior or misbehavior. So you’re quite right about free speech. It sort of, strangely enough, a one-hour conversation on antitrust is now going to move right into free speech, but we’ll get there in a moment.
Political Timing and Potential Remedies [15:30]
Bob Zadek: One more issue on Google, or two issues really. One observation that comes to mind based on what you just said, Ryan, is something I frankly hadn’t thought of that much. It would be interesting for consumers to comparison shop the Google search engine against the competition. I have found in my limited experience, and this really was surprising to me, how when I ran a search—and whether it’s a political search or not, it can be just a commercial search, I’m looking for the world’s best shaving cream, whatever I’m looking for—whatever search you’re doing, it’s fascinating to perform the identical search with two or three, if you have the time, search engines and compare the results, which you easily can do because you’re the one who’s doing the searching. Compare the results and see if you find that consistently one search engine more than another gives you what you want in the order you would want to receive them. And make a buying decision, even though it’s free, as to which is your default search engine. And you might find that one of the non-Google search engines simply gives you more accurate information and less noise than the others, and you will just, in the free market of search engines, switch your default search engine. It’s an interesting mind exercise.
Now, before we leave the subject of Google, Ryan, I want to help our listeners understand why they care. Can you tell, although it’s really early and I know this is a really hard question—so I’m giving the audience a warning label about how hard this question is—can you tell what would a victory look like for DOJ? How would the world of the Google and other search engines be different if DOJ got exactly what they wanted?
Ryan Young: They never specified that in the complaint. That’s one of the biggest problems with the case. In fact, a lot of career staff in the Justice Department who had been building up the case against Google for a year or longer at this point, they were not happy with the complaint coming out so soon. The timing was politicized. Attorney General Bill Barr wanted it out before the election, and he got it. But the price is that the complaint is very weak. Career staff were so upset that some left the case and refused to sign on to it in protest over how shoddy they believed the case was. And when I looked over the case, the career staff were right. It doesn’t specify what kind of remedy do they want. Some people want to break Google up into different firms. One side would handle search, another would handle Google Maps or whatever. There are lots of ways to do that. Other people want to split it up into two separate but equal companies, two competing search engines that would then compete against each other going forward. They don’t specify it. And when you want to oppose concentrated power, you should at least have an endgame in mind. And if we can’t at all like to speak to the other big side of the complaint that shows just how concentrated Google’s power is, I’d like to talk about the advertising, if that’s okay.
The Economics of Digital Advertising [17:00]
Bob Zadek: Of course. I want the audience to understand, because remember I had mentioned the concept of power, which you mentioned, as I said, frequently earlier in the show. And even in the splitting up Google and carving out Google Maps and Google whatever and Google World, whatever, Google Earth, splitting it up, that has no beneficial effect whatsoever on consumers and probably some detriment that I haven’t thought through. But it certainly doesn’t have a clear benefit to consumers. It just makes Google weaker. Well, what kind of governmental policy just says, “You’re too big per se”? No, nobody is being harmed by your size. We just don’t like it. We just don’t like you to be big. It’s creepy. So bigness in and of itself. And once you split up Google because it’s too big, then do we now have a rule that whenever an American-based corporation reaches a certain size—and how do you measure size? Profits, assets, employees, real estate owned? How do you measure size? A whole other conversation. Once an entity gets to be too big per se, it has to split up like cells have to divide in half and get to be small again. How insane that policy would be insane. So the splitting up of Google is only to make it smaller and have less power. And what does size have to do with power anyway? You could be small and be have great power, as I said, Wall Street Journal has great power because of their reputation. And that power is earned and deserved and not harming consumers. But you wanted to talk about the advertising, Ryan, and it’s a really interesting topic. So please share with us what you would like about advertising.
Ryan Young: Absolutely. And what you talk about would give enormous concentrated power to the Justice Department. If the goal is to fight concentrated power, that’s clearly the wrong way to go about it. But to advertising, Google doesn’t charge its users. So how did it become nearly a trillion-dollar company? Because it charges advertisers. Newspapers are upset that Google and Facebook and companies like them are stealing away ad revenue. And remember what we said about the definition of monopoly: if you have that kind of power, you’re able to raise prices, squeeze the supply, and get away with it. So what’s happened to advertising prices in the last decade? As it turns out, even as Facebook and Google have combined to capture over two-thirds of online advertising just between themselves, prices have been cut in half in the last decade. Not only that, but at the same time, print advertising prices have been going up, and some newspapers are charging double what they used to for advertising. Now, if Google and Facebook had the kind of concentrated monopoly power that should be fought, whether by government or other means—well, actually as an antitrust skeptic, not at all by government—if they had that kind of power, they wouldn’t be cutting their prices in half, nor would they be spending billions of dollars in research and development to improve their algorithms, their product, and as well as their advertising services. What you have here is the opposite of monopoly. What you have is a vibrant competitive process. So again, on both fronts, whether it’s the search engine dominance and the dozen keystrokes argument and the relevant market fallacy, or the digital advertising side where you have falling prices, the case is weak. The Justice Department’s career staff are right.
Twitter and the Streisand Effect [19:00]
Bob Zadek: And what I take from this discussion we’re having this morning, Ryan, what I’m taking is the only ones hurt, if you want to use the word hurt, by Google’s quote “power”—I’m going to put air quotes there—by Google’s quote “power” is the government, who likes to be the most powerful enterprise around and jealously protects its power from others who, by lawful means, have also acquired power, whatever that word even means. So this is an antitrust action where government doesn’t want the competition in power from private enterprise. So if anybody is exercising monopoly power, it’s those at DOJ who are taking advantage of their monopoly power to get rid of competition for the attention of Americans. It’s DOJ and the government writ large which doesn’t like the competition. Google is not behaving in any way that’s adverse to the public interest.
And just as we segue into Twitter and the flap with Dorsey and Ted Cruz, which got a lot of media attention and is also fascinating because that will bring us into a free speech conversation as well. Before we leave and visit Twitter, one last point. And that if Google is behaving badly, its bad behavior is in jiggling search results to accomplish, if you believe DOJ, if they believe themselves, that Google is doing so to carry out and to further their, if Google is a “their,” their political purposes. Well, that goes to the quality of the result. And we’ve already discussed that on the show, which I invite people to comparison shop searches. And if you find that Google is cooking the search books, you will just leave them, and the marketplace will punish Google. Because Google has no monopoly on the data. Everybody has access to the data. It’s how you produce the results. That’s Google’s deliverable. And if we find the results are lower quality, we’ll just leave Google.
Now, I’d like to segue, Ryan, into a related antitrust but in many ways different issue involving Twitter. And just to help the audience recall, because in politics and in public policy, two weeks is a really long time. But if you recall, the New York—this all came to light when the New York Post released a story relating to Hunter Biden’s laptop left at a—at a pawn shop, and it found its way to Rudy Giuliani, it found its way to DOJ. DOJ found emails on it that were politically—could be politically damaging to Joe Biden and damaging to Hunter indirectly, but to Joe Biden for sure. It would, believed, profoundly affect election results, or it could. And the New York Post, a 200-year-old paper founded by Alexander Hamilton—remember him? He was made famous by the musical, if you didn’t otherwise hear of him—well, the New York Post released the information from—on its Twitter feed. And Twitter then blocked it, trumping up—no pun for sure—trumping up some story that it was hacked material and it violated their policy. Twitter later apologized. And so Twitter censored—the wrong word, but you know what it means—censored the New York Post release of that information. And that caused immediately Jack Dorsey and others to be dragged before Congress. Ted Cruz publicly scolded Dorsey and complained about Dorsey’s power. Ted Cruz said, “Who elected you, Mr. Dorsey?” and Dorsey didn’t have a really good answer because the answer is nobody. So but again, it was antitrust regulation that was bandied about as the threat against Twitter. So tell us about the gross misuse of the word, even the concept of antitrust in the Twitter case, and tell us about the free speech issues that are alleged to be involved in the—what I’ll call the Twitter flap.
Ryan Young: Sure. Let’s start with just kind of the raw politics of it. I find it almost unbelievable how short-sighted Republicans are being about this. Suppose they’re right that a lot of tech companies do have among their staff an in-house bias and use their product to mute conservative thought and to give advantages to their own points of view. So now Republicans are proposing to gear up a large antitrust and speech regulation machine, kicking into high gear. They’re building a Ferrari with a giant engine that can do anything they want precisely as they hand the keys over to Democrats. Democrats are going to use the power against Republicans. I can’t believe how short-sighted that is. I find that—not that I have high expectations for political figures in the first place, but I find that a strikingly poor and short-sighted judgment. Whatever your opinion of freedom of speech, that is tactically a stoundingly poor and short-sighted judgment.
Bob Zadek: That didn’t work—I’ll just remind our politically astute listeners that it sure didn’t work when Harry Reid did that. When Harry Reid took a very short-term approach when he was majority leader in the Senate, and he compromised certain long-time norms in the Senate dealing with the use of the supermajority 60 votes required to ratify the appointment of federal judges. And that came back to haunt him, and as a result of which we have Amy Coney Barrett today and perhaps Kavanaugh as well, compliments of Harry Reid’s short-sightedness. That was the same issue, Ryan, you just alluded to, that if you start fussing around with the rules, you’re not going to be in power forever, and you’re handing the keys to the kingdom to the other guys when they take power. So sorry, Ryan, please continue.
Ryan Young: No, that’s exactly right. I was picking on Republicans on that issue, but it’s a thoroughly bipartisan issue. Both parties are guilty of it in astoundingly obvious ways. I figure that a cardinal rule of politics is never give yourself powers you wouldn’t want the other side to have. Neither party follows this rule, and I find that astounding. But they have—politicians tend to have much shorter time horizons than people in the private sector.
Section 230 and Editorial Control [20:30]
Ryan Young: By the way, just if I can digress for a second, what I thought of when you said never give yourself power that you wouldn’t want the other guy to have. In American history, the president, the office of the president, was given in many ways broad powers of foreign policy, commander-in-chief and the like. That was done because everybody kind of knew who the president was going to be. It’s Washington, a man above reproach in all respects. But Washington or presidents of that quality weren’t always the president after Washington. And even the founders may have been guilty of assuming that every president was going to be a Washington’s caliber. I just had to sneak that in, Ryan, but please continue with a conversation of Twitter and what’s going on. What’s the antitrust and free speech beef that right now the Republicans, but soon not to be the Republicans, have against Twitter? And I should point out, I think that the attack on social media and censorship, I think it may have a bipartisan edge even though right now the social media is seen to be as primarily progressive, therefore they are more likely to have a friendlier audience in the new administration than they have now. But what’s going on? What’s the beef? What’s the government versus Twitter complaint? What’s going on there?
Ryan Young: Well, there’s no antitrust angle. There are some very creative legal minds working out to find some, but it’s ultimately not a question of monopoly power because of the dozen keystrokes argument we discussed earlier. I mean, I have yet to hear a good response to that. I’ve talked to a lot of people, I’ve read a lot of articles about this, I’ve yet to hear a good rebuttal. And in fact, one of my co-workers—I’m an Android user, she’s an iPhone user. We mentioned earlier that Google pays Apple as much as $12 billion a year to make its search engine the default on iPhones. If you don’t like Google, if you’d rather use something else that say better fits your ideological profile, it takes on an iPhone not a dozen keystrokes, three taps on the screen. She tried it herself. It’s not difficult. There’s no monopoly power there. That by itself collapses an antitrust argument on free speech.
So really this hinges not on the merits of the case, it hinges on politics. Essentially Republicans want to regulate political speech in their favor. Now that the executive branch is transitioning to the Democrats, they’re going to do the same thing. They’re going to take the precedent that the Republicans have set, they’re going to take the new powers that Republicans are gearing up to use themselves, and instead they’re going to use it against Republicans and for themselves. And this political short-sightedness could end up having disastrous long-term consequences against companies that don’t have monopoly power. Consumers are the people who decide whether Twitter and Facebook and Google rise and fall. Google was not the original search engine; before that it took over from Yahoo and Altavista. Facebook took over from Myspace. These kinds of things happen all the time because people come up with better ways to do them. Why did Google emerge over giants like Yahoo and Altavista? Because they did it better. Facebook did it better than Myspace. And every day there are new startups that might end up being something that people prefer. And because of the dozen keystrokes arguments, it’s very easy to switch over. So really the free speech arguments—government should not regulate political speech, and that’s that. I have very few absolutes in my political beliefs. I reject certainty in all its forms. But one of those absolutes is freedom of speech. Government should not regulate speech.
Bob Zadek: And what’s the alleged governmental interest in what Twitter did or did not do specifically with the New York Post blocked Twitter feed and more generally with the allegation that Twitter is somehow carrying out its political beliefs by adjusting how people use Twitter? What’s going on behind the scenes? What’s the alleged governmental interest in what Twitter does? How could the government care what a private business does if it is not doing something which is otherwise perfectly legal?
Ryan Young: The government shouldn’t care, and that’s for a couple of reasons. One is that I think Twitter made a mistake when they muted the Hunter Biden story that the New York Post published. Other media outlets, including some owned by the same parent company News Corp, such as the Wall Street Journal, thought the story was not adequately sourced. I don’t have an opinion on that matter. Twitter clearly did. If I was running Twitter, I would have let the story through. People are competent to decide for themselves, I think. Twitter’s content moderators thought differently. That’s a business decision, and businesses make mistakes all the time. I don’t think that should be a legal issue because it’s a speech issue. Government should not censor speech. So Twitter is free to make its own mistakes, and if anything, the publicity surrounding their muting of the Hunter Biden story resulted in a Streisand Effect. It actually doubled the story’s reach, it stayed in the news cycle for days instead of dying quiet. So if anything, the content moderator at Twitter who made the mistake made a really big mistake. They amplified the story instead of muting it.
Bob Zadek: Ryan, you’ve ventured into pop culture a little bit, the Streisand Effect. Explain to our listeners what “the Streisand Effect” means.
Ryan Young: Sure. Barbra Streisand is a famous singer and also well known for her political activism, especially on behalf of poverty, which made her a little embarrassed when a tabloid ran a photo of a very opulent beachfront home, multi-million dollar mansion. And she was embarrassed by that, and she actually sued to stop the paper from running that photo. What happened was, again, the story would have died on its own very quietly, a few people might have had a chuckle at Streisand’s hypocrisy and left it at that. Instead, she amplified the story’s reach, more people found out about it, more people had a laugh at her expense, and it backfired. That backfiring is called the Streisand Effect in her honor. And we just saw that with Twitter and the Hunter Biden story. It happens all the time when people try to clamp down on speech, a lot of times they accidentally generate more of it.
Bob Zadek: So to summarize where we are on the federal government dusting off a very old, somewhat powerful tool of antitrust litigation to enforce the statute in the present attack on Google in general, and perhaps on social media more broadly, is unsupportable on the basis of antitrust legislation. And it may be the only possible interest of the government is in an arcane piece of—not arcane, but most consumers don’t know about it—which is referred to Section 230. We don’t have the time to discuss Section 230, but basically in a sentence, under existing legislation, Twitter and Facebook and Google to some extent are free to do whatever they want from an editorial standpoint, or they are not allowed to exercise editorial control over what other people publish in their electronic platforms if they are just like a platform. Once they start editorializing and making editorial judgments, then a different body of law is triggered and they could be liable for defamation and things of that nature, which means they have litigation exposure, which means the cost of doing business goes up. So they are deathly afraid of being accused of exercising editorial control and of being like a newspaper deciding what gets printed. So that’s the legal battle that’s going on. Other than that, there is no, Ryan, I think it’s fair to say, antitrust issue as you see it.
So Ryan, thank you so much for sharing your wisdom. I love talking about antitrust because it’s so murky and so old-fashioned and the public never knows who to root for. Now Ryan, how can our friends out there follow your work at CEI?
Ryan Young: Our website is cei.org. CEI is the Competitive Enterprise Institute. We work on all kinds of regulatory issues, from energy and the environment to international trade. We have a whole website dedicated to antitrust, that’s cei.org and our antitrust site is antitrust.cei.org. Bob, it’s been a real pleasure. Thank you so much for having me on.
Bob Zadek: Thank you so much, Ryan. Thanks for sharing your thoughts with us. Bob Zadek saying so long for now. See you next Sunday.