WSJ and Bloomberg highlight weaknesses in DOJ case against Google

October 20, 2020

Wall Street Journal Google in the Antitrust Dock: Justice Will Need More Proof of Consumer Harm to Win its Lawsuit

Bloomberg Government Google Lawsuit Is A Case Of Antitrust Policy Run Amok: Editorial

The Editorial Boards of two of the largest publications in the country released articles highlighting their concerns with the Justice Department’s recently filed litigation against Google. The litigation is seen as the first in a series of lawsuits against big tech companies.

The lawsuit against Google is an antitrust suit and its culpability hinges on whether the company employs anticompetitive practices that harm consumers. Specifically, the lawsuit claims Google uses exclusionary practices similar to those the Government used to prove violations by Microsoft in the D.C. Circuit Court of Appeals ruling in U.S. v. Microsoft (2001), which held that Microsoft’s practice of bundling their web server and browser was monopolistic. And, that the agreements Google made with phone makers and wireless carriers to promote its search business were problematic.

Bloomberg said in its article that, “All the relevant agreements were the result of competitive bidding, users face only the slightest of hurdles if they wish to switch to other services, and even the world’s most ardent Bing enthusiasts must admit that Google has made a great product with immense consumer benefits.

While the Wall Street Journal Editorial Board cited facts showing that consumers can easily switch between search engines as a major difference that could lead the courts to a different decision in this case: “But consumers can easily download other browsers and search engines if they don’t like Google’s, unlike in the 1990s when they had to buy special software or jump through hoops to use an alternative to Microsoft’s. Now most general search engines and web browsers are free. Microsoft’s Bing even pays consumers rewards for using it. Where is the consumer harm?

The WSJ Editorial Board also laid out the complaint’s other weaknesses.

  • In 2005 Google accounted for about 35% of the general search market compared to 30% for Yahoo and 15% for Microsoft. Both of the latter had plenty of data and capital to invest in building better search products. Microsoft pre-loads every Windows PC with its Edge browser and Bing search. Amazon’s Fire operating system uses Bing as its default. Google doesn’t stop users from switching to other search engines.
  • “[C]onsumers consent to letting all sorts of companies, including supermarkets, collect data in return for a free service. Google also allows users to limit the data it collects. Most don’t.
  • “Google uses its general search function to hook people, but it makes money from selling ads on specialized queries. This broader advertising market includes Amazon, eBay, as well as websites like Yelp, OpenTable and Expedia. About 60% of Americans start product searches on Amazon.

Leaders at the Competitive Enterprise Institute react to DOJ Suit Against Google

WASHINGTON, DC – The Department of Justice filed a lawsuit today alleging Google has broken antitrust laws with its search function and digital advertising practices.

Associate Director of CEI’s Center for Technology and Innovation Jessica Melugin said:

 “In the U.S., the antitrust standard is consumer harm. Consumers enjoy Google’s search without charge and the service continues to improve in quality and expand in offerings, like autocomplete and translations. It will be a heavy lift for the DOJ to show real consumer harm. That this bar is unlikely to be met is precisely why so many antitrust enthusiasts are calling for a fundamental rewriting and expansion of U.S. antitrust laws. Those proposed changes sacrifice the primacy of consumer welfare and insert competitors and broader socio-economic goals in its place. This suit is a mistake; antitrust should not be used to protect inefficient producers at the expense of consumer’s interests.”

Senior Fellow Ryan Young said:

 “Any antitrust lawsuit against Google is unlikely to accomplish its goals. The Republicans driving the lawsuit want to avenge perceived political bias. An antitrust lawsuit is a strange way to go about regulating political speech.

 “Democrats might take over the Republicans’ lawsuit or file their own case, depending on how the election goes. They are concerned about monopoly power. For example, Google has a major share of online advertising revenues. But online ad prices have fallen by roughly half over the last decade, even as print advertising prices have gone up. Any first-year law student knows that monopolists don’t cut prices.They raise prices, because they have the market power to do so. Google clearly lacks this market power.

 “Nor is using competing search engines difficult. It takes seconds to type ‘DuckDuckGo.com’ or ‘Bing.com’ into your browser—even in Google’s Chrome browser. While Google is the default search option in most smartphones, Microsoft’s experience with Internet Explorer shows that default status matters very little when something better is a dozen keystrokes away. Its newer Chromium-based Edge browser, the new Windows default, has similarly failed to catch on. Consumers rule the search market, not Google.”

Vice President for Policy Wayne Crews said:

 “The claimed purpose of antitrust is enhancing consumer welfare, but this suit seems more about competitor’s interests. One of the dangerous and unstated goals of antitrust exploitation is to grant lesser competitors forced access to the target’s voluntarily acquired customers without doing the hard work and innovation the target did to win them in the first place. News reports indicate that the DOJ asked rivals and other third parties for their views on which businesses Google should have to sell and which existing competitors should be off-limits as potential buyers in the forced fire sale.  

 “Government asking competitors how it should apply force illustrates the naked character of the rent-seeking involved here specifically and generally. We at least pretend that antitrust is about protecting competition and not competitors, but it seems the most prominent bipartisanship in Washington is to expand government power rather than reduce it.”

For more information about CEI’s work on antitrust, please visit cei.org/antitrust.

With new drug pricing order, Trump flirts with socialized medicine

With new drug pricing order, Trump flirts with socialized medicine

BY MERRILL MATTHEWS

President Trump’s recent executive order on drug prices gets almost everything right — except the solution. Ironically, that solution moves the United States toward socialized medicine, which the president vociferously opposes.

The order says, “Americans pay more per capita for prescription drugs than residents of any other developed country.” That’s certainly true for most brand name drugs, though Americans typically pay much less for generic drugs, which account for about 90 percent of all U.S. prescriptions — a fact often ignored in the health policy debates.

The EO is also correct that “Americans pay more for the exact same drugs, often made in the exact same places.” As a result, Americans “finance much of the biopharmaceutical innovation that the world depends on.” https://d0a997f558a95ead2e8d0c2375aca6dd.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html#xpc=sf-gdn-exp-4&p=https%3A//thehill.com

But Trump’s executive order won’t fix these problems. It will only make it as hard for American patients to obtain the newest, cutting-edge drugs as it is for many patients in foreign countries the president wants to emulate. 

The order forbids Medicare from paying more for drugs than the lowest price available in any member country of the Organization for Economic Cooperation and Development (OECD), after adjusting for per-capita income. Trump calls it a “most-favored-nation price.” 

The order claims those nations enjoy low drug prices because they “negotiate” with pharmaceutical manufacturers. But what the order describes as a negotiation is more akin to a hostage-taking — with their own citizens held for ransom. 

Bureaucrats in those nations’ systems – most of which are largely or completely controlled by the government – often refuse to cover drugs unless manufacturers sell the medicines far below fair-market prices. 

In Canada, for example, just 46 percent of new drugs approved worldwide between 2011 and 2018 are actually available to Canadian patients. And the average delay between approval and availability in Canada is 15 months. In the United Kingdom, it’s 59 percent and 18 months.https://d0a997f558a95ead2e8d0c2375aca6dd.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html#xpc=sf-gdn-exp-5&p=https%3A//thehill.com

But in the United States it’s 87 percent and three months or less.

Those are months – and in some countries, years – that patients go without access to the newest treatments. Some drugs are never made available. 

The U.S. government doesn’t treat its people so callously — or at least it hasn’t. Medicare covers virtually every FDA-approved medicine, and it sets reimbursements based on prices in the commercial market. This market-based pricing ensures that the newest drugs are available and doctors, not government gatekeepers, decide which drugs to prescribe. 

It’s a shame that the president has adopted other countries’ socialized medicine prices because he so often criticizes foreign freeloading. 

Recall that when Trump took office, he saw that our NATO allies were not paying their fair share toward the alliance’s mutual defense, even though the members had for years committed to raising their defense spending to at least 2 percent of GDP to support the alliance. 

With new drug pricing order, Trump flirts with socialized medicine

President Trump’s recent executive order on drug prices gets almost everything right — except the solution. Ironically, that solution moves the United States toward socialized medicine, which the president vociferously opposes.

The order says, “Americans pay more per capita for prescription drugs than residents of any other developed country.” That’s certainly true for most brand name drugs, though Americans typically pay much less for generic drugs, which account for about 90 percent of all U.S. prescriptions — a fact often ignored in the health policy debates.

The EO is also correct that “Americans pay more for the exact same drugs, often made in the exact same places.” As a result, Americans “finance much of the biopharmaceutical innovation that the world depends on.” https://d0a997f558a95ead2e8d0c2375aca6dd.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html#xpc=sf-gdn-exp-4&p=https%3A//thehill.com

But Trump’s executive order won’t fix these problems. It will only make it as hard for American patients to obtain the newest, cutting-edge drugs as it is for many patients in foreign countries the president wants to emulate. 

The order forbids Medicare from paying more for drugs than the lowest price available in any member country of the Organization for Economic Cooperation and Development (OECD), after adjusting for per-capita income. Trump calls it a “most-favored-nation price.” 

The order claims those nations enjoy low drug prices because they “negotiate” with pharmaceutical manufacturers. But what the order describes as a negotiation is more akin to a hostage-taking — with their own citizens held for ransom. 

Bureaucrats in those nations’ systems – most of which are largely or completely controlled by the government – often refuse to cover drugs unless manufacturers sell the medicines far below fair-market prices. 

In Canada, for example, just 46 percent of new drugs approved worldwide between 2011 and 2018 are actually available to Canadian patients. And the average delay between approval and availability in Canada is 15 months. In the United Kingdom, it’s 59 percent and 18 months.https://d0a997f558a95ead2e8d0c2375aca6dd.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html#xpc=sf-gdn-exp-5&p=https%3A//thehill.com

But in the United States it’s 87 percent and three months or less.

Those are months – and in some countries, years – that patients go without access to the newest treatments. Some drugs are never made available. 

The U.S. government doesn’t treat its people so callously — or at least it hasn’t. Medicare covers virtually every FDA-approved medicine, and it sets reimbursements based on prices in the commercial market. This market-based pricing ensures that the newest drugs are available and doctors, not government gatekeepers, decide which drugs to prescribe. 

It’s a shame that the president has adopted other countries’ socialized medicine prices because he so often criticizes foreign freeloading. 

Recall that when Trump took office, he saw that our NATO allies were not paying their fair share toward the alliance’s mutual defense, even though the members had for years committed to raising their defense spending to at least 2 percent of GDP to support the alliance. ADVERTISING

Trump did not respond to this inequity by swearing the United States would only spend as much as our stingiest ally. Instead, he called them out publicly and exhorted our allies to increase their contributions to our mutual defense, which was in everyone’s interest. And they responded.

With medicines, too, our allies don’t pull their weight, content to let U.S. patients and taxpayers carry the load. That hurts Americans and Europeans alike. If Europeans paid 20 percent more for drug costs – hardly closing the gap – Americans and Europeans would gain a combined $17.5 trillion benefit in overall welfare over 50 years, according to an analysis from University of Southern California researchers

New drugs – which cost an average of $1.6 billion each to develop – are paid for by the revenue from current treatments. That’s the capital drug manufacturers used to begin research on a COVID-19 vaccine — long before the federal government ponied up any cash.

If we cut that revenue stream, it’ll lead to less R&D and fewer innovative treatments in the future. One study of adopting “international reference pricing,” which is similar to the most-favored-nation pricing approach, found that it could reduce new drug discovery by 88 percent. That’s too high a price to pay for cheaper drugs now. When friends and allies engage in self-destructive behavior, the correct response is not to emulate their mistakes, but to help them choose a better path. Today, the majority of new drugs invented globally are invented in America, in large part because our government does not dictate prices. The president should keep it that way, and, just as he did with NATO, demand that our allies fall in line. 

BY MERRILL MATTHEWS, OPINION CONTRIBUTOR— Appearing in the Hill on 10/08/20

Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Follow him on Twitter @MerrillMatthews.

Congress: Let Big Tech Help Small Business

Written by: Jake Ward

Amidst the worst economic crisis since the Great Depression — when leaders should be boosting our economy and helping small businesses — a congressional subcommittee chair is instead playing politics and small businesses will pay the price.

In an extraordinary rebuke of American innovators and our global technology leadership, Rhode Island Rep. David Cicilline (D) just released a report on “Big Tech” that recommends Congress punish success by forcibly dismantling America’s leading technology companies. More importantly, he ignores the invaluable partnership between those tech leaders and millions of American small businesses.

Research and common sense tell us that smart use of digital tools and online marketplaces drives small business success. In the best of times, businesses that use affordable, scalable small business tools grow faster and have higher revenue and profits. In a pandemic, access to these tools may be the difference between staying in or bankruptcy.

According to Digitally Driven, a survey of more than 7,000 small businesses, tools that enable e-commerce, digital marketing, more efficient operations and working from home give American small businesses a fighting chance during the COVID recession.

They form a Digital Safety Net, as businesses that embrace them anticipate four times better revenue than those that don’t. Additional research documents that online marketplaces provided more than $145 billion in value in 2018 and likely twice that during the COVID pandemic.

By rejecting the data, Cicilline’s report is wrong from its thesis to the conclusion. Government concerns of tech-industry monopolies and market dominance are always built on quicksand.

Remember Yahoo, AOL and MySpace? Zoom was virtually unknown in February but now is synonymous with video conferencing as Kleenex is with tissues. To assert that there is no competition in technology is to ignore recent history.

At the heart of Cicilline’s recommendations is a “single-line of business rule” for digital platforms and marketplaces. This “Glass-Steagall for the Internet” proposal may be clever branding, but really it is a bad analogy built on faulty mythology twisted into bad public policy.

The legend was that banks’ bad investments using consumer deposits caused the Great Depression, and the Glass-Steagall Act of 1933 was intended to prevent banks from gambling with consumer deposits again. But today’s digital economy is not causing a Depression or the COVID recession. Digital platforms are delivering billions of dollars of value to consumers and small businesses and justifiably have been embraced as a result.

Another absurd proposal would ban digital marketplaces from showing any preference for their own products. But grocery and department stores have been selling their own brands alongside third-party products for decades. Will Congress also require store-brand cereal to be on supermarkets’ top shelves so consumers are less likely to find it?

The Cicilline proposal is a square peg in the modern economy’s round hole, and the resulting chaos will create inefficiencies and force higher prices for online ads, marketplaces, business collaboration tools, and many more services that today work brilliantly for millions of small businesses.

Despite the obvious evidence of tech industry competition and value, including digital platforms’ fierce competition for small business advertising, marketing, and software dollars, Rep. Cicilline is not convinced.

Or perhaps he is simply too busy headlining fundraisers as a modern-day trust-buster to pay attention to the substantive details and data. Is it any wonder that he is releasing the report while the media is occupied with the pandemic, Supreme Court and election?

Regulations are not inherently bad, and antitrust law is essential to protecting consumers. But the wrong regulations for the wrong reasons at the wrong time will have unintended consequences.

Forcibly breaking apart digital platforms will eliminate the gains that many small businesses have enjoyed for nearly a decade. The competition debate cannot just be about the “big” in Big Tech, as these platforms’ size and scale are precisely what enables them to provide small businesses with high-quality tools and services at affordable prices.

The debate about Big Tech must include Main Street and the millions of small businesses that are the backbone of our economy and will drive our economic recovery.

Radical Liberals Running in Maricopa County

Most voters believe the role of an elected prosecutor, sheriff, or elections official, is to enforce the laws on the books. Prosecutors and Executive and Administrative offices always have some discretion in how they run their offices according to law, but they recognize the constitutional limits of their office. The people and their elected legislators write the laws. County officials administer them.

Events across the country have shown that when liberal activists take control of prosecution or administration of law, they will overstep their bounds with little regard for facts and the law.

Maricopa County is a battleground for control of the US Senate and for the Presidency. What many Arizona voters may not realize is that it is also a battle for control of the Arizona legislature and many important county offices.

Voters in Maricopa County elected Adrian Fontes after a failed Presidential preference election in 2016. After 20+ years of non-partisan elections, Helen Purcell’s office did not foresee record voter turnout in 2016. Long lines and understaffed polls, created a backlash and voters held her office accountable. They replaced her non-partisan and administration approach with Adrian Fontes, a man who is partisan, activist, and holds dissenters in low regard, telling one voter to Go F-yourself!. During this election year alone, Fontes’ partisan and activist efforts have been slapped down twice by the courts.

When the typically left leaning Arizona Republic posts Sunday news about Fontes failures, you hope that Independent and Republican voters will get the message.

For County Attorney, Allister Adel faces Liberal activist Julie Gunningle. Who is Gunnigle? Well, for starters, read her Twitter page. She is the type of activist prosecutor that would be a dream for outside groups backed by George Soros. She calls the County Attorney and her office racists without evidence, and vows to be an “anti-racist” activist. She supports Sanctuary City Policies and she is rabidly pro-abortion, not wanting to enforce existing Arizona laws.

If conservatives need motivation to defeat Julie Gunnigle, look at her recent tweets:  Gunnigle calls for the defunding of the Phoenix Police during the riots.

For other radical progressive views see her other tweets.

Gunnigle’s McCarthyism crusade to be an anti-racist

Calls County Attorney’s office racist

Gunnigle won’t enforce AZ abortion laws

Gunnigle criticizes Adel for enforcing existing laws on the books

Gunnigle donates 500 hours to helping with abortion

Voters in Maricopa County need to wake up and inform their neighbors about the consequences of a blue wave in AZ. If the GOP allows Democratic activists to run county offices, or to take control of the legislature, Arizona’s government will be transformed into an activists playground just like California, Oregon, and Washington State. Vote the Republican slate.

Connected Commerce Council Releases New Report: Arizona’s Digitally Savvy Small Businesses Outperform During Pandemic

Washington, D.C. (September 08, 2020): The Connected Commerce Council (3C) today released a report detailing how small businesses nationwide that embraced digital tools early are generating more revenue than their peers, and that Arizona small businesses are using digital tools more and expecting 2020 revenue that exceeds the national averages. The report highlights the existence and importance of the small business “Digital Safety Net,” which 3C defines as the free and low-cost small business services that include communications and workflow tools, digital marketing and advertising, websites and social media, back-office tools, and e-commerce and online payment tools.

Digitally Driven shows that nationally small businesses that embraced digital tools the earliest – “Digital Drivers” – expect 4x better revenue for 2020 compared to “Digital Maintainers,” those who are generally skeptical of digital tools’ value and typically use only a few basic tools such as email and perhaps a website. In Arizona, 49% of small businesses are digital drivers compared to 35% nationally with a predicted 9.75% in revenue reduction compared to an expected 16% reduction in revenue nationally.

“In times like these, when in-person commerce is limited, if not impossible, and working from home is the norm, digital tools literally are a safety net preventing deeper small business calamity,” said 3C President Jake Ward. “The Digital Safety Net is real. However, the net could — and must — be bigger, more robust, and more inclusive. Small businesses must invest time in selecting the right digital tools for their business; technology companies must help small businesses access the right tools; and policymakers must invest more money in public-private partnerships that create and support small business resource networks.”

Other key findings in the report include:

In addition to the 49% that were digital drivers:

  • 23% of Arizona small businesses are “Digital Adopters.” They recognize the value of digital tools and are using some, but are not fully committed to digital, compared to 33% nationally
  •  24% of Arizona small businesses are “Digital Maintainers.” They are generally skeptical of digital tools’ value or are tech-nervous, and typically only use a few basic tools such as email and perhaps a website, compared to 33% nationally

Comparing the 50 states, those with a higher incidence of Digital Drivers show stronger small businesses resiliency than those states with more Adopters and Maintainers.

  • The states with the most Drivers and best-expected 2020 revenue are:

Nevada (63% Drivers, 5.26% revenue growth)

Alabama (51% Drivers, 6.61% revenue reduction)

Arizona (49% Drivers, 9.75% revenue reduction)

Georgia (40% Drivers, 10.75% revenue reduction)

Colorado (47% Drivers, 12.45% revenue reduction)

  • 71% of Arizona small businesses increased their use of digital tools during the pandemic, compared to 72% nationally.
  • Pre-COVID-19, 69% of Arizona small businesses found digital tools either “essential” or “important” to their business, compared to 68% nationally.
  • Arizona small businesses cited three key challenges to adopting and expanding their use of digital tools: 37% cite being unsure about return on investment, 52% cite cost, and 56% cite information and skills gaps.

“When COVID-19 hit, I was seriously concerned about the future of my business,” said Eli Crane of Bottle Breacher in Tucson, Ariz. “Luckily, we were already familiar with a number of digital tools that proved critically important during the crisis. These tools were definitely instrumental to our survival.”

The report also recommends that small businesses maximize their digital tool use and become better prepared for the next crisis, and provides a playbook for tech platforms, governments, and NGOs to support small businesses today and into the future.

For small businesses, it is critical to identify their goals, gaps, and precise needs to ensure they are investing in the right digital tools – not the most popular or least expensive options. For technology companies, helping small businesses discover which digital tools they need and
providing confidence-building skills training and user-friendly support materials will help with the knowledge gap that prevents many companies from taking the digital plunge. And for policymakers, the need is to increase funding of small business resources and create public-private partnerships to address access and education barriers that small businesses experience during tough economic times.

Digitally Driven, commissioned by 3C in conjunction with Google and Greenberg, is based on findings from a nationwide survey of 7,021 small businesses that were still in business, including a representative sample from every state in the country. Data are weighted by gender, ethnicity, region, business size, and vertical, to ensure an accurate national representation. The survey was fielded online and by phone between May 28 and July 3, 2020.

The full report can be found here.
A summary of the report and its key findings for Arizona can be found here.

About 3C: The Connected Commerce Council is a non-profit membership organization with a single goal: to promote small businesses’ access to essential digital technologies and tools. 3C provides small businesses with access to the market’s most effective digital tools available, provides coaching to optimize growth and efficiency, and cultivates a policy environment that considers and respects the interests of today’s small businesses.

Tech Policy and the 2020 Election: Antitrust and Big Tech

By: Jennifer Huddleston

Introduction

Is Big Tech too big, and do companies such as Facebook, Apple, Google, and Amazon need to be broken up via antitrust action? Have we moved into a new age of “cyber barons”? Criticism of large tech platforms and discussions of antitrust action have come from both the left and the right recently. Many of these criticisms do not reflect the underlying principles of antitrust law, but instead reflect other policy concerns such as data privacy and content moderation. Given the criticism from both sides of the aisle, it is not surprising that both presidential candidates have suggested that they would engage in further antitrust scrutiny of large tech platforms if elected.

Liberal Criticisms Regarding Existing Standards

Democratic criticisms of current antitrust largely suggest that enforcement is not aggressive enough and does not account for practices that harm workers and stifle competitors but are not seen in economic harm to consumers. For example, the Biden-Harris platform supports modifying antitrust laws and ties the need for such modifications to “empowering workers.” More generally, criticisms from the left argue that the current approach to antitrust law does not properly account for all the harms to a market by large firms’ behavior and that a more flexible, policy-based approach should be used for more zealous antitrust enforcement.

There are two main problems with such criticisms. First, a more flexible and broad policy-based approach to antitrust would create greater uncertainty for consumers, innovators, and competitors. The prior rule of reason approach stifled beneficial mergers or changes out of an unjustified concern. This approach also tends to focus on the impact on competitors rather than on consumers’ welfare and a properly functioning market.

Second, even the supposed problems have not been shown to be truly harmful or even actually exist. Arguments about the use of data for house brands by Amazon is not that different from the behavior traditional retailers such as Target or Walmart have engaged in for decades. The idea of a “kill zone” (where big tech companies buy out small companies before they can challenge them) appears to be largely a myth and instead has provided more options for startups and investors as well as improved products for consumers. Concerns about market concentration often miss changes in market dynamics or differences in competition at a local versus national level.

Moving away from an objective standard of antitrust might not benefit the very consumers competition law was intended to protect and risks providing a dangerous way for political motives to intrude into an already competitive market. Such politicization could increase the abuse of antitrust law such as the Trump Administration Department of Justice’s alleged use of antitrust to review mergers in the cannabis industry based only on its dislike of the product.

Conservative Critiques of Antitrust

Calls to break up Big Tech have not only come from the left but also from policymakers on the right. Conservative criticisms often allege that the companies are abusing market power to silence conservative voices and argue that breaking these companies up would solve a litany of non-competition related policy concerns. The Department of Justice during the Trump Administration has been actively pursuing potential antitrust claims against the largest tech companies. The president himself has suggested more use of antitrust law against large tech companies, even applauding European Union fines against American tech companies. But as with the criticisms from the left, these proposed solutions might make the alleged problems even worse.

Breaking up “Big Tech” would not solve concerns about anti-conservative bias, content moderation, data privacy, or any of a litany of non-competition policy concerns. Such a policy motivation is not the appropriate use of antitrust and would be better addressed by more targeted policy reforms if needed. In fact, using antitrust to require a breakup might even make these problems worse. Smaller firms would have more limited resources to devote to tasks such as content moderation or data security and might find themselves engaging in more advertising or data usage without the efficiency of a large company. The result is far from a guarantee that these now separated companies would better respond to these policy concerns or be more friendly to conservatives. As former Senator Rick Santorum recently wrote, “Going back to the media of 25 years ago would not go well for the President or for conservatives…. As America wrestles with so many tough issues and prepares to select its leaders in a charged partisan atmosphere, social media matters. And social media matters more to the election prospects for conservatives than it does for progressives.”

Using antitrust for more political purposes not only risks undermining those purposes; it risks unnecessary government interference in a free and competitive market. The result again could easily be that consumers lose out on potential mergers or efficiencies that would have benefited them. In some cases involving technology, the result could even be an increase in costs for once zero-cost products.

Conclusion

The current approach to antitrust is principled and objective with a focus correctly on consumers. As a result, it is a tool to allow competitive markets to continue to flourish while providing a principled mode of correction when anti-competitive behavior arises. Such a standard is adaptable to fast-moving, innovative fields as well as more traditional markets. As conversations around antitrust and Big Tech are likely to continue under either a Trump or Biden Administration, proposed changes to antitrust would likely bring with them new problems as well as fail to cure existing ones.

Jennifer Huddleston is the Director of Technology and Innovation Policy at the American Action Forum.  @jrhuddles

National Council on Disability releases Statement Opposing Importation of IPI

Importation of the IPI in the U.S. will restrict access to prescription medications for the millions of Americans who rely on Medicare Part B due to the IPI’s reliance on quality-adjusted life years (QALYs) – a formula used to assess the value of medications by assigning a lower value to the life of a person with an illness or disability

WASHINGTON—The National Council on Disability released the following statement:

Making prescription medicines more affordable is a proper and necessary goal for the U.S., but it is not in the best interest of Americans to import price controls from countries that use the International Pricing Index (IPI) to determine U.S. drug pricing.

Importation of the IPI in the U.S. will restrict access to prescription medications for the millions of Americans who rely on Medicare Part B due to the IPI’s reliance on quality-adjusted life years (QALYs) – a formula used to assess the value of medications by assigning a lower value to the life of a person with an illness or disability.

To date, QALYs have been deemed contrary to U.S. public policy because of the discriminatory design and impact on people with chronic illnesses and disabilities. NCD’s 2019 report on QALYs describes their consequences on people with chronic illnesses and disabilities in countries with government-run health systems that use the IPI. Where Americans enjoy broad access to the most effective and cutting-edge medications available, people in IPI countries have dramatically less access to important drugs, including denied or restricted access to the most effective drugs for cancer and other serious medical conditions.

Medicare and Medicaid have not relied on value assessments that use QALYs for prescription drugs but importing the IPI will most certainly reduce access to quality healthcare for Americans by limiting or restricting access to medications. It will also import the use of QALYs, which run counter to U.S. civil rights laws that prohibit healthcare discrimination against people with disabilities.

For the benefit of all Americans who rely on nondiscriminatory access to the most effective prescription drugs to treat their individual conditions, NCD urges the Trump administration to abandon its plan to use IPI and to examine alternatives that do not rely on QALYs or other discriminatory metrics.

Conservative leaders say tech anti-trust lawsuits “undermine the rule of law, and negatively impact consumers”

The Honorable David N. Cicilline
Chairman, House Committee on the Judiciary
Subcommittee on Antitrust, Commercial and Administrative Law

The Honorable F. James Sensenbrenner
Ranking Member, House Committee on the Judiciary
Subcommittee on Antitrust, Commercial and Administrative Law

Dear Chairman Cicilline and Ranking Member Sensenbrenner,

We, the undersigned, write to you regarding your July 29 hearing, “Online Platforms and Market Power, Part 6: Examining the Dominance of Amazon, Apple, Facebook, and Google.” We also understand that the House Judiciary Committee has launched its own investigation into these companies and are also reviewing whether changes are necessary to existing antitrust laws. This comes as both sides of the aisle are pushing for the weaponization of antitrust, either as a tool to punish corporate actors with whom they disagree or out of a presupposition that big is bad.

We would like to emphasize the need to distinguish between the proper and improper uses of antitrust in approaching discussions of market power, and are concerned that today’s hearing could lead to the use of antitrust to address concerns surrounding online content moderation, data privacy, equality, or other socio-political issues that are unrelated to the competitive process.

It is important to consider what is at stake. Using antitrust to achieve policy or political goals would upend more than a century of legal and economic learning and progress. The need to bring coherency to antitrust law through a neutral underlying principle that cannot be weaponized is what led to the adoption of the modern consumer welfare standard.[1] It is broad enough to incorporate a wide variety of evidence and shifting economic circumstances but also clear and objective enough to prevent being subjected to the beliefs of courts and enforcers. Abandoning the consumer welfare standard by giving enforcers a roving mandate would shift antitrust law back to the approach of the 1960s when, in Justice Potter Stewart’s words, “[t]he sole consistency that I can find is that, in litigation under [the antitrust laws], the Government always wins.”[2]

It is also important to put today’s hearing into perspective. The current antitrust debate is relevant to far more than just “Big Tech.” The economic consequences of many of the recent proposals would make the American economy and consumers substantially worse off across a wide array of industries. Proposals include aggressive merger prohibitions, inverting the burden of proof, allowing collusion and antitrust exemptions for politically favored firms, and politicizing antitrust enforcement decision-making more generally. Arbitrary or overly-broad antitrust enforcement would hamper our economic recovery and risks job losses—something we can ill-afford as the nation recovers from the COVID-19 economic slow-down.

In sum, weaponizing antitrust for broader socioeconomic purposes would fundamentally alter the primary goal of antitrust, undermine the rule of law, and negatively impact consumers. We ask that this letter be entered in the hearing record. We thank you for your oversight of this important issue. 

Sincerely,

Ashley Baker
Director of Public Policy
The Committee for Justice

Robert H. Bork, Jr.
President
The Bork Foundation

Ralph Benko
Chairman
The Capitalist League

Wayne Brough
President
Innovation Defense Foundation

Tom Giovanetti
President
Institute for Policy Innovation

Douglas Holtz-Eakin
President
American Action Forum

Karen Kerrigan
President & CEO
Small Business & Entrepreneurship Council

Curt Levey
President
The Committee for Justice

Stephen Moore
Co-Founder
Committee to Unleash Prosperity

Katie McAuliffe
Executive Director
Digital Liberty

Doug McCullough
Director
Lone Star Policy Institute

Lisa B. Nelson
CEO
American Legislative Exchange Council

Grover G. Norquist
President
Americans for Tax Reform

Andrea O’Sullivan
Director, Center for Technology and Innovation
James Madison Institute

Eric Peterson
Director of Policy
Pelican Institute

Steve Pociask
President / CEO
The American Consumer Institute

Thomas A. Schatz
President
Citizens Against Government Waste

Pete Sepp
President
National Taxpayers Union

Josh Withrow
Senior Policy Analyst
FreedomWorks

David Williams
President
Taxpayers Protection Alliance

Price Controls Aren’t Solutions

BY DANIEL SAVICKAS

Prices for prescription drugs in the U.S. are far too high. There is no denying this sad reality. According to an analysis done by the House Ways and Means Committee, the U.S. pays roughly four times as much as 11 similar nations for prescription drugs. For millions of patients, families, and caregivers, this is unacceptable. Policymakers are right when they say something needs to be done.

However, it wouldn’t truly be a day that ends in ‘y’ in Washington if the proposed answer from lawmakers didn’t threaten to make the problem worse. Lawmakers of all stripes – from Sen. Bernie Sanders (I-Vt.) to Sen. Josh Hawley (R-Mo.) to even President Donald Trump himself – are proposing to implement price controls in hopes of assuaging the problem.

These lawmakers, especially the self-proclaimed “conservatives” who should know better, ought to heed the sage wisdom from President Reagan’s inaugural address: “Government is not the solution to our problem, government is the problem.” Sadly, the proposal on the table would introduce more government to the equation, not less.

Currently, various lawmakers have proposed some form of an international pricing index (IPI). This concept would tie drug prices in the U.S. to drug prices overseas. The Department of Health and Human Services (HHS) rolled out a proposal in late 2018 that would have capped drug prices in Medicare Part B to no more than 50 percent above the aggregated prices in 14 comparator nations. This is similar to a proposal introduced in the Senate by the aforementioned Sanders.

Fortunately, that proposal seemed to go the way that most socialistic schemes do: to the dustbin of history. Unfortunately, there are credible rumors that the White House is attempting to revive it with the added twist of the knife in the form of a “most favored nation” provision (MFN). Said provision would ensure that, amongst developed nations, the U.S. would have to have the lowest prescription drug prices. In other words, the U.S. will have the most stringent price controls in the world. This is a problem.

While the U.S. does have unacceptably high drug prices, there are a number of reasons why we are still higher than the rest of the world. Most of the other nations in the developed world have price controls of their own. This does ensure that they have lower prices. However, it also ensures that they have access to fewer cures, are subject to longer wait times, and often suffer from drug shortages. These are consequences that the U.S. will surely inherit if we choose to model the rest of the world.

There are plenty of solutions to help bring U.S. prices down in a market friendly way that would not upset the superior quality of care Americans receive. One would be to appoint a special trade negotiator who will convince other nations to relax their price controls so the U.S. does not have to shoulder the disproportionate burden of pharmaceutical research and development. Another would be to relax the massive burden the Food and Drug Administration (FDA) places on drug makers, making it exorbitantly expensive to do so. We could also reform the patent system that incentivizes minimal innovation and cyclical price hiking.

If we decide to go the route of the rest of the world, we will succumb to the socialist vision of European healthcare and will inherit their deficiencies. There is a definite problem in the U.S. However, despite being rebranded as a “most favored nation” proposal, is still a price control, and thus the introduction of a new problem. We need actual solutions.