By Mark Jamison

The bipartisan and multinational attack on US tech companies has become incoherent. It always had weak intellectual foundations, which is why arguments against Big Tech firms are long on mantras about them being gigantic and bad, ad hominem attacks, and fearmongering. Now the arguments have become contradictory.

The cases against Big Tech rest on a belief that the companies have market power. The primary evidence for this conclusion is that the companies provide unprecedented volumes of business. But such “evidence” contradicts the market-power claim.

The essence of market power is the ability to receive monopoly profits by restricting supply. So if these companies have market power, then it must also be true that they limit the amounts of what they and others provide. This means, for example, that Meta and Alphabet are limiting the supply of social media and search respectively. But are they? The evidence indicates otherwise: Over 70 percent of Americans use Meta’s Facebook. Alphabet’s Google service delivers nearly 90 percent of US searches and provides 8.5 billion searches a day worldwide.

Big Tech’s critics apparently agree that the firms don’t restrict supply. In fact, they argue that the companies provide too much service. For example, the organization Wall St. Watchdog and former Treasury Secretary Steven Mnuchin both argue that Amazon provides too much e-commerce. The American Addiction Centers states that people consume too much social media. Many senators appear to agree.

A counterargument to what I just said is that, at least for Meta and Alphabet, they exploit market power in their advertising services. That’s fair, but it’s apparently not the view of the Federal Trade Commission (FTC). In its lawsuit against Meta, the FTC claims that the company has market power in personal social networking services (PSNS), which the agency defines in such a way as to exclude pretty much every social media service except Facebook. Advertising is barely mentioned. So the FTC must believe that Americans should consume more PSNS.

The Department of Justice (DOJ) has a different take than the FTC. In its case against Google, the DOJ argues that Google engages in anticompetitive conduct so that it can provide more, not less, search, and profit more from ads. That’s at least feasible. But then the agency approvingly quotes an unnamed former Google CEO as saying, “Scale is the key. We just have so much scale in terms of the data we can bring to bear.”

In effect, the DOJ is arguing that Google is providing more search than it should so that it can provide better advertising services. Evidently, the DOJ would like search services to be spread across more providers, resulting in less effective advertising services. Advertisers might not be impressed with this outcome.

If critics are correct that Meta and Alphabet exercise market power in advertising, then it must also be true that the companies undersupply online advertising. But Big Tech critics argue the opposite is happening. The Huffington Post, Insider Intelligence, and DivvyHQ, for example, claim that there is too much online advertising. Many in Congress seem to think so too. In introducing their Journalism Competition and Preservation Act, Sens. Amy Klobuchar (D-MN) and John Kennedy (R-LA) and Reps. David Cicilline (D-RI) and Ken Buck (R-NY) argue that traditional newspapers and broadcasters have lost advertisers to Meta and Alphabet. This implies that there is too much online advertising, not too little.

When I speak with people about this contradiction, they sometimes offer that the purpose of increasing the number of online advertising suppliers would be to lower prices, not increase the amount of advertising. Fair enough. But if the prices went down, advertisers would want more advertising. So absent an increase in the quantity supplied, there would be a shortage of online advertising space. Either someone would need to ration advertising space or prices would rise to their previous levels.

These contradictions in the attacks on Big Tech should cause the attackers cognitive dissonance. As best I can tell, this does not seem to be occurring. This is just as distressing as the poor policies the critics advocate, because their propensity to believe contradictory arguments must be affecting their other policy and regulatory decisions.

(Disclosure statement:
Mark Jamison provided consulting for Google in 2012 regarding whether Google
should be considered a public utility.)

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