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Momentum grows for a digital watchdog to regulate tech giants

Ben Brody, Bloomberg News on

Published in News & Features

WASHINGTON -- With Big Tech accused of everything from decimating industries to abusing privacy, calls are growing for the creation of a federal regulator.

Presidential candidates, consumer advocates and some antitrust enforcers have focused on breaking up Amazon.com Inc., Apple Inc., Facebook Inc. and Alphabet Inc.'s Google -- or at least forcing them to unwind past acquisitions. Yet those moves could take years and face lengthy court challenges.

The desire for faster action is fueling demands for a new agency to oversee the industry, an idea that's gaining traction among liberal and free-market economists in the U.S., Europe and Australia. They say there's plenty of precedent: The U.S. and other countries have watchdogs for specific industries, such as aviation, medicine, financial services and the environment, so why not digital markets?

Advocates say a digital regulator could referee disputes between competitors, set standards for privacy, make it easier to move one's data between networks, and make sure the biggest companies aren't squelching innovation or smothering potential rivals.

"If the search engine discriminates against you vigorously enough, you're not alive for very long," said Fiona Scott Morton, a Yale University economist and a former antitrust official at the Justice Department. "You need a regulator to be alerted to the problem on Monday and be able to have a hearing the next Monday, figure it out and keep the victim alive rather than taking two or three years to bring a case."

The European Union on Tuesday took a big step in this direction when the president-elect of the EU Commission enlarged the portfolio of Margrethe Vestager, one of the world's toughest antitrust regulators as the bloc's competition commissioner. As the head of digital affairs, she will oversee such matters as big data, innovation, cybersecurity and artificial intelligence, along with antitrust.

 

In the U.S., efforts to establish such an agency would be met with many obstacles. Republicans, who opposed the creation of the Consumer Financial Protection Bureau in 2010, would likely fight another bureaucracy. Democrats may see it as diluting antitrust inquiries. The tech companies, too, would likely try to stop it. An agency with the power to require changes to their business practices could be even more threatening to their bottom lines than budding federal and state antitrust investigations.

Besides Scott Morton, who led a University of Chicago panel that produced a report on the digital economy in July, supporters include Jason Furman, President Barack Obama's former chief economic adviser who was the lead author of a similar study for the British government.

President Donald Trump might welcome a digital authority, which could also monitor social-media companies for alleged bias. He has been a persistent critic of Facebook, Google and Twitter Inc. for what he says is suppression of conservative political opinions, a charge the companies have denied.

It's notable that a digital agency was a key proposal in the report by the University of Chicago's Stigler Center for the Study of the Economy and the State. The so-called Chicago School's laissez-faire thinking on antitrust has dominated the approach of courts and enforcers since the 1970s. Many experts now think that stance went too far, clearing the way for industry overall to become more consolidated and for the tech giants to rise.

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