[music]

Melissa Harris-Perry: Hey, everybody. Welcome to The Takeaway. I'm Melissa Harris-Perry. Here's something I learned recently, James E Boasberg has a wicked sense of humor. Oh, wait, let me back up for a moment. Because I imagine you're asking, "Who is James Boasberg?" All right, he's a federal judge. He serves on the US district court for the District of Columbia, which is kind of a big deal job, because eight judges from the DC Circuit eventually went on to become justices on the Supreme Court.

Jurors, including chief justice Warren Berger, the notorious Ruth Bader Ginsburg, and conservative superstars, Antonin Scalia, Clarence Thomas, John Roberts, and Brett Kavanaugh, but back to Boasberg. Turns out he's funny. I wouldn't have expected it because typically he sounds like a pretty straightforward guy.

Here he is in a 2021 video produced by the United States courts to celebrate Constitution Day.

James E Boasberg: What's unique about the American constitutional system and it's checks and balances, is that unlike in foreign countries, judges here are appointed for life. As a result, we are under no political pressure from whatever ruling party may govern to follow that party's wishes.

[music]

Melissa Harris-Perry: Just beneath that, heard it all before judicial seriousness beats the heart of a comedian.

[laughter]

Melissa Harris-Perry: See, back in 2021, Boasberg dismissed an antitrust case brought by the federal trade commission against Facebook, but last week, Boasberg gave the FTC the green light to proceed, and he did so with really colorful language. His opinion begins, "Second time lucky."

[laughter]

Melissa Harris-Perry: Seriously, those are the first three words of the opinion. "Second time lucky." He continues, "The Federal Trade Commission's first antitrust suit against Facebook Incorporated stumbled out of the starting blocks last June." Oh, that's got to hurt, but then he goes on to explain that, "The court left ajar for the agency to amend the complaint and reinstate the suit. Eagerly accepting such an invitation, the FTC has filed an amended complaint." Can't you just see the eager Fed regulators bursting through the slightly propped judicial door with their new filing.

Speaker 3: Oh, yes.

Melissa Harris-Perry: A bit later in the decision, Judge Boasberg straight clowns Facebook by writing, "The company let fly a new arrow this time around. The court believes it misses the target."

[laughter]

Melissa Harris-Perry: Burn. He winds up with the zinger, "Whether the FTC will be able to prove its case at summary judgment and trial, is anyone's guess."

Okay. Okay. I know this is not exactly Def Comedy Jam, but it's not every day that a district court opinion paints such a distinct and colorful picture of an eager government prosecutor and an arrogant corporate giant. I, for one, appreciate judge Boasberg dropping some nerdy legal giggles in the midst of this very serious matter. It's something Senator Lindsey Graham managed back in 2018 when he asked Mark Zuckerberg to name his biggest competitor during a Senate judiciary and commerce committee hearing.

Lindsey Graham: Who's your biggest competitor?

Mark Zuckerberg: Senator, we have a lot of competitors.

Lindsey Graham: Who's your biggest?

Mark Zuckerberg: I think the categories of-- Do you want just one, I'm not sure I can give one, but can I give a bunch?

Melissa Harris-Perry: Eventually, Senator Graham just got straight to the point by asking Zuckerberg whether Facebook is a monopoly.

Lindsey Graham: Isn't an alternative to Facebook in the private sector?

Mark Zuckerberg: Yes, Senator. The average American uses eight different apps to communicate with their friends and stay in touch with people, ranging from texting apps to email.

Lindsey Graham: Which is the same service you provide?

Mark Zuckerberg: Well, we provide a number of difference services.

Lindsey Graham: Is Twitter the same as what you do?

Mark Zuckerberg: It overlaps with a portion of what we do.

Lindsey Graham: You don't think you have a monopoly?

Mark Zuckerberg: It certainly doesn't feel like that to me.

Lindsey Graham: Okay.

Melissa Harris-Perry: Boasberg's decision is a major step forward for regulators like the FTC, which has long been a critic of the practices of tech giants like Amazon, Apple, Facebook, and Google, and the judge managed to do it with a little bit of style, but what it will all mean for the substance of monopolies and tech? Well, to quote the judge himself. "That's anyone's guess."

[laughter]

Melissa Harris-Perry: Here to break down the lawsuit and antitrust laws is Rebecca Allensworth, professor at Vanderbilt Law School.

Rebecca Allensworth: Antitrust law is the law of competition. It's what businesses can and can't do when they're competing with each other. What are the rules of the road? What goes too far?

Melissa Harris-Perry: I feel like our antitrust laws, and, even as you say, business and competition, that there's kind of a, maybe even 19th, but certainly 20th-century vision of that as though there's two hardware stores next to each other, and the preserving competition between hardware store A and B. Maybe those antitrust laws didn't imagine the 21st-century realities of modern tech businesses.

Rebecca Allensworth: I think there's a lot of power to that narrative. The main statute that we use to bring big tech companies to heal, the statute that's cited and all these current cases, was passed in 1890. At the same time, the law has evolved through interpretation in the courts, and was used in 2001 against a tech company doing things that are really quite similar to what's happening today.

I think on the one hand you're right, that we have old law, and an old law that was built up around what we call smokestack industries, maybe the hardware store, maybe aluminum. At the same time, I think that there are places where it's evolved to be more responsive to what we see today.

Melissa Harris-Perry: What led us initially as a nation to needing the antitrust laws? What were the trusts that were considered most problematic?

Rebecca Allensworth: Well, there was standard oil, which was an oil monopoly, essentially. There were the railroad, and it's conventional talk about these things like they're monolithic easy to imagine monopolies, and so we had to have trust-busting against them. It was easy because we could just break them up, and now different oil companies have to compete with each other. I think when you scratch beneath the surface, you'll see that even the standard oil was a pretty complicated network of properties that related to each other in vertical ways.

The railroads actually are really complicated because you've got network effects there too. This is why I said there's power to that narrative that, "Oh, our antitrust laws are not prepared to take on this kind of networked techy thing," but then there's also this counter-narrative that maybe business has always been somewhat like this, and antitrust laws have always been somewhat prepared to deal with it. The real problem may be what happened in the '70s and since then in the way that the courts have interpreted these antitrust laws.

Melissa Harris-Perry: Let's talk about this recent decision by a federal judge. What does it mean for the Federal Trade Commission's case against Facebook?

Rebecca Allensworth: The recent decision says it can go ahead. In some ways, it means everything for their case. It's a necessary but of course not sufficient step in the direction of a winning case against Facebook and some real changes there.

Melissa Harris-Perry: This is the same judge who initially said that FTC had failed to provide sufficient evidence. What was different this time?

Rebecca Allensworth: That's right. When I read his first opinion, I thought, "Oh, this is really rough." A case getting dismissed, and is all kinds of skepticism in this, and then he comes out with this opinion where he says, "Oh, no, I always said that the market definition was fine, and I didn't address any of the competitive conduct. I was just worried about this narrow question of, within the market of personal networking services, what is Facebook's share? The FTC has to tell me what their share is and how they got it, at least an estimate of it."

That was the flaw that caused him to dismiss the first complaint. FTC came back and provided an estimate of that share and why they thought that the number was what it was, and he accepted that. Rereading that old opinion by him that I had read is so damning. It actually isn't that damning. Really it says what he says it said, which is the real problem is that you haven't told me how much of this market Facebook has.

Melissa Harris-Perry: Let's talk a little bit about that. What is the antitrust case against Facebook, and also maybe why are regulators pursuing it and continuing to pursue it even when they met big roadblocks like the previous ruling.

Rebecca Allensworth: Well, I think the reason why they're still pursuing it is, it's fairly obvious. It's both, I think a good soup that has a lot of legs. Whether they will succeed or not is unclear, but is certainly worth pursuing. Also there's a political problem if you bring a suit, it's dismissed but without prejudice. You're sort of invited to replete it, and then you give up. You look like you've rolled over in the face of big tech. Just politically they're not going to do that.

Melissa Harris-Perry: They're making the claim that Facebook acquired Instagram and WhatsApp in order to forestall future competition from those companies, and that by doing so, they violated the Sherman Act, which prohibits monopolization. Monopolization is obtaining or, in this case, really more accurately, defending your monopoly by doing certain unlawful business practices.

Our production team is sitting down, and we're talking about what we're going to have conversation about, and I was like, "Yes, and you know what? When we leave this conversation, I'm going to go plan my Facebook live for later in the month."

[laughter]

Melissa Harris-Perry: I always feel this iciness in my belly as we are simultaneously wanting to cover the ways that monopolistic behavior on the part of Facebook might be harming consumers, as well as rival companies, and also going and making use of Facebook, WhatsApp and Instagram. Should I be feeling guilty, or is that actually the evidence of the monopoly itself?

Rebecca Allensworth: I don't think you need to feel guilty. I think the fact that you have to go from doing this to go doing a Facebook live thing is evidence that you don't really have a lot of options. You know everything you know about Facebook, you know all the bad things, probably, and yet what are you going to do? This is your avenue to your audience, this is your way of communicating with the world, and it is for so many people in so many contexts that you're not given a choice.

That fundamentally is what antitrust cares about, and it's that consumer choice idea is the mechanism of competition. I don't like what you're doing, so I'm going go to your competitor. Your prices are too high, your privacy policy sucks. I'm going to switch. I think fundamentally that's what Zuckerberg was worried about in 2012, that Instagram and, later WhatsApp, could become that place that people might switch to.

Melissa Harris-Perry: That helps me understand in part the way that it harms consumers, if I can't opt out. How's that different from the fact that I can't change my cable company either because there's only one that serves my community?

Rebecca Allensworth: Antitrust wouldn't see those things as particularly different. If there's only one company that can serve your community for cable, they have monopoly power, and then antitrust goes further and says monopoly power isn't unlawful. It's anti-competitive acts that maintain it or create it. If your cable company did things to make sure nobody else came into that neighborhood, or other predatory tactics, they too would be liable.

Antitrust doesn't care how crucial or central or important, I mean I'm not saying your cable isn't important, we all want our cable TV, but they treat all markets alike. I think part of why these cases are so high profile is because they are so much a part of our day to day, and they're increasingly being seen as really essential, but that fact isn't particularly relevant in a formal way to the antitrust analysis.

Melissa Harris-Perry: Are there rival companies, and if there aren't, is it because of Facebook, or is that because-- in other words, is that necessarily evidence that Facebook has engaged in particular kinds of monopolistic behavior, or might it be that they're just really way far ahead and much smarter and better than anyone else, and rivals have not been able to emerge?

Rebecca Allensworth: This is not going to be a big part of the antitrust analysis because antitrust cares about the process of competition, not about the outcome so much. There is a way in which Facebook is not a great product. My personal experience of it is that it doesn't add a lot to my life, and then increasingly, people are coming out and seeing the harm that it's causing, and to especially young people. Saying that they're dominant because they're awesome, I think is a little bit suspect.

There's a different question though there which is, are they dominant because the nature of a social network is you have to have the whole market. There's a little bit more to this part of the argument in the sense that having two Facebooks doesn't quite make sense. Like, "Oh, I'm on Facebook A, are you on Facebook A?" "No, I'm on Facebook B." "Well, I guess we can't be friends." That's not going to work. There's something called network effects, and when you have a market that's defined by network effects, it tends to get really big. Sometimes the competition is for the market, not within the market, and yet Facebook's going to make these arguments, and they're going to make them strongly.

There's a problem though because if this is true, then why does Facebook need to do all these little machinations to make sure that it stays on top? That's the problem I think that antitrust law can really identify here, which is, okay, fine maybe there has to be really large economies of scale for social networking. That means that when Instagram starts up and starts threatening you, you've got to improve your own products, you've got to try to compete for that market, not swallow up Instagram to make sure you don't have to compete.

Melissa Harris-Perry: If FTC wins this, what might it mean for Meta's future? What kinds of actions could go forward?

Rebecca Allensworth: There's been a lot of talk of breaking up big tech, and I actually think Facebook may be the one company for which that would make sense in a big way, because there are these natural product lines, these natural points at which you could cut it off, you could spin off Instagram, you could spin off WhatsApp.

It's a little unclear though how much that would get you. Facebook blue, as they call it, the Facebook that we all know and use, would still be characterized by a lot of network effects, it would still have a huge market share. I think a breakup in this context is possible, maybe even likely if the government wins its suit, but it may mean less than we all would want it to.

Melissa Harris-Perry: Billions instead of gabillions.

Thank you to Rebecca Allensworth who is professor at Vanderbilt Law School. Thanks so much for joining us.

Rebecca Allensworth: Thank you. This was great.

[00:15:21] [END OF AUDIO]

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