Attorney General Jeff Sessions is meeting with state attorneys general to discuss whether the Big Tech social media platforms are stifling competition and the free exchange of ideas.
While free speech and competition often seem like two separate issues, they may be brought together by antitrust laws.
Keep in mind that Alphabet’s Google, Facebook, and Apple have greater dominance over social media than the monopolists of the bad, old days such as Standard Oil or American Telephone and Telegraph Co. had in their time.
Google drives 89 percent of internet search. Google and Facebook absorbed 63 percent of online ad spending last year. Apple and Google account for 81 percent of podcast downloads. YouTube’s dominance is so extreme that hardly anyone bothers to keep track of online video market share anymore.
Even at these extreme levels of market power, however, it is likely that the companies enjoy a wide-latitude under the law to exclude content or ban publishers they find objectionable. Both Google and Facebook have banned bail-bond companies and payday lenders from advertising on their platforms—and most legal experts doubt those bans will face serious legal hazards.
But in early August Google, Facebook, and Apple blacklisted Infowars and its founder Alex Jones from their platforms under pressure from CNN and other mainstream media companies. Twitter temporarily suspended Jones.
As CNN reporter Oliver Darcy pointed out: “Important to note that tech platforms did not enforce their own rules and take action against Alex Jones / InfoWars on their own accord. It took media outlets to point out for weeks that InfoWars was skirting the rules on these tech platforms for them to enforce own standards.”
Participating in a blacklist or boycott organized to quash a competitor can be a breach of antitrust laws.
Section 1 of the Sherman Antitrust Act of 1890 broadly prohibits concerted activity that restrain trade or commerce. “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal,” the law says.
Courts have long held that the Sherman Act does not bar all contracts or agreement that restrain trade. Rather it is only those that impose “unreasonable” restraints, which typically means those that harm competition.
In a 1959 case that is strikingly similar to today’s social media blacklists, the Supreme Court looked at a boycott in which a bigger rival got together with 10 household appliance manufacturers and their distributors and agreed that they would not sell appliances to a small retailer called Klor’s. The court ruled that even though the victim was just a single merchant—and so competition between the others continued—the boycott violated antitrust law.
In a 1961 case, Silver v. New York Stock Exchange, the Supreme Court looked at the legality of the NYSE boycotting non-members and excluding members it found were misbehaving. The court said that New York Stock Exchange occupied such a dominant position in the securities trading markets that its boycotts would violate Section 1 of the Sherman Act if Congress had not granted self-regulating authority to the exchange under the securities laws. Effectively, the securities laws were held to have amended the Sherman Act and created an exception permitting such a boycott.
In recent years, the Supreme Court has declined to apply the idea that these types of boycotts or blacklists are “per se” illegal in a number of situations, reviewing them instead under the much more lenient standard it calls the “rule of reason.” Under this standard, a court must engage in a balancing test, evaluating whether the procompetitive effects of the conduct outweigh its anticompetitive effects.
But the social media blacklists do not fall under any of the standard circumstances that kick something into the more lenient standard. And the fact that Infowars’ direct competitors such as CNN played such an important role in initiating the blacklist likely means courts will apply the per se standard. Add to that the NYSE-like market dominance of the big social media companies, and these blacklists look even more legally precarious.
If this seems a stretch, it may be useful to forget for a moment that it was Infowars that got blacklisted. A lot of people find its content so repellent that they cannot imagine that a conspiracy against the site could violate legal rules. But what if the target was another smaller competitor with major media organizations, such as The New Yorker or The Intercept? What if it was The American Consevative? Clearly, a conspiracy between major media companies and social media platforms to exclude these would raise antitrust red flags.
Certainly, holding that social media giants cannot cooperate with mainstream media companies in blacklisting upstarts like Infowars would break new ground. There’s no case that directly prohibits it. And federal courts have become much more hesitant to strike down agreements excluding competitors than they were back when the Klor’s and Silver cases were decided.
And yet AT&T thought its acquisition of Time-Warner would easily be approved based on that same body of law. Instead, it has found itself mired in a long-running battle in federal court.
Our new era of digital media giants may be testing the limits of the Court’s tolerance for questionable conduct by market dominant actors.