DOJ antitrust chief Makan Delrahim looking to the past to combat tech giant monopolies
The head of the U.S. Justice Department's antitrust efforts, Makan Delrahim, drew comparisons on Tuesday between past monopolies like AT&T and the state of the modern tech industry, including companies like Apple and Google.
At one point before its breakup Standard Oil likewise offered cutting-edge technology and low prices, Delrahim told an Israeli conference via video link, according to Reuters. Another infamous monopoly, AT&T, similarly defended itself by claiming that its market status offered better prices and innovation — in reality it was an early example of the "network effect," Delrahim said, by way of its opposition to independent companies using its long-distance lines. That made it difficult or impossible for smaller rivals to compete.
The problem extended into Microsoft's anti-competitive efforts against Netscape in the 1990s, and antitrust action was a solution, Delrahim argued.
"The government's successful monopolization case against Microsoft may very well have paved the way for companies like Google, Yahoo and Apple to enter with their own desktop and mobile products," he remarked.
When considering antitrust actions the DOJ is said to watch for collusion, higher prices, and falling quality standards. Delrahim used diminished privacy as an example of poor quality, likely referring to scandals at Amazon, Facebook, and Google.
The DOJ isn't inherently opposed to companies buying up each other, Delrahim noted.
"Acquisitions of nascent competitors can be pro-competitive in certain instances and anti-competitive in others," he explained. "I will note the potential for mischief if the purpose and effect of an acquisition is to block potential competitors, protect a monopoly, or otherwise harm competition."
The DOJ recently received jurisdiction to launch an antitrust probe of Apple as part of a much wider examination of the tech industry. While Apple has escaped privacy complaints, critics have still pointed out that the company maintains absolute control of iOS app distribution, blocking developers from selling anywhere but the App Store — where it normally claims 30% from each transaction, and enforces tough rules that for instance block "duplicates" of its own apps and services.
Democratic Senator and U.S. Presidential candidate Elizabeth Warren recently called on Delrahim to recuse himself from probing Apple and Google. He lobbied for both companies between 2006 and 2007, something Warren suggests is a conflict of interest.