Big Tech is once again in Washington’s crosshairs. On Friday, President Biden called on the Federal Trade Commission and Department of Justice to enforce existing rules and establish new ones that could interfere with the market domination of America’s biggest tech firms.
The executive order from Biden calls on the FTC to establish stricter rules over mergers, making it harder for larger tech companies to swallow up their smaller competitors — just like Facebook has with Instagram and WhatsApp. It also makes it harder for companies to use their customers’ data to make competing products — just like Amazon has been accused of doing with its third-party sellers.
The order also calls on the FTC and DOJ to use flexibility in existing antitrust laws to retroactively unwind “bad mergers” completed under prior administrations.
The president appears to be putting pressure on the likes of Facebook (FB) and Amazon (AMZN), both of which are staring down antitrust lawsuits and federal investigations. It also seeks to put checks in place for major internet service providers by forcing them to provide subscribers with the total price they’d pay when signing up for plans, and to steer clear of charging steep early cancellation fees.
But executive orders don’t hold the same weight as laws, largely because the next president can scrap them. And just because a president signs one, doesn’t mean it’ll achieve its intended goal even during that president’s administration. Congress could still step in to undo such orders, and they can be challenged by existing laws.
Facebook’s Instagram and WhatsApp acquisitions are also targets of the order
The Biden administration’s call for the DOJ and FTC to unwind “bad mergers” doesn’t reference specific companies — yet it’s clear that two controversial mergers — Facebook’s acquisitions of Instagram and WhatsApp — are among those most ripe for undoing.
“Rather than competing for consumers, [companies] are consuming their competitors,” Biden said before signing the order.
“Rather than competing for workers, they are finding ways to gain the upper hand on labor. And too often, the government has actually made it harder for companies to break in and compete.”
The FTC has already sought to break up Facebook via its own antitrust suit. The suit, however, was dismissed last week, without prejudice, by federal district court Judge James Boasberg of the District of Columbia. The FTC is permitted to amend its argument, and is expected to refile a complaint within 30 days.
Going after Amazon
In addition to Facebook, the order also seems to call out Amazon by encouraging the FTC to establish “rules on surveillance and the accumulation of data.” Amazon has been accused by lawmakers on the House Antitrust Committee of using data it collects from third-party sellers on its e-commerce platform to develop its own competing products under its Amazon Basics line of goods.
During testimony before the Committee in July 2020, former Amazon CEO Jeff Bezos said the company has rules about using third-party data to develop its own products, but admitted he couldn’t guarantee that it hasn’t broken those rules in the past.
Amazon’s use of third-party seller data is also the focus of an ongoing FTC antitrust investigation. And to add to the company’s troubles, the FTC’s new chair, Lina Khan, is an outspoken Amazon critic who made her name by writing an article for the Yale Law Journal outlining the need to address current antitrust laws to go after Amazon.
The company has taken the threat posed by Khan seriously, and has already requested that the FTC recuse her from any antitrust investigations into the e-commerce giant.
How much impact the president’s executive order will have remains unclear. While presidents have enjoyed broad latitude under Article II of the U.S Constitution to issue the directives, critics say they can conflict with existing laws. Meanwhile, Congress can pass new laws that override such orders (subject to presidential veto).
While advocates for corralling Big Tech and bringing transparency to internet pricing may praise the executive order, there’s no guarantee that any of it will go into effect.
Alexis Keenan is a legal reporter for Yahoo Finance and former litigation attorney. Follow Alexis Keenan on Twitter @alexiskweed.