How regulators gerrymander antitrust law

By Robert Bork Jr.

October 12, 2024

Imagine if Congress, for some odd reason, wanted to punish Chuck Norris. It might pass a tax bill that only pertains to “martial artists who are ranch owners retired from acting careers in film and television.” Not only would that be unwise (this is Chuck Norris we’re talking about), it also would be unconstitutional to use seemingly objective definitions meant to single out one person. The Constitution wisely forbids such bills of attainder.

But regulatory attainder is flourishing. In federal court last week, an expert witness for Google called out such regulatory attainder – the Department of Justice’s tactics in its antitrust claim that the search engine is an illegal monopoly that controls ad technology at every turn.

Economist Mark Israel testified that the government case against Google’s prominence in “open web display advertising” – the little image tiles that come up at the top and righthand side of a webpage – is too narrow a definition to capture the cutthroat competition for ad dollars taking place in the real world. Advertisers are moving aggressively to other platforms, to online retailers like Amazon, to platforms like Facebook (for Boomers), to TikTok (for youth).

Google is also charged with controlling the market for ads displayed on the screens of desktops and laptops. But, Israel testified, display ad spending for desktops and laptops flipped, from 71 percent in 2013 to 17 percent in 2022. In all, Google raked in only 10 percent of online display advertising in 2022, down from 15 percent a decade before.

By any real market definition, Google is a major player struggling to maintain market share in a digital jungle in which predators are rapidly evolving. But the antitrust regulators of the Biden Administration are not interested in real-world market definitions. Antitrust regulators in the Department of Justice and Federal Trade Commission write the regulatory equivalent of bills of attainder to make the cases they want to make against their preferred ideological targets.

Regulators also borrow gerrymandering techniques from the political world, the practice of politicians tailoring their House districts to meet their political needs. Consider the Federal Trade Commission’s case against Kroger and Albertsons, accusing these grocers of merging to put a stranglehold on the “traditional supermarket.” The FTC argues this combination would victimize consumers who shop at supermarkets once a week for all their groceries.

But the FTC’s definition leaves out a lot. For example, this gerrymandered definition excludes warehouse clubs and supercenters, like Sam’s Club and Costco, even though such competitors have doubled their share of retail sales in recent years, causing supermarkets’ share to drop by more than 25 percent. The government ignores the one-in-eight consumers who buy groceries mostly or exclusively online. Nor does the FTC take stock of marketing research that shows that Americans shop around twice a week, and often “retail hop” between stores.

The Department of Justice uses a similarly gerrymandered approach to its case against Apple, accusing the technology company of using illegal tactics to dominate the here-to-fore unknown “performance smartphone market.” Never mind that Apple is engaged in fierce competition with Samsung and Google for the smartphone market, or that Apple offers iPhone models across a range of affordability.

Similar gerrymandering is used by the FTC in its case against Amazon, which is accused of harming the “online superstore market.” Geoff Manne, president of the International Center for Law and Economics, writes: “FTC’s approach to market definition here – lumping together wildly different products and wildly different sellers into single ‘cluster markets’ – grossly misapprehends the nature of competition …”

For example, FTC neatly excludes online stores that sell brands, like Nike’s online store, or that sell a particular category of goods, such as Wayfair’s furniture catalogue. FTC overlooks the emerging competition from Walmart and Target that are leveraging their thousands of stores nationwide to serve as distribution centers that can compete with Amazon’s network.

Or consider FTC’s antitrust case against Meta, owner of Facebook and Instagram. Meta is accused of dominating the previously unknown “personal social networking” market, while the agency ignores YouTube, X, TikTok, Mastodon, iMessage and a host of other services I am too old to know about.

Expect Justice’s Antitrust Division and the Federal Trade Commission to continue to slice and dice market definitions in search of preordained results. As Stalin’s security thug Lavrentiy Beria famously said, “show me the man and I’ll show you the crime.” Will the federal judges overseeing these cases fail to see their deceitful premises?

It is up to the courts to take a hard look at the government’s bespoke market definitions. And when judges find market definitions are tailored to fit a complaint, they should kick these cases to the curb.

Robert H. Bork Jr. is president of the Antitrust Education Project.

Originally published at BizPac Review.