The Future of the FTC’s Regulation of Big Tech

The FTC’s role in shaping the future regulatory environment for big tech is growing. With antitrust cases, privacy concerns, AI regulation, and potential legislation on the horizon, the agency is expected to be a key force in redefining how big tech operates. The future could see tighter regulations, more accountability, and possibly a more level playing field for smaller competitors in the digital space.

Perhaps unsurprisingly, opinions differ wildly and strongly on whether the FTC has historically done its job well. However, unlike other issues, opinions on the FTC do not strictly follow party lines. In fact, there may be significant differences in how Harris would enact overall FTC regulations, specifically on technology, compared to President Biden.2 The Harris campaign has been actively articulating their vision in connection with a recent antitrust ruling against Google. As Big Tech cozies itself to both presidential candidates, the only thing that seems certain is that Lina Khan, the current leader of the FTC, will not remain in her seat even if the Democrats secure the White House in November.

In this insight, we will review the most recent decision against Google, examine FTC policy under President Biden, consider the implications of a new administration, and discuss how the U.S. regulatory environment may impact markets and investors.

In Google’s recent antitrust loss, a judge ruled that the company acted illegally to maintain a monopoly in online search. Specifically, Google has spent billions of dollars to be the automatic search engine for browsers like Apple’s Safari or Mozilla’s Firefox.3 This suit was brought by the Department of Justice and not the FTC; however, the ruling comes as the FTC has filed additional suits against Amazon and Meta. The FTC has become the targeted agency by executives and media who claim that the government is overreaching.

Biden’s FTC has largely focused on accomplishing simple benefits for consumers. For example, in October ‘23, the FTC removed junk fees from consumer transactions for things like concert tickets, hotel rooms, and bank accounts.4 In another hawkish move, the FTC attempted to ban non-compete clauses. Khan’s FTC has also taken action to block what she has described as unlawful mergers, for example, by blocking the merger of Nvidia and ARM and suing to stop the merger between grocery giants Albertsons and Kroger.5, 6 These actions illustrate Biden’s FTC and his vision for the US’s regulatory environment.

Trump’s views on Big Tech regulation are influenced by his administration's broader focus on reducing regulatory burdens across various industries while addressing his grievances with tech companies, particularly around content moderation and political bias.

• Regulation Skepticism: Trump generally promotes deregulation and a pro-business stance. His administration favored reducing regulatory hurdles to promote economic growth. He will likely argue that excessive FTC regulation will stifle innovation in the tech sector and hamper the U.S. in global competition.
• Tech Bias and Free Speech: Trump frequently criticizes Big Tech for what he perceives as unfair censorship of conservative voices. He will likely advocate for FTC actions that address perceived political bias in content moderation and support reforms that hold tech platforms accountable for censoring political speech. However, he could oppose broader antitrust actions that break up large companies.
• Antitrust: While the Trump administration acted against Big Tech, including initiating antitrust lawsuits against Google, Trump seemed less ideologically focused on breaking up tech companies. His concerns focused on how platforms treated conservative content, rather than purely economic considerations, and his reelection would likely result in the same approach.

Candidate Harris will likely support a more robust regulatory framework around Big Tech, shaped by concerns over monopolistic practices, privacy, and accountability, which aligns with the broader Democratic platform.

• Consumer Protection and Privacy: Harris has a history of advocating for stronger consumer protection laws. She might push for the FTC to lead in protecting user privacy, especially concerning tech companies' data collection and surveillance practices. This could include supporting legislation that gives the FTC more enforcement powers over privacy violations, like the GDPR in Europe.
• Antitrust Action: Harris will likely support more aggressive antitrust actions against Big Tech. The Biden administration, in which Harris serves, has taken a strong stance on increasing competition in the tech industry, pushing back against monopolistic practices that hurt consumers and stifle innovation. Harris might advocate for FTC actions to break up or heavily regulate companies like Meta, Google, and Amazon to ensure a fair marketplace.
• Focus on Inequality and Social Responsibility: Harris could also emphasize the need for Big Tech to be more socially responsible. This could include pushing for regulations that address algorithmic bias, AI ethics, disinformation, inequality, and other societal issues. She would likely support more transparency and accountability through FTC oversight.

• Approach to Regulation: Trump would likely advocate for less intrusive regulation, arguing that the free market and innovation should be protected from heavy-handed government intervention. On the other hand, Harris would likely push for stronger regulations to curtail Big Tech's power, protect consumers, and ensure a level playing field.
• Political Bias vs. Consumer Protection: Trump's primary concern might be how tech companies handle free speech and political bias, potentially advocating for FTC involvement to ensure platforms remain neutral. Harris, however, would likely prioritize consumer protection, privacy, and antitrust enforcement, focusing more on the economic and social impact of Big Tech’s dominance.
• Antitrust Action: While both could agree that Big Tech’s market power needs to be addressed, Trump might focus more on the political implications, whereas Harris would likely take a broader view, emphasizing competition and market fairness through strong antitrust actions.

To anticipate the potential impact of the regulatory landscape, investors must fully understand who may be impacted. This can be complicated and requires significant experience in both litigation and industry practices. Institutional investment managers are well suited to manage regulatory risk due to their ability to attract and retain high-quality investment talent with the expertise to position portfolios accordingly.

Sources:

1. Tracking regulatory changes in the Biden era | Brookings
2. Harris, Walz antitrust policy would prioritize growth, competition (cnbc.com)
3. https://www.nytimes.com/2024/08/05/technology/google-antitrust-ruling.html
4. The US government wants to make it easier for you to click the 'unsubscribe' button | AP News
5. FTC sues to block Albertsons and Kroger merger | Fortune
6. FTC Chair Lina Khan takes victory lap on blocking Nvidia-Arm merger (cnbc.com)