these cases, I have spent hundreds of hours trying to make sure that the Commission gets it right. These concerns will be the subject of my remarks today.
First, I will discuss the arguments against the Commission challenging mergers and conduct in the high-tech sphere. Second, I will discuss some considerations that I believe should inform the Commission’s analysis when it does decide to litigate a case in the high-tech sphere.
I.
Over the last year, I have heard the FTC’s opponents make six arguments as to why the agency should, as a general matter, stay out of cases involving high-tech industries.
The first argument is that market definition in these cases – a necessary prerequisite to any litigation – is too difficult because of the multi-sided nature of the markets generally at issue. That is to say, in these cases, the Commission is not looking at a conduct or transaction’s effect on just one market (such as whether consumers will pay more for a product), but at how the conduct or transaction will affect at least two interrelated markets. In the online advertising cases, for example, those two markets are typically the market for advertisers and the market for consumers of those ads. As a firm’s control over one increases, it inherently enjoys benefits in the others; the more users (i.e., consumers) for which a firm can claim credit, the more advertisers that will flock to that firm’s service. The alleged problem is that looking at the effects in both of these markets (to say nothing of defining them, given that they are sometimes in a nascent state) is too hard for the agencies. I half agree.
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