The debate on antitrust reform should incorporate racial equity

FTC Commissioner nominee Lina M. Khan testifies during a Senate Commerce, Science, and Transportation Committee nomination hearing on Capitol Hill, in Washington, DC on Wednesday, April 21, 2021. (Photo by Pool/Sipa USA)No Use Germany.

Last month, Lina Khan—a widely known critic of Big Tech companies—was sworn in as the newly minted chair of the Federal Trade Commission (FTC). She already faces a considerable challenge after a federal judge dismissed the agency’s antitrust lawsuit against Facebook, allowing it 30 days to file an amended complaint. In this defining moment of her early tenure, Khan—who comes from a more progressive movement of antitrust lawyers and theorists—will be quite busy attending to the complaints that members of Congress, academics, and other stakeholders have about large technology companies.

On June 24, the House Judiciary Committee voted to advance six landmark antitrust bills, which, if enacted into law, could decrease anticompetitive practices in the tech industry. This would be a necessary—and long overdue—correction to the decades-long Chicago School jurisprudence, under which courts have interpreted antitrust laws to primarily equate consumer harms to higher monetary costs for products or services. It shows that Congress is recognizing how the traditional Chicago School approach does not fully address the many non-monetary consequences that can result from concentration in the technology industry, such as privacy risks and power over speech.

While those issues are important, the recent actions coming from the FTC and Congress should not miss out on the opportunity to address another aspect of antitrust: racial equity. Since the potential harms—both monetary and non-monetary—that accompany concentrated markets do not affect all individuals equally, a facially-neutral approach to competition enforcement is not fair or equitable. Communities of color can suffer grave economic consequences or experience competitive isolation when products and services are not offered or are disproportionately represented in their markets. For example, noncompete contracts can negatively impact Black and other workers of color, especially post-employment restrictions that can increase employer monopsony power in labor markets, and suppress salaries and future earnings. As another example, the rising number of mergers and acquisitions across the overall U.S. economy may contribute to declining startup rates, particularly affecting diverse entrepreneurs who face outsized challenges to raising capital and accessing credit for their ventures.

With the growing interest in antitrust—and the granular focus on Big Tech—within Congress and the new administration, racial equity should be positioned as one of the core pillars of any future actions. Toward this goal, the antitrust community should be sensitized to the role of institutional inequities in concentrated markets, considering them when analyzing anticompetitive actions, their outcomes, and associated enforcement actions.

Why racial equity is a competition concern

Under the letter of the law, antitrust and civil rights are generally treated as separate statutes. Yet in practice, their values intertwine: Market dominance can effectively put companies in a powerful position to exacerbate historical racial inequalities. Take the search engine market, for example, of which Google controls over 90%. In 2012, Harvard professor Latanya Sweeney discovered that Google searches for individuals with Black-sounding names were more likely to generate advertisements for arrest records than searches for individuals with white-sounding names—even if no arrest records actually existed. This flawed system could result in significant emotional, reputational, or financial harm for racially-stereotyped individuals, as well as amplify the profiling associated with algorithmic biases. The lack of competition in the online search industry not only eliminates consumers’ options to choose a different, less-biased search engine, but also reduces market incentives for Google to improve its biased algorithms, as was recently illustrated by the dismissal of the former technical co-lead of Google’s Ethical Artificial Intelligence Team, Timnit Gebru.

Large technology companies also routinely collect massive volumes of data about people, compounded in scale through mergers and acquisitions. Using this data, they can surveil selected populations for online behavioral advertising or micro-interactions based on known or inferred attributes. In this sense, advertisers choose which communities can see or do not see their ads—either through the direct targeting of demographic variables like age, gender, sexual orientation, or race, or through “proxy variables” like zip code, education, interests, and purchase history. These activities can disproportionately impact marginalized communities who may be shown different employment, credit cards, housing, and other advertisements based on the platform or advertising algorithm. More concerning, companies like Google, Amazon, Apple, and Facebook have each engaged in activities that have cemented their respective market power, allowing them to continue to wield control over the advertisements which their hundreds of millions of users see.

Including equity as a goal in antitrust enforcement

Last year, then-acting FTC Chair Rebecca Kelly Slaughter put forward an argument that U.S. enforcement agencies should consider antitrust statutes as “a tool for combatting structural racism” by prioritizing competition enforcement in highly concentrated industries where people of color are marginalized. These enforcement decisions are especially consequential given the resource constraints that federal antitrust agencies face. According to Michael Kades of the Washington Center for Equitable Growth, appropriations for the FTC and Antitrust Division of the Department of Justice (DOJ) decreased 18% from 2010 to 2018 when adjusting for inflation. These constraints force federal enforcement agencies to choose which antitrust actions to pursue or abstain from; each active choice potentially impacts marginalized communities within the related sector.

It is possible that some of the newly introduced House legislation could offer an opportunity to advance racial equity by further expanding the parameters of competition enforcement. For example, the Merger Filing Fee Modernization Act could increase funding for federal antitrust enforcers—potentially allowing for more litigation capacity in situations where anticompetitive behavior, directly or indirectly, harms marginalized groups or contributes to algorithmic biases. The Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act could require applicable platforms to offer data portability and interoperability options, potentially giving users greater flexibility to stop using a platform with biased or discriminatory algorithmic outcomes. The American Innovation and Choice Online Act, Platform Competition and Opportunity Act, and Ending Platform Monopolies Act could each introduce new restrictions on mergers and acquisitions and prohibit certain anticompetitive behaviors by large platforms, including those that may imperil civil rights. But, to ensure leveled pursuits of markets that are both competitive and antiracist, more granular discussions about racial equity and inclusion must take place in parallel with these overarching antitrust reforms.

Such discussions must also include ways to promote diverse representation within the FTC and DOJ. According to recent reports, only 2.85% of attorneys at DOJ’s Antitrust Division and 4.1% at the FTC’s Bureau of Competition identify as Black. Although initiatives like the FTC’s Diversity Council and DOJ Antitrust Division’s Diversity Committee aim to promote inclusive recruitment and retention, there are areas where both agencies can improve. The FTC and DOJ career websites both list unpaid legal internships, for example, which create financial barriers for law students from underrepresented backgrounds to enter the litigation or competition enforcement fields.

Even worse, in late 2020, the DOJ reportedly canceled agency-wide diversity and inclusion programs in response to an executive order from former President Trump. While Khan’s confirmation is historic, as are Kristen Clarke and Vanita Gupta’s DOJ appointments within the Biden administration, both agencies still critically lack representation of Black and Latino nominees to senior-level positions. No current FTC commissioner identifies as Black or Latino and only three Black commissioners have served since the agency’s inception in 1914. Because the FTC and DOJ make enforcement decisions that affect communities of color and other marginalized populations, antitrust law cannot become a tool to dismantle systemic racism without more inclusive representation in both leadership and general workforce positions.

As broad antitrust reform continues within Congress and federal enforcement agencies, we must take seriously that negative effects on consumers extend far beyond monetary prices and ultimately include racial inequities—which, paradoxically, can be a core reason for such economic inequalities in the first place. When the six House bills were introduced, their co-sponsors stated that there was a need to consider how antitrust affects certain values, including quality, privacy, and security, censored speech, control over how we see and understand the world, innovation, and choice. It’s time to add racial justice to that list.

Facebook, Google, Amazon, and Apple are general, unrestricted donors to the Brookings Institution. The findings, interpretations, and conclusions posted in this piece are solely those of the authors and not influenced by any donation.