The tech giants’ long-standing abuse of their market dominance has been keeping the US legal system busy lately: on August 13, a court ordered Apple to pay $300 million for 5G patent infringement, the same day that another court held Google liable for infringing five ofSonos’s home audio system patents.
These are just two examples that illustrate the changing narrative of how big tech is able to steal virtually any technology from smaller competitors and simply wear them down on the legal front until they desist. Until now, the unofficial response from some of these giants was simple: sure, we may have infringed some of your patents, what a shame, take us to court, we don’t care, because our pockets our bottomless. This “so sue me” approach, usually based on the consumer welfare doctrine — no harm done as long as the price of the product doesn’t go up — made it possible for many of these companies wait as smaller competitors explored certain areas for them and then copy their technology, sell their products cheaper, and put them out of business.
The Sonos case is a perfect illustration: the company’s success was built on making sleek, wireless speakers… until the likes of Google and Apple flooded that market with cheaper, internet-connected copies. But the court has ruled that Google infringed Sonos’s patents for multi-room audio systems, and now the company expects imports of Google’s Home and Chromecast systems and Pixel phones and laptops made in China to be blocked as a result.
Sonos can thank Lina Khan, the academic antitrust law expert that big tech fears most, and for good reason. The youngest person ever to head the FTC, unlike her predecessors, she has no background in business and rejects the consumer welfare standard as the basis for deciding monopoly practices. Little wonder, given the abuse of that doctrine over the past decades and the harm it has done to workers, innovation and the rule of law. In her well-known 2017 Yale Law Journal article, Khan argued that big tech’s dominance, cemented by practices such as giving away its products for free or at rock-bottom prices that no other competitor could match, posed long-term harm to consumers, who had a right to expect quality, variety and innovation, which were more consistently promoted by robust competition and an open marketplace. Even if big tech’s practices, including its procurement and pricing policies, did benefit users, they were detrimental in the long run to markets and democracy as a whole.
This new approach, promoted by the Biden administration, is steadily percolating through the judicial system, and attempts by companies such as Amazon or Facebook to have Khan recused, arguing that she is biased, seem to be failing. We are facing a major shift in the way antitrust legislation is interpreted, hopefully putting an end to an era of abuses, and that will not only give big tech headaches, but provide more opportunities for innovators able to see the opportunities of a level playing field.
Interesting times ahead.
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This post was previously published on Medium.
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