‘Europe acting out of jealousy!’: Rep. Issa erupts at foreign regulations targeting US tech firms

Key Concepts

• Relevant Market: The scope of competition considered in antitrust cases, increasingly argued to be global, particularly in tech.
• Sovereign Market Power: The ability of nations to use their domestic market size and regulations to disadvantage foreign competitors.
• Unicorns: Privately held startup companies valued at over $1 billion.
• Digital Markets Act (DMA): EU legislation aimed at regulating large online platforms.
• Antitrust Enforcement: Government action to promote competition and prevent monopolies.
• Political Influence in Antitrust: Concerns about lobbying and political pressure affecting antitrust decisions.
• Technology Transfer: The practice of foreign entities seeking access to US technologies, sometimes through investment requirements.

Testimony Before a Subcommittee on Global Competitiveness & Antitrust

This transcript details a hearing concerning the impact of foreign market power on US competitiveness, particularly within the technology sector, and the state of antitrust enforcement within the United States. The central argument, repeatedly emphasized by the opening speaker, is that the traditional focus of antitrust enforcement – solely on domestic competition – is insufficient in a globalized world.

I. The Expanding Definition of the “Relevant Market”

The core contention is that the “relevant market” in antitrust cases, especially in the tech industry, is now global. The speaker asserts that even 100% market share within the US is meaningless if foreign nations leverage their market power to stifle US innovation. He cites examples of countries like Korea, Australia, most of Europe, and Brazil utilizing their sovereign power to disadvantage US companies, even those considered allies. He states, “It doesn't matter if you have a 100% market share in the United States… If in fact foreign nations… use their market power to stop you. That is what’s going on often with our closest allies.” This perspective represents a significant departure from traditional antitrust thinking, which often focused on defining narrower, geographically-limited markets.

II. Foreign Market Power & Unfair Trade Practices

The speaker highlights specific concerns about unfair trade practices. He references Chairman Joe of the Korea Free Trade Commission, quoting a statement perceived as disparaging to the US, and points to the commission’s questioning of American worker anger. He alleges that foreign governments aren’t interested in purchasing US products or engaging in joint ventures, but rather in acquiring US technology through investment and other means. He also cites instances of Hyundai and Kia illegally importing workers into the US, circumventing US labor rules. The Digital Markets Act (DMA) in Europe is presented as a prime example of regulatory action designed to undermine the competitive advantage of American “unicorn” companies.

III. Historical Context & Testimony from 40 Years of International Business

The speaker draws on his personal experience of over 40 years in international business, recalling a trade conference in South Korea 30 years ago where officials explicitly prioritized technology transfer over purchasing US products. This historical anecdote reinforces the claim that the issue of foreign governments seeking to acquire US technology is not new. He emphasizes that this isn’t solely a concern with China, but also extends to allies like Europe and Australia.

IV. Concerns Regarding Political Influence in US Antitrust Enforcement

A significant portion of the hearing focuses on concerns about the integrity of US antitrust enforcement. Professor Alfred, a witness with prior service in the Trump administration, argues that the greater threat to a healthy US economy is corruption within US antitrust agencies, rather than foreign enforcement of their own laws. He alleges pervasive lobbying influence at all levels of the Department of Justice, impacting decisions based on relationships rather than merit. He states, “if our antitrust system is failing because it's being overrun by insider influence, political lobbying, money contributions, and so on… we should focus about fixing our problems at home first and foremost.” He notes parallels between European antitrust cases and those brought in the US, suggesting that the issue isn’t necessarily the enforcement itself, but the potential for political manipulation.

V. The Impact of Weakened Antitrust Enforcement

Professor Alfred further elaborates on the consequences of weakened antitrust enforcement. He cites a Rasmussen poll demonstrating overwhelming public support for vigorous antitrust enforcement. He argues that allowing greater corporate concentration will lead to higher prices for consumers, lower wages for workers, and reduced innovation and market entry for new businesses. He emphasizes that antitrust enforcement is crucial for protecting the “pocketbook issues” of Americans in areas like housing, healthcare, agriculture, and entertainment. He stresses the importance of state attorneys general and private litigation in maintaining effective antitrust oversight.

VI. Defining the Relevant Market – Online vs. Offline

Professor Portuguese interjects to clarify the definition of the “relevant market,” arguing against the notion of a separate “digital market.” He contends that digital platforms compete with both online and offline businesses – digital advertising competes with print advertising, and digital supermarkets compete with traditional grocery stores. He emphasizes that competition is broader than often perceived.

VII. Allegations Regarding Professor Alfred’s Background

The ranking member introduces an article questioning Professor Alfred’s background and potential biases, referencing his connections to the Trump administration. This is presented without further elaboration, seemingly intended to cast doubt on his testimony.

Conclusion

The hearing underscores a growing concern about the ability of US companies to compete in a globalized market, particularly in the face of assertive foreign governments and potentially compromised domestic antitrust enforcement. The central takeaway is the need to redefine the “relevant market” in antitrust cases to reflect the global nature of competition and to safeguard the integrity of US antitrust enforcement against political influence and lobbying efforts. The speakers advocate for a more proactive and robust approach to antitrust enforcement to protect American consumers, workers, and innovation.