American consumers need a champion
By Terrell McSweeny
Feb 14, 2018
The monopoly man is back. He is leading the vanguard of a new antitrust movement reminiscent of trust-busting during the Progressive Era or the anti-monopoly movement of the New Deal. A lot of ink (or bytes) has been spilled on America’s “monopoly moment” — how concentrated political and economic power are propelling inequality and whether America’s dominant “tech titans” are monopolizing not only online commerce, but our attention and possibly even our democracy.
The new antitrust movement has invigorated calls for more aggressive regulatory action. Yes, strong antitrust enforcement is vital to preserving free and functioning markets and reigning in abuses by dominant companies, but it is insufficient to create a more equitable and competitive marketplace. We also need a revitalized consumer movement that can keep pace with the digital age.
We can debate the causes of America’s concentration problem, but the near-daily reminders of its symptoms are undeniable. We don’t need to pay hundreds of dollars for a prescription, get blind-sided by hidden ticket fees, or receive a notice that our vital personal information has been breached to understand that consumers have lost ground. For most of us, just scheduling a cable repair is reminder enough.
Consumer protection — in addition to competition — is essential to restoring dignity and value to American consumers.
The outlook is worsening. In its first year, the Trump administration eliminated consumers’ choices and control over how sensitive personal data are collected and used, rolled back net neutrality regulations that protect the open internet, froze programs to allow defrauded students to wipe out their student loans, stopped rules to protect people from abusive mandatory arbitration agreements, shut down enforcement against discriminatory lenders, and weakened protections for children exposed to toxins. And on the tenth anniversary of the start of the financial crisis that devastated the housing market and the savings of millions of Americans, Trump’s new director of the Consumer Financial Protection Bureau — the agency in charge of consumer protection in the financial sector — announced he will stand down the agency’s enforcement against the abusive practices that contributed to the crisis in the first place.
In sum, the Trump administration is brazenly dismantling basic consumer protections that are vital to the economic well-being of American families — all to favor a small number of dominant companies.
Certainly more competition would help restore power to individuals and curtail abusive practices. Competition can yield better prices, better quality of services, better pay, more job opportunities, and more chances for small businesses to enter markets. But that is only true if markets are open and competitive. Many markets in the United States are increasingly dominated by a few vertically integrated behemoths that possess both the ability and incentive to discriminate against downstream rivals. (Provision of internet service is a perfect example, with four companies controlling about three-fourths of the market.) Even in competitive markets, incentives sometimes work against consumers. That’s why consumer protection — in addition to competition — is essential to restoring dignity and value to American consumers.
Sometimes consumer protection regulations foster competition and lower barriers to entry. For example, the FCC’s net neutrality order, before it was repealed, established clear rules to protect consumers, innovators, and an open internet. By guaranteeing small entrepreneurs access to customers, the rule lowered barriers to entry for innovators, checked the power of internet providers to serve as gatekeepers, and protected consumers’ privacy and internet access. Since most Americans have little or no choice when it comes to internet service, competition did not pose a meaningful restraint on discriminatory or anti-consumer conduct by providers of internet service.
Consumer protection can also help when sellers avoid direct competition on the basis of price. Anyone who has booked a vacation knows how the true costs are hidden during the booking process. For example, many hotels charge additional resort fees, airlines charge bag and seat fees, and rental car companies charge airport fees. These so-called “hidden fees” add up. Since they aren’t included in advertised prices, they are hard to avoid and annually cost Americans a small fortune. This landscape is only becoming more complicated as technology enables increasingly personalized pricing. A solution is to strengthen consumer protections and require more transparency around mandatory fees.
Likewise, strengthening consumer rights to their data may encourage better privacy and security around personal information, introduce new competition, and foster innovation. Americans embrace all the conveniences of always-connected products and services, while being wary of the privacy and security implications of them. But absent stronger consumer protections, we will continue to have little choice or control over who gets our data and how they use it.
We are in a new era of monopolies, with fresh challenges but stakes as high as ever. The revitalization of the antitrust movement presents an opportunity to not only strengthen antitrust law, but also to revitalize the consumer movement needed for the digital age.
About the author:
Terrell McSweeny is a Commissioner of the Federal Trade Commission. Prior to joining the FTC, she served at the Department of Justice Antitrust Division, as Domestic Policy Advisor to Vice President Biden, and as Counsel on the Senate Judiciary Committee.