Analysis: Biden's Executive Order on Competition





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The Soren Review
Analysis: Biden's Executive Order on Competition
By The Soren Review • Issue #1 • View online
More of a Suggestion, Really, Unless Congress Also Takes Up the Cause

Executive Order on Promoting Competition in the American Economy | The White House
President Biden signed an executive order on July 9 aimed at “promoting competition in the American economy.” While the order covers a wide range of issues in a wide range of industries, it is clear from the language that the President and his lawyers feel constrained by how much they can do through unilateral action. The EO effectively directs agencies under the President’s control (and “encourages” independent agencies) to study how they might better enforce existing anti-trust legislation, change existing/adopt new regulations to improve the competitive landscape (including things like licensure requirements), and promote competition through their procurement practices. Though there are some suggestions for specific things the agencies might look into, there are few concrete “requirements” for what the agencies will do or not do with the regulatory regimes.
Executive Order on Improving the Nation's Cybersecurity | The White House
Contrast that with the EO on Cybersecurity a few weeks ago, which included a number of highly concrete requirements (like mandatory Multi-Factor Authentication and a requirement to include Software Bills of Materials in delivered products). In essence, this is because the regulation of competition is largely in the hands of agencies with a large degree of autonomy and is much more constrained by existing laws and judicial precedent.
To really make a difference, Congress needs to act. Here are a few suggestions:
1. Establish a new tax on data held on US persons by technology platforms. Couple this with rules outlawing the use of certain types of “sensitive” data in any sort of targeted advertising/monetization system. This is going to be the topic of a post next week, so more to come, but the basic idea is that if data-hoarding platforms found data substantially more expensive, they would probably shed a lot of it. This would (a) alleviate some (but not all) privacy concerns, (b) create new opportunities for differentiation in advertising opportunities, creating a more competitive market, and © provide more insight into how the platform algorithms work (by showing us what pieces of data different platforms care about the most).
2. Give states and local governments the right to directly provide internet connectivity in their local markets, thereby moving the market for internet providers upstream to competition for maintenance contracts, equipment installation, or giving consumers (through tools like Software Defined networking) the right to choose their ISP even if that ISP doesn’t have a direct hook-up to their house. This eliminates the “natural monopoly problem” in internet provision and creates a series of much more competitive marketplaces. A similar move could be done for other “public utilities” like electricity.
3. Levy a tax on the pesticides, hormones, and other additives used in non-organic agriculture to cause the prices of non-organic goods to float upward toward the prices of organic goods. This will make “organic” farming (and small “natural” farms, who often can’t afford to be certified as organic but effectively are) more competitive with mass agriculture operations, allowing more small growers to stay in business.
Each of these actions would create a more competitive marketplace in their respective industries, but cannot be done through executive action alone. For instance, the EO “encourages” the FCC to reestablish Obama era Net Neutrality standards. These standards rely on a FCC legal interpretation of a very old law, are subject to legal challenge, and are prone to being reversed in a new administration that is more captive to large ISPs. A much more durable solution is one that is legislative.
This doesn’t have to be legislation enshrining a particular definition of net neutrality, either: the goal of the standards is to prevent ISPs “favoring” different types of content (which might, say, give their own video streaming service a leg-up over YouTube TV or Hulu). That’s a great concern for platform providers who don’t own the rails but need the rails free to get to their users. But its also a concern that only exists when the rails are dominated by natural monopolies. If my only option for internet is Spectrum, and Spectrum doesn’t want me to become a chord-cutter and use YouTube TV instead of their cable option, then net neutrality is a real issue. If, on the other hand, I have 5 ISPs to choose from, Spectrum wouldn’t dare “throttle” certain online services because they’d get nailed by their competitors for doing so. It’s hard to make the ISP market more competitive at the level of individual homes and businesses by nature of the physical cost of laying cable to all those houses and offices. But if we make that “last mile” delivery a public good and let ISPs compete for “virtual” markets (much like people can choose a different “originator” source for their electricity in many markets today) or to be the behind-the-scenes input(s) for a far smaller number of state/local network hubs, we can open up that competition by lowering the barriers of entry for new rivals and make the concerns which motivate net neutrality all but disappear.
My ultimate take on the competition EO is that it’s a nice bit of politics that is unlikely to make a big difference in the long run. As each of the named executive agencies goes through their “consultation” process to consider changes to the rule books, they will almost certainly be “captured” by industry lobbyists who mostly represent the large, established firms. Congress is, of course, always subject to those same forces, but is also at least a little more responsive to the public will. There’s a lot of people who don’t like how much data Facebook collects on them, would love to break up with their ISP, and want to succeed as a small farmer. If Congress could listen to enough voices like that, small, focused acts
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