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Internet Giants Try to Soften Antitrust Rules in Credit Card Case

A trade group representing Silicon Valley weighs in on obscure battle over credit card fees.

A trade group representing Amazon.com Inc., Facebook Inc., Google, and Uber Technologies Inc. has taken sides in a Supreme Court battle over credit card fees because the internet giants want to shape the future of antitrust rules in their favor.

The top U.S. court is set to hear oral arguments on the lawsuit—Ohio vs. American Express—next month. The dispute started in 2010, when states and the federal government sued American Express Co. for forbidding merchants from steering customers to credit cards that charge lower fees. The government said this discouraged competition and led to artificially high card fees. American Express argued its business was a two-sided marketplace that must balance the desires of merchants against the need to attract cardholders. The extra fees American Express charged went in part to offer airline miles and other perks to shoppers, the company argued. What looked like bullying merchants was actually just enthusiastic competition against Mastercard Inc. and Visa Inc. for users. 
 
The dispute has no direct connection to Silicon Valley. But it could heavily influence any future antitrust action against tech firms, many of which run two-sided digital marketplaces. In a friend-of-the-court brief filed this week, the Computer and Communications Industry Association said a ruling against American Express would threaten innovation by hampering marketplaces that have to please multiple groups with differing priorities. 
 
“If the tests of market definition and market power fail to account for these additional constraints,” the group wrote, “they may cause multi-sided firms to appear to enjoy power over price and output when they are, in fact, engaged in vigorous competition.” 
 
Some antitrust experts take the opposite view. It would be a major departure from existing antitrust practice to allow anticompetitive behavior in one market on the assumption it would balance out elsewhere, said Chris Sagers, a professor at the Cleveland-Marshall College of Law. Antitrust rules shouldn’t treat multi-sided marketplaces any differently than other markets, he added. “The question is whether a defendant can kill off the plaintiff’s case by putting on any purported excuse whatsoever — even it’s just abstract, speculative nonsense,” he said. 
 
The case is particularly notable because it’s being heard at a time of growing concern over the power of the biggest U.S. internet companies. Even the most extreme scenarios could become immune to antitrust complaints, argued Tim Wu, a professor at Columbia Law School. Uber could ban drivers from working with Lyft Inc., or Amazon could make sellers charge lower prices on its platform than anywhere else. Given the complexity of these platforms, it would become essentially impossible to say that damage to, say, advertisers, isn’t outweighed by the free services that many tech platforms offer to users.  
 
“Don’t you realize uou’re insulating a whole class of business from the reach of the law?” said Wu.
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