Antitrust and Unfair Competition Law

Competition: SPRING 2023, Vol 33, No. 1


By Madhu Pocha and Patrick Jones1

If the ethos of Silicon Valley could be captured in a single phrase, it would be Mark Zuckerberg’s directive to "move fast and break things." That approach emphasizes the importance of rapid innovation and experimentation, encouraging startups to push boundaries and challenge conventional thinking. It has led to the creation of some of the largest, most valuable companies in the world—ubiquitous "Big Tech" platforms that have helped solidify California as the engine of the American economy. But the rapid growth and increasing dominance of these companies have led to concerns about Big Tech’s potential to stifle competition. Indeed, the major players—Amazon, Apple, Facebook (Meta), Google (Alphabet), and Microsoft—have all been around for a decade or more.2

Is now also the time for regulators to "move fast and break things" in the name of competition? In recent years, the Federal Trade Commission, the U.S. Department of Justice and numerous state attorneys general have advanced an aggressive enforcement agenda against Big Tech—relying primarily on the federal Sherman Act—that seems equally inspired by Zuckerberg’s popular motto. Still, some critics argue states should take enforcement into their own hands through new legislation. In California, one question worth considering is whether the state should revise its antitrust laws to ban single-firm monopolization, perhaps using Section 2 of the Sherman Act or other similar prohibitions recently proposed in various other state legislatures as a model.

We think the answer is no. In our view, Section 2—which can be enforced by the California Attorney General and private individuals and businesses in California—will likely be enough to address any reasonable monopolization concerns regarding Big Tech platforms.


Section 2 strikes the appropriate balance in its treatment of monopoly power—i.e., the power to control prices, restrict output, or exclude competition in a relevant antitrust market. Possessing monopoly power is not itself illegal, nor should it be. Monopolization under Section 2 requires both "(1) the possession of monopoly power

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in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident." United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966) (emphasis added). The italicized language is crucial, as it distinguishes between exclusionary and pro-competitive conduct. In certain cases, a firm may attain monopoly power from the latter, such as when it offers a superior product or service, or when economies of scale make it more efficient than its nascent competitors. And, as the Supreme Court recognizes, the potential for monopoly profits is often what "attracts ‘business acumen’ in the first place; it induces risk taking that produces innovation and economic growth." Verizon Commc’ns, Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407 (2004). Cognizant of these realities, Section 2 aims not to eliminate monopolies, but rather to prevent firms from using tactics that impede the competitive process in order to gain or maintain a monopoly. In this way, Section 2 protects the competitive process that allows firms to succeed financially by innovating and competing on the merits.

The problem with Section 2, critics may contend, is that modern doctrinal principles seem outdated when confronted with the business models employed by dominant technology platforms. Under the current regime, to demonstrate harm to competition, a plaintiff typically must show harm to "consumer welfare," which "courts and antitrust authorities have largely measured . . . through effects on consumer prices."3 Proponents of the consumer welfare standard argue that it provides a clear and objective measure for determining when legal intervention is necessary, and that it allows for a flexible and case-by-case approach to antitrust enforcement. But requiring proof of consumer price effects assumes that firms charge consumers a price to use their products and services. By contrast, Big Tech platforms are often free for users. As a result, the argument goes, prevailing doctrine will hamstring regulators’ efforts to bring Sherman Act monopolization suits against these platforms when the anticompetitive effects of their dominant market positions cannot be measured directly through consumer price effects.

We think that perspective fails to properly credit the ability of Sherman Act jurisprudence to evolve with changing circumstances. Courts have long acknowledged that the Sherman Act has "a generality and adaptability comparable to that found to be desirable in constitutional provisions." Appalachian Coals, Inc. v. United States, 288 U.S. 344, 360 (1933); see Nat’l Soc’y of Pro. Eng’rs v. United States, 435 U.S. 679, 688 (1978) ("Congress, however, did not intend the text of the Sherman Act to delineate the full meaning of the statute or its application in concrete situations. The legislative history makes it perfectly clear that it expected the courts to give shape to the statute’s broad mandate by drawing on common-law tradition."). Courts and practitioners have understood the Sherman Act, and Section 2 in particular, "to empower the federal courts to develop a federal ‘common law’ of antitrust and to do what common law courts do—namely, to formulate, augment, and alter legal rules in accordance with history, custom, and developing perceptions of the problems being dealt with."4

Section 2’s history illustrates how adept the courts have proven to be despite changing times. During the first few decades of the Sherman Act, federal regulators brought monopolization suits against some of the largest corporations in the country, and courts largely upheld those enforcement efforts. See, e.g., Standard Oil Co. v. United States, 221 U.S. 1 (1911); United States v. Am. Tobacco Co., 221 U.S. 106 (1911); United States v. United Shoe Mach. Co., 247 U.S. 32 (1918). That period later gave way to early New Deal-era thinking that "de-emphasized competition in favor of central-planning initiatives designed to combat the Depression and promote economic growth."5 But starting in the mid-1930s, the Second New Deal brought with it a renewed willingness to target monopolistic behavior—and the courts obliged, adopting a robust view of anticompetitive conduct under Section 2. See, e.g., United States v. Aluminum Co. of Am., 148 F.2d 416 (2d Cir. 1945); United States v. Griffith, 334 U.S. 100 (1948). With certain exceptions, government- and plaintiff-

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friendly precedents extended through the 1960s, after which—mirroring the rise of market-centric economic theory—the modern consumer welfare standard began to gain traction.6

Even then, however, the government and private plaintiffs have brought successful enforcement actions against technology giants. Take United States v. Microsoft, where the D.C. Circuit affirmed a finding that Microsoft illegally maintained its monopoly power over Intel-compatible PC operating systems by imposing various restrictive terms in its agreements with original equipment manufacturers ("OEMs") and internet access providers, and by "technologically binding" its browser and operating system in order to thwart the use of rival browsers. United States v. Microsoft Corp., 253 F.3d 34, 58-78 (D.C. Cir. 2001). While the court acknowledged that for conduct to be considered exclusionary, "it must harm the competitive process and thereby harm consumers," the government did not need to prove that Microsoft’s prices were inflated because of the exclusionary conduct or that prices would decrease absent the conduct. It was enough to show that "Microsoft reduced rival browsers’ usage share not by improving its own product but, rather, by preventing OEMs from taking actions that could increase rivals’ share of usage" and "closing rivals to a substantial percentage of the available opportunities for browser distribution" without legitimate justification. Id. at 62, 70-71.

Today, an era of enforcement against single firms has reemerged. Federal regulators, state attorneys general, and private plaintiffs have brought monopolization actions in the shadow of an apparent bipartisan willingness to curb the influence of Big Tech platforms.7 Like Microsoft, IBM, and other technology giants before them, both Facebook and Google are fighting government suits alleging monopolization in violation of Section 2 of the Sherman Act. See FTC v. Meta Platforms, Inc., No. 1:20-cv-03590 (D.D.C.); United States v. Google LLC, No. 1:20-cv-03010 (D.D.C.); United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va.). Amazon faces numerous private suits under Sections 1 and 2 of the Sherman Act, primarily challenging its various "most favored nation" clauses as illegal restraints on trade and monopolization. See Frame-Wilson v., Inc., No. 20-cv-00424 (W.D. Wash.); De Coster v., Inc., No. 21-cv-00693 (W.D. Wash.); In re, Inc. eBook Antitrust Litig., No. 21-cv-00351 (S.D.N.Y.). While many of these cases are in their early stages, if what’s past is prologue, courts will likely interpret Section 2’s prohibitions to respond to the circumstances, without the need for further legislation.

Skeptics might point to the Supreme Court’s decision in Ohio v. American Express Co. ("Amex") as portending otherwise. Ohio v. American Express Co., 138 S. Ct. 2274 (2018). That case involved the treatment of certain "two-sided platforms," which are businesses that "offer different products or services to two different groups who both depend on the platform to intermediate between them." 138 S. Ct. at 2280. Those platforms are distinct from other businesses because "the value of the services that [they] provide[] increases as the number of participants on both sides of the platform increases." Id. at 2281. The Amex credit card platform, for example, becomes more valuable to cardholders when more merchants accept the card, but also becomes more valuable to merchants when more cardholders use the card to pay them. Such two-sided platforms, the Court noted, "must be sensitive to the prices that they charge each side" of the platform because a loss of participation on either side "risk[s] a feedback loop of declining demand" across the entire platform. Id. at 2281, 2285 (referring to the phenomenon as "indirect network effects"). And because "[p]rice increases on one side of the platform . . . do not suggest anticompetitive effects without some evidence that they have increased the overall cost of the platform’s services," the Court concluded that in any case involving a two-sided "transaction platform" like Amex, "courts must include both sides of the platform" as part of the antitrust relevant market. Id. at 2285-86.

A "transaction platform" are a type of two-sided platform that "facilitate[s] a single, simultaneous transaction between participants" on each side. Id. at 2286. For instance, a credit card transaction

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platform "can sell its services only if a merchant and cardholder both simultaneously choose to use the network. . . . It cannot sell transaction services to either cardholders or merchants individually." Id. When these dynamics are at play, the Court reasoned, platforms "exhibit more pronounced indirect network effects and interconnected pricing and demand." Id. The upshot is that, in cases where Amex applies, plaintiffs now face an elevated burden to show anticompetitive harm across the platform as a whole—including an elevated "net price," if relying on evidence of supracompetitive prices—instead of simply focusing on the effects on one side.

Despite this elevated burden, Amex does not necessarily pose a threat to the enforcement efforts against most Big Tech platforms.8 For one, its holding is limited to "two-sided transaction platforms." Although Google, Facebook, Amazon, and other Big Tech companies operate certain two-sided platforms—for example, the Google Play app store, Facebook Marketplace, and Amazon Marketplace—a significant part of their business interests do not involve two-sided transactions. Facebook’s social network serves as an intermediary between users and advertisers, but it does not facilitate simultaneous transactions between each side and does not exhibit the kind of "indirect network effects" of a credit card transaction platform. Cf. Amex, 138 S. Ct. at 2286 ("Newspapers that sell advertisements, for example, arguably operate a two-sided platform because the value of an advertisement increases as more people read the newspaper. . . . But in the newspaper-advertisement market, the indirect networks effects operate in only one direction; newspaper readers are largely indifferent to the amount of advertising that a newspaper contains."). Similarly, while Google’s search and advertising services may be "two-sided" in a general sense, they do not involve simultaneous transactions.9

Moreover, even when Amex does apply, it is not an insurmountable hurdle. In US Airways v. Sabre—a case tried twice, once before Amex and once after—we obtained a successful Section 2 verdict on behalf of American Airlines (successor in interest to US Airways) against Sabre, a two-sided platform that connects travel agents with airlines. See US Airways, Inc. v. Sabre Holdings Corp., No. 11-cv-02725 (S.D.N.Y.), ECF No. 1208 (May 19, 2022). Both the district court’s pretrial rulings and the Second Circuit’s opinion remanding the case for a new trial demonstrate that a plaintiff can prove harm to competition through both price and non-price effects on competition.10 For example, the Second Circuit explained that "US Airways. . . introduced evidence of market harms beyond supracompetitive pricing," including "that the contractual restraints made entry into the marketplace extraordinarily difficult, . . . reduced the quality of options available in the marketplace and led to technological stagnation," which are "all types of harm that are cognizable when analyzing both sides of a two-sided platform." US Airways, Inc. v. Sabre Holdings Corp., 938 F.3d 43, 62 (2d Cir. 2019) (cleaned up).


Section 2’s proven adaptability across decades of technological change makes it the most appropriate vehicle through which potential plaintiffs—state governments included—can address Big Tech monopolization concerns. The statute’s text and robust jurisprudence already provide ample flexibility for courts to tailor doctrine to the circumstances surrounding concrete cases—a significant benefit when regulating companies so inextricably linked to social and economic progress. That stands in sharp contrast to the kinds of antitrust reform bills proposed as of late.

For example, New York State’s "Twenty-First Century Antitrust Act" would, among other things, eliminate consideration of pro-competitive effects when evaluating the legality of challenged acts.11As a consequence, technology companies might be incentivized to abstain from conduct with clear net-benefits out of fear that even marginal anticompetitive effects would land them in regulators’ crosshairs. This would deter, rather than foster, competition.

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On the federal level, the "Competition and Antitrust Law Enforcement Reform Act of 2021" would liberally redefine "exclusionary conduct" to mean conduct which "materially disadvantages at least one potential competitor" or "tends to foreclose or limit the ability or incentive of at least one potential competitor."12 It would also decree that such conduct, when undertaken by defendants with greater than fifty percent market share, would be "presumed to present a risk to competition" absent the defendant proving otherwise.13 The former requirement would effectively abrogate the longstanding principle that "harm to one or more competitors will not suffice" by itself to show harm to competition. Microsoft Corp., 253 F.3d at 58. And the latter would introduce a new formalistic rule where a flexible, case-by-case standard previously applied. Taken together, these provisions elevate the interests of an efficient platform’s competitors over our collective interest in competition.

Either of these reforms would represent a fundamental shift in antitrust first principles—one that risks deterring the fierce competition that makes Silicon Valley (and by extension, California) unique in the eyes of so many aspiring entrepreneurs and innovators. And while the 100+ year history of Sherman Act jurisprudence provides guidance to companies with significant market power, these reforms are untested and will cause significant uncertainty about where the line is between lawful and unlawful conduct.


Big Tech moves fast, but Section 2 can keep up without breaking the legal standards that have proven reliable in confronting anticompetitive conduct for more than a century. To be sure, as recent advances in artificial intelligence portend, the years ahead will present novel competition questions. But as the history of Sherman Act jurisprudence and recent enforcement actions show, Section 2 is robust and flexible enough to proscribe conduct that stifles competition, including conduct by Big Tech firms. Adopting a broader prohibition on unilateral firm conduct would introduce uncertainty into the marketplace and potentially stifle the very competition it is intended to promote.



1. Madhu Pocha is Managing Partner of O’Melveny & Myers’ Century City office and a member of the firm’s Antitrust and General Litigation/Trial practice groups. Patrick Jones is a Counsel in O’Melveny’s Washington, DC office and a member of the Antitrust practice.

2. Even potential disrupters like OpenAI, the company behind the generative artificial intelligence products ChatGPT and Dall-E, are partly owned, and closely aligned with, Microsoft. See Microsoft and OpenAI extend partnership (Press Release), Jan. 23, 2023,

3. See Lina Khan, Amazon’s Antitrust Paradox, 126 Yale L.J. 710, 720 (2017).

4. Phillip E. Areeda (late) & Herbert Hovenkamp, Antitrust Law: An Analysis of Antitrust Principles and Their Application ¶810 (Fourth and Fifth Editions, 2023 Cum. Supp. 2016-2022).

5. William F. Adkinson Jr. et al., Enforcement of Section 2 of the Sherman Act: Theory and Practice (Fed. Trade Comm’n, Working Paper Nov. 3, 2008),

6. Laura Phillps Sawyer, US Antitrust Law and Policy in Historical Perspective (Harv. Bus. Sch., Working Paper No. 19-110),

7. See Roger P. Alford, The Bipartisan Consensus on Big Tech, 71 Emory L.J. 895 (2022),

8. Although the restraints at issue in Amex were challenged under Section 1 of the Sherman Act, the Court’s holding can apply with equal force in Section 2 cases. See US Airways, Inc. v. Sabre Holdings Corp., 938 F.3d 43, 56 (2d Cir. 2019).

9. Indeed, neither the FTC in its suit against Facebook nor the government enforcers in their suits against Google have alleged a relevant market involving a two-sided transaction platform. See Complaint, FTC v. Meta Platforms, Inc., No. 1:20-cv-03590 (D.D.C.), ECF No. 3; Complaint, United States v. Google LLC, No. 1:20-cv-03010 (D.D.C.), ECF No. 1; United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va.), ECF No. 1.

10. See, e.g., US Airways, Inc. v. Sabre Holdings Corp., No. 11-cv-02725, 2022 WL 874945, at *9 (S.D.N.Y. Mar. 24, 2022) ("US Airways offers significant evidence from which a reasonable jury could find that Sabre exercised monopoly power in the GDS market, precluding Sabre’s request for summary judgment on this issue. This evidence includes (i) net pricing that has approached double the competitive level, (ii) excessive profits, (iii) a flow of payments from GDSs to travel agents that would not exist in a competitive market, (iv) ability to price discriminate by charging airlines different fees, (v) maintenance of a high, stable market share while selling obsolete technology, (vi) retaliatory conduct against airlines that promote innovation, (vii) structural barriers to entry, (viii) artificial barriers to entry, (ix) the failure of even one GDS competitor to emerge within the last thirty years and (x) that Sabre had between a forty-nine and fifty-two percent share of TTA bookings through GDSs in the United States from 2006 to 2012.").

11. S. S933C, 2021-2022 Leg. Sess. (N.Y. 2021),

12. Competition and Antitrust Law Enforcement Reform Act of 2021, S. 225, 117th Cong. (2021), Id.

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