By Peter Reap, J.D., LL.M.
His remarks before a public workshop on venture capital and antitrust law at Stanford also sought answers about the market behavior of the major online platforms.
At a public workshop on antitrust and venture capital jointly conducted by Department of Justice and Stanford University today, Makan Delrahim, Assistant Attorney General of the Department of Justice Antitrust Division, opened the meeting by framing it as part of the Justice Department’s efforts to understand the competitive conditions under which the market leading online platforms operate. Delivering his prepared remarks, "Opportunities (Let’s Make Lots of Money)’: The Role of Venture Capital in a Competitive Economy," Delrahim highlighted four questions that he hoped to learn answers to from the venture capital (VC) members of the audience.
Delrahim hoped to learn answers to these questions from the attendees of the VC workshop about the market behavior of the major online platforms:
- What does the VC community know about the likelihood of future disruptive innovation that could challenge today’s technology giants?
- Are any of today’s digital platforms so dominant, with such a capability to restrict access to inputs or to distribution of products, that investors are not willing to develop products that rely on those platforms?
- Where are we in the life cycle of the market for data about how people interact with websites, and with their phones or wearables? We are engaged in a national debate about the value of keeping that information private, but do we have a sense of what that information might be worth in different markets and how consumers may be served by rules that allow the collection and use of that data?
- What tools does the VC community use to evaluate the strategic value of a transaction, that we as antitrust enforcers can utilize to think about whether a transaction is premised on creating value for consumers, versus preventing competition?
Throughout his brief opening remarks, Delrahim emphasized the similarities between antitrust enforcers and venture capitalists. He observed that they both: monitor market conditions and take calculated risks; spend a great deal of time trying to predict the future of business; share values that dynamic competition should drive markets and disruption can create consumer value; and, share the similar goal that great entrepreneurs be rewarded and encouraged. These last few commonalities he linked to his "New Madison" Approach to the intersection of antitrust enforcement and intellectual property rights—"[t]hey are also part of venture capital’s DNA," Delrahim emphasized.
Delrahim offered the example of messaging platform Slack, a 2014 startup which faced long odds with its enterprise collaboration program. At the time, the market was dominated by giants like Microsoft, IBM, and Cisco, each with their own versions of an office social network. Yet, because of the faith of the venture capitalists backing the product, Slack achieved great success and eventually went public in 2019 with a value of $19 billion at closing. However, IPOs such as Slack are increasingly rare, Delrahim noted. He hoped that the workshop would help the Antitrust Division to understand this evidence and discover if there are any causal explanations at odds with the antitrust laws. To that end, in conclusion, Delrahim encouraged attendees to email the Justice Department any anticompetitive concerns they might have witnessed.
Later in the workshop, Doug Melamed, Professor of the Practice of Law at Stanford Law School, and a former Acting Assistant Attorney General in charge of the Antitrust Division, was undaunted by his task of presenting the attendees "all you need to know about antitrust law in about 15-20 minutes." Indeed, he stated that he could summarize all of U.S. antitrust law in one sentence: "Private conduct that increases market power, other than by reason of efficiency-based competition on the merits, is illegal." Followed by a quick dive into an explanation of basic antitrust concepts, Melamed even had time to field audience questions. Other panels joined by Justice Department personnel followed.
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