Politics

Trump's Sinister Attacks on CNN

There are very good reasons to block the deal between AT&T and Time Warner—but the president is busily forfeiting the benefit of the doubt.

By David Frum
Mike Blake / Reuters

Days before the Thanksgiving holiday, the U.S. Department of Justice released its complaint against the proposed AT&T–Time Warner merger. The complaint is a history-making document. It announces a return to long-discarded approaches to antitrust, and argues that these old ways have regained relevance in the digital era.

The Justice Department’s arguments for this rediscovery are sophisticated and even compelling—so much so that they raise a retrospective question: If this big merger of content creators and content carriers is banned as anticompetitive, why was the previous big merger of Comcast and NBC Universal permitted? The issues raised by AT&T–Time Warner were also presented by Comcast–NBC. What has changed between then and now?

The morning after Thanksgiving, however, President Trump tweeted his latest and most outrageous attack yet on CNN, a unit of Time Warner.

These are ominous words. Inside the U.S., CNN’s reporting is protected by the First Amendment and the courts. Outside of the country, U.S.-affiliated journalists do ultimately depend on the protection of the U.S. government. Trump’s tweet is a direct attack on those international journalists’ freedom and even safety. Trump is inviting rogue regimes and other bad actors all over the world to harass CNN journalists—or worse. Trump’s words inspired this lament from General Michael Hayden, a former director of the National Security Agency and the Central Intelligence Agency.

Trump’s animus against CNN raises a searching and troubling question. What if the Department of Justice is doing the right thing for the wrong reason? Or what if the president’s personal determination to silence a crucial media institution—or, worse, to force its sale to an ally like Rupert Murdoch—explains the sudden pivot in the department’s antitrust philosophy?

From the 1930s through the 1980s, antitrust lawyers worried a lot about vertical integration: companies that owned every step of production, from mine to showroom. In 1948, the Department of Justice won a case forcing the major movie producers to sell their chains of movie theaters.

The Supreme Court’s decision in U.S. v. Paramount Pictures incidentally destabilized the careers of many B-movie actors who had until then enjoyed steady, predictable salaries under the old studio system. The shock jolted one of those actors, Ronald Reagan, from his former New Deal liberalism to burning rage against an over-intrusive federal government.

Indeed, the old concern with vertical integration did become progressively more intrusive. In the 1960s, makers of car radios brought a spate of lawsuits to stop carmakers from selling cars with radios preinstalled. Could cameras be sold with film? Insulin together with the infusion apparatus? How could an economy innovate if every product upgrade required government approval? Just think of how much of the office equipment of the 1980s—calendar, camera, calculator, dictionary—comes bundled in a modern phone!

When Reagan reached the presidency, in 1981, he oversaw the reinvention of antitrust law. The new thinking on antitrust—most powerfully expressed in Robert Bork’s 1978 book, The Antitrust Paradox—denounced the old concern with vertical integration. The Justice Department, Bork argued, should zealously police mergers between companies that competed directly against one another: horizontal competition, in the argot. What happened up and down the product chain should be left to Mr. Market to decide. The Comcast–NBC deal was approved by that logic.

Unnervingly, however, the uses of market power that we confront in the 2010s look a lot more like the old motion-picture studios trying to control every inch of film content in their theaters than like car-radio makers trying to force consumers to buy two products at a higher price instead of one convenient bundle of car and radio at a lower price. Facebook seeks to seize for itself all of the value created by its users. Companies such as Comcast hope to use control of the content consumers want to extract purchases of content that consumers want less. Time Warner, the DOJ fears, hopes to extend this grasp to the emerging mobile world: maintaining the high profits of the old cable industry even as Americans sever cable’s physical cords.

As social media emerge as the nation’s, and the world’s, true public square, hard questions arise about their owners claims to be mere platforms. Does Facebook really have no duty to police advertisers who request, “No blacks, please?” Can Twitter stand aside as its platform is used for harassment and threats?

The deregulated, postindustrial world of the 1980s and ’90s seemed to banish old fears of industrial concentration. The world of Google, Facebook, and Amazon looks a lot more like the world dominated by U.S. Steel and General Motors. Suddenly, formerly antique antitrust ideas again seem relevant to our time.

Only … is that really what’s going on?

From The New York Times, July 5, 2017:

White House advisers have discussed a potential point of leverage over their adversary, a senior administration official said: a pending merger between CNN’s parent company, Time Warner, and AT&T. Mr. Trump’s Justice Department will decide whether to approve the merger, and while analysts say there is little to stop the deal from moving forward, the president’s animus toward CNN remains a wild card.

On the campaign trail, Trump repeatedly denounced the merger, as he also attacked Amazon, the company founded by Jeff Bezos, owner of The Washington Post. Bruised by The Post’s reporting, Trump delivered this threat to Sean Hannity in May 2016: “[Bezos] thinks I’ll go after him for antitrust. Because he’s got a huge antitrust problem because he’s controlling so much, Amazon is controlling so much of what they are doing. He’s using The Washington Post, which is peanuts, he’s using that for political purposes to save Amazon in terms of taxes and in terms of antitrust.”

Strikingly, Trump had little to say about anticompetitive trends elsewhere in the economy. The banking industry underwent a huge consolidation during and after the financial crisis. The share of deposits held by the top 10 banks jumped from 30 percent in 2000 to 46 percent in 2010. The top 10 held 36 percent of loans in 2000, but 50 percent in 2010. The overwhelming majority of that concentration is explained by mergers: an average of 150 a year over that decade.

Monopolization even in the information economy does not interest him so long as the monopolizers refrain from reporting on him in ways he does not like. Trump has had nothing negative to say about Facebook or Google. He reserved his antitrust energy exclusively for companies connected to The Washington Post and CNN. That’s fishy.

Likewise it’s fishy that the assistant attorney general for antitrust who filed the objection to the AT&T–Time Warner merger saw “no problem” with it in a television interview before he joined the Trump administration. Something changed his mind after he took office.

The most sinister explanation of the change is that Trump’s anti-CNN animus inspired the DOJ’s intervention.

But here’s a second explanation, rather less sinister but in its way just as disturbing. The career Justice Department staff wanted to move against the AT&T–TimeWarner merger because of reviving concerns about vertical integration and market power in the Facebook-Google-Amazon era. Their wish may well have been blocked under a more normal Republican president with more conventionally conservative, Bork-influenced views of antitrust. Trump’s determination to strike at CNN, however, opened an opportunity for a more aggressive approach. In other words, we could be looking at a federal-enforcement action that is simultaneously credible in its substance—and also enabled by malicious motives.

In the litigation over the Trump travel ban, courts cited Trump’s tweets as evidence that he had exceeded his proper powers. Historically, presidents have wielded large discretionary power over the entry of aliens into the United States. They can exclude any category or subcategory of aliens for any reason. In one case, the Supreme Court upheld an exclusion of an alien even when the executive offered no reason at all. But Trump’s tweets avowed a deliberate intention to exclude people on the basis of religion. He had demanded a “Muslim ban” during the campaign and he reiterated his “ban” terminology as recently as November 24. Confronted with this repeated actual notice of discriminatory intent, the courts reacted by imposing new limits on long-established powers of the presidency.

What will they do as the Time Warner litigation moves forward—and the president’s virulent comments are entered into evidence? Otherwise, legal governmental actions can be tainted as illegal and unconstitutional if done for improper reasons.

Donald Trump is a president with a unique lack of respect for constitutional rights, the rule of law, and the independence of news media. That disrespect shadows every measure of his administration—and haunts the debate we need to have about rethinking antitrust in this age of digital monopoly power.