Big Tech Is Under Siege. Why Does T-Mobile Get a Pass?

(Bloomberg Opinion) -- Makan Delrahim, the U.S. Justice Department’s top antitrust enforcer, sure seems worried about technology consumers for someone who’s about to allow potentially one of the most harmful megamergers in recent memory: T-Mobile US Inc.’s deal for Sprint Corp. .The department’s antitrust division said Tuesday evening that it is looking into how “market-leading online platforms” – likely referring to Apple Inc., Amazon.com Inc., Facebook Inc. and Google – became so powerful and whether they’re engaging in practices that hurt competition and consumers. It’s to be taken as a sign that the government is serious about reining in the tech giants. “Without the discipline of meaningful market-based competition, digital platforms may act in ways that are not responsive to consumer demands,” Delrahim was quoted as saying in the press release..But Delrahim, according to numerous news reports, is on the verge of giving his blessing to T-Mobile’s acquisition of Sprint. That decision, which may come Thursday, would be inconsistent with his department’s stance regarding the tech industry. Even though the two wireless carriers are much smaller than the likes of Google and Facebook, and they have reportedly agreed to make some divestitures to smooth over antitrust concerns, the transaction may still meaningfully concentrate pricing power in their market..Access to wireless connectivity has become part of our social fabric and a requirement for students to succeed in school and for everyday business dealings. Almost anything you use your smartphone for when on the go – Googling something, posting to Instagram, shopping on Amazon – is enabled by services such as T-Mobile and Sprint’s. The wireless market, where the transition to faster 5G data networks is taking place, essentially sits at the center of the so-called American dream and plays a role in the nation’s income inequality. .Like the U.S. tech giants, T-Mobile and Sprint have taken to figuratively waving the American flag by using the threat of Chinese tech dominance as a defense against antitrust enforcement. The carriers’ refrain has been that the merger would provide the ability to role out a nationwide 5G network faster to compete with that of Verizon Communications Inc. and AT&T Inc. – and more important, for the U.S. to compete with China. It plays directly into President Donald Trump’s nationalistic views and notion of needing to win this supposed 5G race. But for the tech giants, my colleague Shira Ovide wrote Tuesday, these types of talking points aren’t working, as the government scrutinizes their power and influence. .To appease the Justice Department, T-Mobile and Sprint are selling some wireless spectrum and prepaid mobile assets to satellite-TV provider Dish Network Corp. for $5 billion, Bloomberg News reported on Tuesday. The idea is that Dish, which itself is sitting on billions of dollars worth of unused spectrum licenses, can sell T-Mobile wireless service under the Dish brand name for a certain number of years while it build its own network to eventually compete with T-Mobile and the other carriers. But I’m not alone in my skepticism that Dish will truly fill the hole that Sprint will leave behind as an important fourth competitor – or of any terms that hinge on the enigmatic Charlie Ergen, the billionaire behind Dish. And if Dish can rise to the occasion, as Delrahim seems to believe, it’s unclear why T-Mobile would prefer that over simply competing with Sprint, a weaker player, as it does now. Sprint’s spectrum may be the answer, yet some of that is being divested to Dish..The contradictions between how the Department of Justice is looking at the online platforms versus the wireless carriers isn’t helping to suppress speculation that political forces have been at play in some of its policing activity. Last year, DOJ lawyers fought to block AT&T’s takeover of Time Warner. I believe that the DOJ’s concerns were warranted and that incidents like the current carriage contract dispute between AT&T’s DirecTV and CBS are partly ramifications of allowing a single company – AT&T – to control one of the biggest entertainment-content companies, pay-TV operators and wireless-service providers. That said, it’s hard not to wonder about improper meddling by the White House, given that one of the assets at stake in the merger was CNN, Trump’s media arch-nemesis, and that he reportedly ordered Gary Cohn, then-director of the National Economic Council, to pressure the DOJ to block the deal. .The case for stopping AT&T-Time Warner was less cut and dry, given that the companies technically didn’t compete, making it the kind of vertical merger that usually isn’t problematic for antitrust regulators. However, when presented with T-Mobile’s Sprint deal, one that is full of red flags, Delrahim appears to be working with the companies to find a way to help them cross the finish line. From what has leaked out about the concessions he’s requested, they feel a bit flimsy..If Delrahim is worried about the tech platforms taking advantage of American consumers, he should think twice before allowing the already small number of companies controlling the pipes that carry mobile data to further concentrate their power. .To contact the editor responsible for this story: Beth Williams at bewilliams@bloomberg.net.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners..Tara Lachapelle is a Bloomberg Opinion columnist covering deals, Berkshire Hathaway Inc., media and telecommunications. She previously wrote an M&A column for Bloomberg News..©2019 Bloomberg L.P.

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Big Tech Is Under Siege. Why Does T-Mobile Get a Pass?

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