GUEST COLUMN, Kristen Osenga, Austin E. Owen Research Scholar
The Justice Department has fired a shot across Big Tech’s bow. In a recent speech, Dina Kallay, a deputy assistant attorney general in the department’s antitrust division, criticized Big Tech for using supposedly “free” patent-licensing initiatives to poach smaller competitors’ technologies.
Her remarks come at a pivotal moment. The Alliance for Open Media — a consortium led by Amazon, Meta, Google, and other tech giants — announced a new video-streaming format that could soon be embedded in televisions and tablets.
The group claims the technology will be “royalty-free.” But such promises often come with strings attached.
Kallay didn’t mention the Alliance for Open Media by name, but her message was clear. Under the Trump administration, the Justice Department will defend small businesses from Big Tech’s anticompetitive depredations.
Most Americans don’t pay attention to the technologies behind streaming platforms. They just want their phones, TVs, and tablets to play content seamlessly.
Globally standardized technologies for streaming, Wi-Fi, and 5G are protected by numerous patents. Without patent protection, rival companies could simply copy an innovator’s designs.
But for standardized technologies to be widely useful, they also need to be broadly accessible. Just imagine the chaos and inefficiency that would result if certain Wi-Fi routers only worked with iPhones but not Androids.
To promote widespread adoption, innovators promise to license “standard-essential” patents to any willing user on terms that are “fair, reasonable, and non-discriminatory,” or FRAND.
Under this model, anyone who wants to use the standardized technology can do so, provided they pay a modest royalty to the companies that helped invent that technology.
The Big Tech companies behind the Alliance for Open Media claim to have found a better way. Over the past several years, they’ve been touting several video streaming formats as “royalty-free.” The implication is that companies can license them at no cost.
But that’s not actually the case. The format is free only to those who take a license on the Alliance for Open Media’s terms. Those terms stipulate that, in order to use the format, licensees must agree to cross-license their own technologies to other Alliance members without charging royalties.
This coercive requirement harms small firms. If Alliance members like Google, Netflix, and Amazon adopt AOM technologies in their streaming platforms, they can force smaller developers and device makers to either follow suit — that is, give away their intellectual property and licensing revenue in the process — or refuse and be effectively shut out of the market.
There’s also a strong chance that AOM’s members will offer access to their technology for “free” now but later close off or start imposing onerous requirements for access to it after achieving market dominance.
The stakes extend far beyond streaming; standards are present in all areas of life, from telecom and wireless networks to aerospace, power grids, and autonomous vehicles.
Preserving America’s technological excellence requires strengthening the patent system and FRAND framework that have long promoted risk-taking and invention. The Trump administration’s warning shot to Big Tech is good news for small innovators — and for every American.
ABOUT THE AUTHOR — Kristen Osenga is the Austin E. Owen Research Scholar and Professor of Law at the University of Richmond School of Law.
