What They’re Saying: Conservative Thinkers Support Existing Antitrust Doctrine
This week, National Review published an opinion piece that attempted to make a “conservative case” for government breaking up leading tech services. It’s important to note, however, that asking for heavy-handed government intervention is far from the conservative mainstream. There are an abundance of thinkers and experts on the right and also the left, who believe existing antitrust doctrine, the consumer welfare standard, is the best approach for tech services and oppose breaking up our nation’s most innovative companies.
Current Federal Trade Commission (FTC) General Counsel and former Senior Legal Fellow at the Heritage Foundation Alden Abbott argues a “big is bad” antitrust theme thwarts innovation. “The ‘bigness is badness’ antitrust theme, put forth by Justice Louis Brandeis and Justice William Douglas, among others, did have an effect, but not a good one. Efficient mergers were discouraged, and industry-leading firms lived under the constant threat of antitrust investigation. When intrusive government regulation substituted for antitrust—as in the case of AT&T from the early 20th century to the 1980s—innovation moved at a snail’s pace and consumers and the general economy suffered.” (Alden Abbott, “Antitrust And The Winner-Take-All Economy,” Heritage Foundation, 1/23/18)
American Enterprise Institute (AEI) Fellow Jim Pethokoukis notes the purpose of antitrust law is not to dismantle successful companies. “That’s not how antitrust works in the modern U.S. economy. Companies do not get dismantled just because they are big and dominate a particular market sector. If consumers are benefiting, government generally keeps its hands off. Tax policy or campaign finance reform usually tackles concerns about economic and political power now.” (James Pethokoukis, “The Astonishingly Weak Antitrust Case Against Facebook, Google, and Amazon,” The Week, 1/19/18)
AEI’s director of economic policy studies Michael Strain argues the consumer welfare standard is superior to a “fuzzier” ‘big is bad’ approach. “Another standard that could be used in antitrust enforcement is essentially ‘big is bad’ — the presumption that large and powerful companies should be suspect because of the political and economic influence they wield. This vague, fuzzier standard is inferior. It ignores the good things that come from size, including the ability to produce output at lower cost. It also invites regulatory mischief. And it weakens the focus on the benefits competitive markets offer to consumers. By the standard of consumer welfare, big tech is a blessing.” (Michael Strain, “Big Tech May Be Monopolistic, But It’s Good for Consumers,” Bloomberg, 3/20/18)
Senior Fellow at the Competitive Enterprise Institute Iain Murray writes that “the primary issue for antitrust is consumer welfare.” “American antitrust law is not particularly concerned with size or market share, whatever Learned Hand might have said. Our bipartisan legal consensus in America holds that the primary issue for antitrust is consumer welfare, as the late, great Robert Bork argued in The Antitrust Paradox. It is the fact-based ‘rule of reason’ not hypothetical concern about size that drives American antitrust law. And a good thing too. What this means is that government is not empowered to steam in and break up companies that are increasing consumer welfare through efficiency and innovation in favor of their less efficient, less innovative, and less welfare-enhancing competitors.” (Iain Murray, “Misplaced Trust In Antitrust,” National Review, 12/14/17)
Tyler Cowen, an economics professor at George Mason University, says it’s not clear that antitrust action is an effective remedy to market concentration. “One of the central premises of the ‘new liberal economics,’ as described by the Hillary Clinton campaign, is the notion that monopoly power is growing and must be stopped by applying more antitrust law. While it is true that many indicators of market concentration are up, it’s less clear that antitrust law is an effective remedy.” (Tyler Cowen, “Yesterday’s Antitrust Laws Can’t Solve Today’s Problems,” Bloomberg View, 10/5/16)
Former FTC Commissioner Joshua Wright and Executive Director of the International Center for Law and Economics Geoffrey Manne argue erroneous antitrust interventions will hinder economic growth. “In the United States, two of the most significant characteristics of the ‘new’ antitrust approach have been a more intense focus on innovative companies in high-tech industries and a weakening of long standing concerns that erroneous antitrust interventions will hinder economic growth. But this focus is dangerous, and these concerns should not be dismissed so lightly.” (Geoffrey A. Manne And Joshua D. Wright, “Google And The Limits of Antitrust: The Case Against The Antitrust Case Against Google,” Harvard Journal Of Law And Public Policy, 3/10/10)
Wayne Brough, chief economist and vice president for research at FreedomWorks, writes that competition in the tech sector is “fierce and daunting.” “Competition in the marketplace is fierce and daunting, with rivals constantly driving profit margins down and attempting to lure customers away from rivals. This competition serves consumers well, but the market is littered with firms who failed to deliver. Unfortunately, many firms often turn to laws and regulations to gain and protect their market share. This allows them to behave like monopolists, raising prices and reducing consumer welfare due to government interventions designed to create the ‘ideal’ market.” (Wayne Brough, “In Government We Antitrust,” American Spectator, 7/27/17)