ICYMI: Stark Departure From Existing Antitrust Policy A “Gamble” Not Worth Taking
Earlier today, Georgetown’s Larry Downes and the Brookings Institution’s Blair Levin published an op-ed in the Washington Post, asking if the recent tech backlash was “going askew.”
Downes and Levin point out that critics of leading tech services propose only vague alternatives to the consumer welfare standard, and that the tech sector is in fact one of the country’s most productive. Experts have called the spectre of breaking up leading tech services a “gamble”—one which the EU took and has been paying the price for ever since, with European businesses “no-shows in the digital revolution.”
Read more from Downes and Levin below.
Proposed alternatives to the consumer welfare standard are “vague,” and risk politicizing antitrust enforcement. “We’re concerned, however, by the tendency of some to shoehorn pet theories into the debate — notably the passionate but incomplete argument that it’s time to jettison decades of antitrust policy that limits the government to intervening only when market concentration has, or could, cause higher prices for consumers. The vague alternative, proposed by critics on the left and right, is a return to a failed framework that boils down to, at best, a general belief that ‘big is bad’ and, at worst, to politically-based payback for companies on the wrong side of an election.”
Philip Verveer, the government’s lead counsel in its 1982 antitrust case against AT&T, recently argued antitrust action against leading tech services was little more than “an act of faith” and that it very well wouldn’t lead to any benefits. “In fact, Philip Verveer, a Visiting Fellow at the Harvard Kennedy School and the government’s lead counsel in the AT&T case, recently concluded that unleashing antitrust against today’s platform companies would amount to little more than ‘an act of faith that a successful prosecution would bring about benefits.’ There’s no need to gamble. The more effective regulator of digital markets has always been the happy confluence of engineering and business innovations in hardware, software and communications driving exponential improvements in speed, quality, size, energy usage and, of course, cost.”
The tech sector is lowering prices, raising wages, and improving productivity—not exactly warning signs that regulation is needed. “Annual pay for tech workers (including hourly workers at e-commerce fulfillment centers) rose at more than twice the rate of other industries. Job growth in tech was four times faster. Lower prices, higher pay and growing productivity: That doesn’t suggest a problem, or at least not one requiring radical restructuring of the companies driving the gains.”
Overzealous regulation of the tech sector would hamper the United States’ ability to continue to lead the digital revolution, just like the EU’s actions have. “Consider the alternative approach taken in Europe, which has ramped up an aggressive attack of U.S. technology companies, applying the kind of expansive view of competition law urged by Wu and others. European businesses are still largely no-shows in the digital revolution, the result not of monopolies but of the micromanagement of employment, investment and infrastructure by regulators. Rather than freeing up local innovators to benefit European consumers, the European Union seems content simply to fine successful U.S. businesses. The European approach highlights another problem with calls for U.S. antitrust enforcers to punish platform companies just for their size. Looking ahead to the technology drivers of the near future, such as artificial intelligence and autonomous vehicles, any hopes for the United States to lead internationally depend on heavy investment today in research and development. Many of the highest-risk bets are being placed by, you guessed it, today’s ‘monopoly’ companies.”