Antitrust laws have fallen out of favor in recent decades, and there hasn’t been a successful monopoly prosecution by the US government since it sued Microsoft in 2001. But some lawmakers seem determined to bring back the glory days of “trust-busting” and there are a number of initiatives to that end currently making the rounds—initiatives that could drastically change the internet and services like Amazon Prime.
One reason successful antitrust lawsuits dissipated is the consumer welfare standard. This legal precedent has become the prevailing doctrine for courts determining antitrust questions and holds that companies must not only be monopolies but have also used that monopoly power and in a way that harms consumers to be eligible for government intervention. This was not always the case and the adoption of this standard is largely thanks to the advocacy of conservative legal scholar Robert Bork in the 1980s.
But that may soon change as Republicans, Democrats, and unelected bureaucrats in the Department of Justice and the Federal Trade Commission are all actively working to change the laws that govern this field.
While there are numerous bad proposals floating around, a bipartisan sponsored bill, led by Democratic Senator Amy Klobuchar, has gained the most ground recently, passing out of its Senate committee last week.
The American Innovation and Choice Online Act would erode the consumer welfare standard and move our antitrust model closer to those seen in communist China and parts of Europe. Remember when Google got fined last year for ranking its own products first in search results (the horror)? That’s the kind of thing we could see should this bill pass. Say goodbye to those sweet deals Amazon Prime shows you when you search.
Not only that, but the bill treats companies unequally. It’s tailored so it will only apply to large tech companies, the preferred target for populist Democrats and Republicans, while leaving brick and mortar stores alone. So Target, which is headquartered in Klobuchar’s state of Minnesota, would be allowed to sell its generic products and give them preferred placements, but online retailers would not.
The bill also greatly expands the Department of Justice and the Federal Trade Commission’s regulatory power, essentially giving power over the market to unelected bureaucrats, and presents data privacy issues by forcing companies to share user data.
But there’s still some good news. While members of the government may be eager to garner more control of private businesses and the market, the public is not convinced.
New Polling
New polling from Echelon Insights on behalf of industry-trade group Netchoice (which full disclosure, I am a fellow for) surveyed 3,893 registered voters across the US and found that Americans are opposed to the consequences of this legislation.
In fact, only one percent said that regulating the tech industry is the biggest issue facing the country right now. As one might expect, the preferred policy focuses were instead on inflation, the economy, and COVID-19.
Furthermore, 62 percent of respondents said new regulations should apply to all companies in an industry, rather than only the largest companies. 57 percent opposed proposals that could eliminate some of Amazon Prime’s services. And 71 percent said companies should be allowed to package their services together.
Additionally, 62 percent opposed forcing large tech companies to share data with competitors, including foreign actors, and 65 percent said app stores should be allowed to refuse apps they deem unsafe for their customers. Those are pretty damning numbers for Klobuchar’s bill, which might be one reason why she rushed it through its senate committee last week, skipping normal protocols.
Despite wild claims from Democrats that antitrust might reduce inflation, it appears the American public is more economically literate than that. A majority, 54 percent, said regulations will increase prices, and economists almost unanimously agree on this point (which is unheard of).
Lastly, and perhaps most importantly, 56 percent said they don’t trust Congress to regulate online services in a way that improves these services.
Is the Public Waking Up?
Politicians frequently try to fear-monger the public into giving them greater control of the free market, and often to great success. These same tactics have been tried against virtually every major industry or innovation since antitrust laws were developed in the late 1800s. Twenty years ago it was Microsoft and Apple, now it’s Google and Facebook.
But stick around long enough and you’ll realize that we don’t need the government to fight against monopolies or ensure competition—we just need them to get out of the market’s way.
Most of the time, the companies being targeted under antitrust merely 10 to 20 years ago are already no longer the top competitor in their industry. When’s the last time you were worried about MySpace’s dominance over the market? What about Kodak? Or Alcoa aluminum? All of these were once said to be monopolies, or at the very least, to hold so much market power that they should be treated as such. Yet none of them maintain that market share today. Innovations happened, new competitors edged them out, and time marched on.
This is why it has become increasingly clear that antitrust is not about competition, but control. Nor is antitrust about the welfare of consumers. If it were, our lawmakers would want the consumer welfare standard baked into our law. Instead, they are seeking to take actions against companies that would directly harm consumers. Why?
It’s fair to assume some are working to rig the field in favor of their friends in the industry who see these tech companies as competitors. But others are simply motivated by hatred of the practices of Big Tech and believe that if private businesses don’t operate as they wish the government should have the power to punish them. This should concern literally everyone. It’s as anti-capitalist and authoritarian as it gets.
Will the Real Monopoly Please Stand Up?
The truth is, real monopolies rarely exist. And where they do, it’s almost always thanks to government regulations and subsidies that rigged the market in their favor in the first place.
The only actual, ongoing monopoly Americans face is the government itself, which we have no choice to opt-out of and which we are forced to give our money to. The idea that this entity is going to come in and save us from big business is frankly laughable.
Politicians claim that antitrust legislation is about increasing competition. But that simply isn’t true. It’s about the government picking winners and losers. Efforts to actually increase competition would focus on reducing regulations and barriers to entry in the market—barriers that the government facilitates through taxes and red tape. As Thomas Sowell once said, “Competition does a much more effective job than government at protecting consumers.”
There is much the government could do to get out of the market and actually allow for greater competition. If they truly want to prevent monopolies and uphold a capitalist system, that’s the direction they should go in. Using antitrust to gain regulatory control over industries is the opposite of that, and it is the consumers who would ultimately suffer.
Hannah Cox
Hannah Cox is the Content Manager and Brand Ambassador for the Foundation for Economic Education.
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