Anu Bradford
It is increasingly clear that antitrust laws are in need of an overhaul, especially if we want to regulate the fast-moving tech sector effectively.
Under existing antitrust law, enforcement cases take too long to build and to conclude. Last month, the European Commission scored a big victory when the European Union’s highest court upheld the Commission’s 2017 decision that Google was illegally favoring its price-comparison service, Google Shopping, in search results. But, by then, it had been almost 15 years since the Commission opened its investigation. This is far too slow for a sector where markets are dynamic, products evolve quickly, and potential entrants need fast remedies to overcome entry barriers and challenge entrenched giants.
Europe recognizes this, and in 2022, it enacted the Digital Markets Act, an ex ante regulation that empowers the EU to prohibit certain types of conduct without needing to show that they have caused concrete harm to consumers in the marketplace. The DMA applies to the largest tech companies, which act as “digital gatekeepers.” And it strikes at the heart of their business models: for example, it requires Apple to open its App Store and prohibits Google from giving preference to its own products. With the European Commission now moving to enforce the DMA, we will soon see whether this new approach to antitrust will be more effective in ensuring a competitive digital marketplace.
In the United States, efforts have been made in Congress to enact bills that would replicate elements of the DMA, but all have faltered. Some might argue that no such laws are needed, pointing out that, just a few months ago, the US Department of Justice won its antitrust lawsuit against Google over the company’s tactics for maintaining a monopoly on the search-engine market.
This historic win may, indeed, suggest that existing laws work, at least when enforcement agencies are sufficiently motivated and bold. But plenty of uncertainty remains, not least because antitrust cases are destined to move through long appeals processes. And to prevail in court, US antitrust-enforcement agencies have to draft a rather narrow argument in each case. As a result, agencies are forced to bring multiple cases against each company, all of which require significant resources.
If remaking the digital economy must be done one case at a time, it will be a very long process – far too long, given how fast technologies like artificial intelligence are developing. This suggests that the US would benefit from Congress enacting a version of the DMA to complement existing antitrust laws.
Todd G. Buchholz
A new generation of US antitrust regulators – sometimes called “antitrust hipsters” – are convinced that “big is bad,” and that Big Tech is especially loathsome. But is this wise or reckless? Do we want to turn Silicon Valley into Silicon Gravel?
Rather than focusing on “consumer welfare,” the hipsters, led by Federal Trade Commission Chair Lina Khan, tell us to ignore the bargain prices that consumers enjoy and instead exalt fuzzier objectives, including fairness and worker well-being. But how will government bureaucrats measure those? Isn’t it more feasible – and more useful – to measure whether families are paying more for the goods they want?
So far, US courts have tossed out many of Khan’s cases, including mergers between Meta and Within, and between Microsoft and Activision. And for good reason. The issue should not be whether some firms dominate in market-share rankings, but whether they exploit that dominance to harm customers.
Markets can change fast. In 2006, MySpace attracted more visitors than Google and grabbed 60% of all social networkers. If the US Justice Department had tried to smash this colossus at its peak, the case would have been obsolete before trial, because a curly-haired college kid whose friends called him Zuck had already been plotting to wipe it out. By 2011, that kid had long since dropped out of school, and his platform, Facebook, had ten times as many users as MySpace ever had.
It could happen again – and soon. Intel accounts for nearly 80% of the PC chip market, and unlike MySpace, it has been dominant for decades. But Intel chip prices are dropping, its share price has fallen by half since January 2024, and some Wall Street types are betting that in a few years, the company will find itself in bankruptcy court. Still, if the only relevant consideration is market share, the government should grab a sledgehammer, right?
Until President Joe Biden’s administration came to office, US antitrust regulators were more lenient than their EU counterparts, who love to chase down successful companies with threats of lawsuits, breakups, and bad publicity. Might this help to explain why, from 1995-2019, US productivity jumped 50%, compared to just 28% for the EU?
For the hipster antitrusters who have great confidence in their foresight or fortune-telling, I’ll close with one last question: How many of you had even heard of Nvidia – the world’s most valuable company – before 2020?
Cristina Caffarra
In the first two decades of the twenty-first century, when neoliberalism prevailed, antitrust enforcement was reduced to a technocratic endeavor that excused most bad behavior for the sake of “efficiency.” Nearly all mergers were approved with limited conditions, and scrutiny of anticompetitive activities in the US essentially ground to a halt. In Europe, only a few cases were pursued, each dragging on for a decade and doing little to improve the situation on the ground. The result has been growing concentration across various markets and a complete failure to prevent the entrenchment of dominant digital ecosystems, whose excessive market power poses serious risks, such as undermining democratic discourse.
But during the Biden administration, amid an ongoing debate in the US about the end of the neoliberal consensus, the authorities have changed course, championing a return to one of the “original animating values” of antitrust: the idea of “freedom from all masters.” In practice, this has meant ending deference to digital giants, adopting a more proactive approach across the board, moving away from efficiency as a guiding principle, and focusing not just on consumer welfare, but also on the concerns of workers and small businesses. While this emphasis on fairness, distribution, and inequality has not been popular with Wall Street and Silicon Valley, it has resonated with the public, turning antitrust into a kitchen-table issue. The key takeaway is that it’s not competition laws that need to change; the will to enforce them can make all the difference.
By contrast, Europe remains trapped in a mild version of the neoliberal paradigm it imported from the US at the turn of the century. Antitrust enforcement, particularly at the European Commission, is still a deeply technocratic endeavor that purports to be “tough on mergers” but approves nearly all of them. While the Commission has initiated several cases against large digital platforms, they failed to make any difference. Poor case selection, overextended theories of harm, excessively long processes, and weak remedies have, not surprisingly, led to massive underenforcement.
Mario Draghi’s recent report on EU competitiveness, which highlighted numerous shortcomings in the European model, calls for a “new approach to competition policy” to help meet current challenges, and recommends integrating competition policy into industrial and trade policies. Draghi’s central message is that Europe’s competition policy is “not delivering” on two critical goals: innovation and growth. Although European enforcers do not want to hear this message, it is clear that the bloc urgently needs fresh thinking and policy innovation.
Mordecai Kurz
In the US, the main problem with antitrust policy is that the courts have adopted the Chicago School’s fallacious interpretation of the intent of antitrust laws. In 1978, the American legal scholar Robert Bork argued, using simplistic reasoning, that antitrust law was intended solely to ensure that consumers pay the best current price. This narrow interpretation ignores dynamic strategies firms use to build up market power, which has many other negative effects, like reducing economic efficiency, undermining investment, and ultimately, increasing inequality and weakening democracy.
Yet the logic turned out to be very influential. Together with the Chicago School’s wrongheaded claim that antitrust penalizes the best market outcomes merely for being the best, it led a generation of jurists to accept the fallacy that, due to market efficiency and technological competition, monopolies that emerge as market outcomes are fundamentally harmless. significant body of academic literature has refuted these claims.
Antitrust policy is further complicated by private ownership of technology, which is the main source of legal market power. Technology generates monopoly profits in markets for goods that are produced using these technologies. Such market power is regarded as legally innocent, exempt from antitrust, and temporary. In reality, firms make it permanent using diverse strategies, from patents to mergers.
As a result of these factors, most antitrust actions taken today require the identification of anticompetitive practices or conduct. But such practices and conduct are complex, subject to multiple interpretations, and are difficult to prove in court, because they depend upon unobserved intent.
To revitalize antitrust policy, we need to ensure that the courts are taking an accurate view of market power. But changing legal doctrines will take a long time. In the interim, we must broaden antitrust laws to reflect the recognition that technology ownership is a key source of market power. Three principles should guide such an effort.
First, while antitrust laws have multiple effects, such as supporting free trade, their only objective is to outlaw market power (apart from that granted to innovators). This calls for policies that prevent firms from using dynamic strategies to build up their market power.
Second, higher technological concentration reduces competition in the same way that higher product-market concentration does: combining two related innovations held by two different firms – such as through an acquisition – increases market power above the level that prevails when each is owned by a separate, competing firm. So, while legal protection should be granted to innovators, the acquisition of technology should be prevented if it will increase market power beyond the level granted by patents.
Lastly, technological market power is consistent with free entry. This is so because even if entry is entirely free, to overcome existing market power, an entrant must innovate a new and profitable technology which is superior to the incumbent’s technology. Since this is often difficult or impossible, technological competition does not remove market power. Therefore, to preserve competition, antitrust policy must do much more than ensure free entry.
Tara Pincock
US antitrust laws, as written, are broad enough to cover a wide range of unfair competition practices. But over the last 40 years, the courts have interpreted and applied these laws in ways that favor Big Business and have significantly limited their scope and effectiveness. While the laws themselves remain fit for purpose, we need the courts to interpret them as Congress intended. If the judiciary is unable or unwilling to do so, it falls to Congress to amend the laws to correct the courts’ errors.
Prior to US President Ronald Reagan’s administration, the courts largely interpreted antitrust laws in accordance with congressional intent. But beginning in the 1980s, they adopted the consumer welfare standard, under which corporate consolidation is viewed as “bad” only if the reduction in competition leads to demonstrably worse outcomes for consumers (such as higher prices or lower quality). The courts are not solely to blame, though. The federal agencies charged with enforcing antitrust law have also been lax in their duties.
But antitrust-enforcement agencies – that is, the Federal Trade Commission and the Justice Department’s Antitrust Division – have recently wised up. In recent years, they have adopted a more aggressive stance, seeking to hold major corporations accountable for their anticompetitive practices and to block mergers and acquisitions in sectors that are already highly concentrated.
While it often feels like antitrust enforcers are fighting a losing battle against the courts, there are glimmers of hope, particularly at the district-court level. For example, Google was recently found liable for its anticompetitive conduct in online search. The crucial question is whether these enforcement victories will be upheld on appeal.
Congress, too, has recognized that there is a problem, with legislators introducing several bills that, if passed, could help put antitrust enforcement back on course. If we continue in this direction, there is a strong chance that antitrust laws will regain their original strength and purpose. If not, antitrust could become a dead letter.
Yanis Varoufakis
Antitrust legislation is a crucial shield for societies defending against the exorbitant market power conferred on conglomerates by concentrated capital. But, in the age of cloud capital, it is inadequate.
The reason lies in cloud capital’s radically new nature as a produced means not of production, but of behavioral modification. Cloud capital enriches its owners not by price-gouging us (the consumers), but by modifying our behavior through digital platforms that offer us free services, while being designed to extract maximum rents from the actual producers (say, vendors on amazon.com) and maximum free labor from us. With every review, post, or video we upload, we unwittingly create new cloud capital on behalf of Big Tech.
When US President Theodore Roosevelt’s administration broke up Standard Oil, it was undoubtedly a politically brave and difficult act. Nonetheless, the objective was straightforward (to reduce gas prices and increase output), as were the technicalities involved (divide a national oil monopoly into smaller, local companies that would be allowed to compete with one another everywhere). In the case of Google, Amazon, or Meta, both the means and the ends of conventional antitrust legislation are irrelevant. Big Tech firms do not charge consumers money, and their raison d’ être is to be universal, supranational.
So, what should we do? For starters, we must immediately start legislating the enforcement of inter-operability: our right effortlessly to shift our data and friends across any and all platforms. That, in itself, would reduce Big Tech’s power over us. But the next, equally critical steps are more radical: we must rethink who owns the algorithms, who controls the coding of artificial intelligence. That is a much, much larger task.