The Curse of Bigness: Antitrust in the New Gilded Age

by Tim Wu

Liberal economists tended to support antitrust as a counter to the domination of big business. Conservatives feared “a road to serfdom,” in Friedrich Hayek’s phrase, resulting from central planning accomplished through a union of monopolies and the state.

The goal of preserving competition might simply protect weaker, less efficient companies from more efficient firms that might lower prices for consumers.

one must begin with “the strongest presumption that the existing structure is the efficient structure.”

In other words, they began with a presumption that antitrust was unnecessary, based on the laissez-faire idea that problems work themselves out, and most of the time we live in the best of all possible worlds.

he faulted the law based on what he thought the law’s goals should be (“consumer welfare”), not what they were, like the scientist who faults Star Wars for failing to explain hyperspace.

Virtues of competition stressed by Hayek, like the virtues of decentralizing information and the avoidance of central planning, were lost.

In truth, clad in the costume of economic rigor, Robert Bork’s attack on antitrust was really laissez-faire reincarnated, without the Social Darwinist baggage, and with a slightly less overt worship of monopoly—but with much the same results.

The belief that really mattered was that the market enjoyed its own sovereignty and was therefore necessarily immune from mere democratic politics.

God of telecommunications, brooking no rivals, accepting no sharing, and swallowing any children with even the most remote chance of unseating Kronos.

There is, after all, only so much you can do when your innovations need to be engineered not to disturb the mother ship.

Microsoft’s products never won by choice, but rather, by the sense that there was no real choice.

To take just one example, it is highly doubtful that Google would have achieved dominance in a world where Microsoft could dictate what search engine was being used on every computer in the world. We would all be using Bing.

Tech markets were too complicated or “fast-moving” for the law to catch up and understand. The government would kill the goose that lays the golden egg.

The big cases have been portrayed as wasteful and useless, and breakups, the original remedy, as too radical to take seriously. The Justice Department and the FTC have been depicted as bumblers who can’t do anything right, or bullies who unfairly attacked successful firms, and in their misguided efforts, did nothing but hurt the American economy and punish winners.

It is time to rehabilitate the reputation of the big cases, give them their due, and stress their importance—particularly for a dynamic, technologically driven economy.

Google would give you free email, free map apps, free cloud storage. Hence businesses like Facebook or Google needed to be seen as more akin to a charity. Who would sue the Red Cross for its “monopoly” on disaster relief?

After a decade of open chaos and easy market entry, something surprising did happen. A few firms—Google, Ebay, Facebook, and Amazon—did not disappear. They hit that five-year mark of obsolescence with no signs of impending collapse or retirement.

Instead of surrendering to the inevitable, Facebook realized it could just buy out the new.

When a dominant firm buys its a nascent challenger, alarm bells are supposed to ring. Yet both American and European regulators found themselves unable to find anything wrong with the takeover.

It takes many years of training to reach conclusions this absurd. A teenager could have told you that Facebook and Instagram were competitors—after all, teenagers were the ones who were switching platforms.

Google bought YouTube without a peep from the competition agencies.

These were hardly coercive takeovers, as practiced by Standard Oil. Most of these firms were happy to have a big fat buyout. But if the takeovers were friendlier, their net effect was little different than John D. Rockefeller’s campaign: the continued domination by the trusts.

The cheerer-in-chief for the monopoly form is Peter Thiel, author of Competition Is for Losers. Labeling the competitive economy a “relic of history” and a “trap,” he proclaimed that “only one thing can allow a business to transcend the daily brute struggle for survival: monopoly profits.”

It’s not enough to demand change without providing an agenda that enjoys legal legitimacy, can make use of the best economic tools, and is usable by enforcers, judges, and industry itself. That is the aspiration of this last section.

The fact that a merger may be designed to eliminate a future or “potential” competitor is often ignored as too speculative.

Europe now leads in the scrutiny of “big tech,” including the case against Google’s practices, and in smaller, less public matters, like policing how Apple deals with competitors who also depend on the iPhone platform.

Too much of the resistance to dissolution comes from taking too seriously the legal fiction of corporate personhood.

The simplest way to break the power of Facebook is breaking up Facebook.

The “protection of competition” test is focused on protection of a process, as opposed to the maximization of a value. It is based on the premise that the legal system often does better trying to protect a process than the far more ambitious goal of maximizing an abstract value like welfare or wealth.

The Neo-Brandesian antitrust agenda is not an agenda for solving every economic challenge produced by the new Gilded Age. But structure matters, and these suggestions would help us return to an economic vision that prizes dynamism and possibility, and ultimately attunes economic structure to a democratic society.

all created with the idea that power should be limited—that it should be distributed, decentralized, checked, and balanced, so that no person or institution could enjoy unaccountable influence. Yet this vision has always had a major loophole. Written as a reaction to government tyranny, it did not contemplate the possibility of a concentrated private power that might come to rival the public’s, of businesspeople with more influence than government officials, and of an artificial creature of law, the corporation, that would grow to have political protection exceeding that of actual humans.

the struggle for democracy now and in the progressive era must be one centered on private power—in both its influence over, and union with, government.