30 December 2024
Anti-trust has been in the news lately because of the multiple cases that the Department of Justice has been pursuing against tech companies including Google. The case against Google is just another step in the increased enforcement by the Federal Trade Commission (FTC) and its chair, Lina Khan. These have the potential to create more competition in the marketplace for consumers. However, there are some other benefits that are not as obvious that are beneficial to the public.
The FTC has paid special attention to the tech industry during its renaissance. The FTC believes that technology companies have grown too big and have become too dominant in their fields. This has led to cases against Google, Microsoft, and Meta. These are three of the biggest technology companies in the country, let alone companies in the world.
This focus started with the Biden administration. At the beginning of the term, President Biden issued an executive order titled “Promoting Competition in the American Economy”. This has set the tone for the next three years in the administration. This was spurred by the appointment of the FTC chair, Lina Khan. She was given the mission to dramatically increase merger enforcement and look at the consolidation of various industries across the country [1].
The cases targeting the companies are focused on stifling the growth of large tech companies. These companies have grown tremendously over the past few decades. In this time, they have become integral to the everyday lives of almost every person in the United States. Companies like Google, Amazon, and Meta control more information, data, and technological processes than close to every other company combined. They grew and grew, snapping up markets and buying companies that further fuelled their dominance in technology.
It hasn’t just been in the technology industry. Some of the more recent examples include Pfizer acquiring two other large pharmaceutical companies and the consolidation of airlines. Consolidation has occurred in many of the key industries that people rely on like pharmaceutical companies, airlines, healthcare companies, and hotels [3].
Anti-trust lawsuits and an increased focus on this topic have the potential to be beneficial for many people. Ensuring that there is sufficient competition in the marketplace can have a large effect on a large swath of people across the country. If pursued correctly, anti-trust lawsuits can spur companies or industries to promote more competition. Increased competition has the potential for policies to be instituted that benefit the worker. If an anti-trust lawsuit can correctly prove that a company has a monopoly, then that could open the industry up to more competition and more competition for workers [4].
But one neglected benefit of pursuing anti-trust cases is the potential to use anti-trust as a way of reducing corporate influence on policy-making.
Companies like Google (Alphabet), Meta, and Amazon are among the top spenders on lobbying. These companies are able to use their size and money to exert enormous influence over politicians and policy-making. Companies employ lobbying firms to influence politicians on certain issues and push them toward a certain viewpoint. If the largest companies are spending the most on lobbying, the logical assumption would be that they have the most influence on politicians and policy-making. This could further entrench their status as some of the largest companies in the world if they are able to push for changes that benefit them [5].
Critics of the FTC’s aggressive anti-trust approach argue that targeting large tech companies may stifle innovation and hinder economic growth. Many of these companies became dominant through their ability to innovate and scale operations in ways that smaller competitors could not. Intervening too heavily might discourage startups and established companies from pursuing groundbreaking advancements for fear of regulatory pushback. Additionally, these critics contend that large companies often create large economies that benefit consumers through lower prices, enhanced services, and more reliable products. Therefore, anti-trust lawsuits could inadvertently hurt consumers by disrupting these benefits.
While the concerns about stifling innovation and disrupting efficiencies are valid, unchecked consolidation often has long-term negative consequences that outweigh the short-term gains. Monopolistic practices can lead to reduced competition, which undermines the incentive for companies to innovate or improve their services.
Moreover, fostering a competitive environment can drive innovation across an entire industry. Smaller companies and startups, freed from the barriers imposed by monopolistic practices, are often better positioned to introduce disruptive innovations. While regulation might initially slow some activities, the broader goal of a dynamic, competitive marketplace ultimately benefits consumers, workers, and the economy at large. This extends to the pursuit of a fairer legislative process. Smaller companies and industries as a whole might be better positioned to lobby and argue for legislation that would benefit everyone instead of the biggest and dominant companies.
The whole point of anti-trust is that the government can pursue cases against companies it believes are monopolies and control too much of an industry. This promotes more fair competition among companies within a certain industry. The obvious consequence of anti-trust pursuit is that it will promote more competition within an industry. But it could lessen the influence that large companies have leading to a more fair and balanced legislative process. If companies are not able to influence politicians and policy-making as they once were able to, then policies might be free of their preferred wishes. This would hopefully result in a more balanced and democratic process where the desires of the people are prioritized over the wishes of the largest companies [6].
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Works Cited
[1] “U.S. Antitrust Merger Enforcement: What to Expect in 2024: Perspectives: Reed Smith LLP.” U.S. Antitrust Merger Enforcement: What to Expect in 2024 | Perspectives. Accessed November 5, 2024. https://www.reedsmith.com/en/perspectives/2024/01/u-s-antitrust-merger-enforcement-what-to-expect-in-2024.
[2] “Microsoft, Google, and a New Era of Antitrust.” Harvard Business Review, February 23, 2023. https://hbr.org/2023/02/microsoft-google-and-a-new-era-of-antitrust.
[3] “The Consolidation Curve.” Harvard Business Review, August 1, 2014. https://hbr.org/2002/12/the-consolidation-curve.
[4] “Modern Antitrust Enforcement.” Yale School of Management, September 3, 2024. https://som.yale.edu/centers/thurman-arnold-project-at-yale/modern-antitrust-enforcement.
[5] “Top Spenders.” OpenSecrets. Accessed November 5, 2024. https://www.opensecrets.org/federal-lobbying/top-spenders.
[6] “Why You Should Care about Antitrust.” Yale Insights, October 20, 2020. https://insights.som.yale.edu/insights/why-you-should-care-about-antitrust.
Policy & Political Review 