Don’t Punish Success: American Antitrust Law & Tech

By: Katie McAuliffe and Laurel Duggan

Don’t Punish Success: American Antitrust Law & Tech

By: Katie McAuliffe and Laurel Duggan

The global dominance of American tech companies should make our nation beam with pride. Our tech firms are international luminaries of our national values: free speech, open inquiry, and innovation. The tech sector also sustains 18.2 million American jobs and has helped keep small businesses afloat during the pandemic. Yet companies like Google and Facebook—whose successes are a testimony to the American model of free enterprise—are being assaulted from all directions by our elected officials.

The last year has seen a flurry of antitrust investigations by state attorneys general against Google and Facebook. Mississippi A.G. Jim Hood even compared American tech companies to the robber barons of the 1800s. Yet this obsession with antitrust runs contrary to the interests of taxpayers, the vast majority of whom wish their A.G.s would focus on crime rather than punishing American businesses for their success.

State attorneys general are primarily interested in Google’s advertising business and monetizable searches. It is important to note that Google, the largest digital advertising company, still competes with Facebook, Amazon, and numerous other firms without household names like Amobee and Horizontal for its main revenue source: advertising. And this dominance is not static. Google and Facebook’s market shares have dropped in recent years, and Google is projected to see a decline in revenue this year for the first time since 2008.

The federal government is also putting pressure on tech firms. The Justice Department’s investigation into Alphabet (Google’s parent company) and other large tech firms has been underway for months. The DOJ is expected to bring a case against Google this summer, although little information has been publicly released on the case. The CEOs of Google, Apple, and Facebook (pending a possible subpoena) are expected to testify to the House Judiciary in July.

Antitrust law in the United States operates under the consumer welfare standard, meaning that dominant firms will not be targeted by the government unless they use their power to harm consumers. This standard rejects the idea that big businesses should be targeted simply because they are big. Consumers, not bureaucrats, get to decide which companies succeed and which ones fail. Unfortunately, a populist undercurrent in American politics seeks to weaponize antitrust law against some of America’s greatest success stories.

Photo Credit: Niharb